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FMCG growth forecast lowered because of a steep fall in Q2: Nielsen

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Research and analytics firm Nielsen has slashed its 2020 growth forecast for the FMCG sector. It expects the sector to shrink by about 3 percent as it sees the recent recovery being stalled by headwinds in the economy. Diptanshu Ray, lead retail intelligence-South Asia of Nielsen said the paring of the forecast for the full year had to do with the steep decline seen during the June quarter.

Research and analytics firm Nielsen has slashed its 2020 growth forecast for the FMCG sector. It expects the sector to shrink by about 3 percent as it sees the recent recovery being stalled by headwinds in the economy.
Diptanshu Ray, lead retail intelligence-South Asia of Nielsen said the paring of the forecast for the full year had to do with the steep decline seen during the June quarter.
“Q2 has gone down by minus 19 percent. Even with the greenshoots that we see in the macro environment currently and the positive trajectory that we see in the FMCG it is not enough to cover up the entire shortfall that we have seen and hence we have revised or revisited our forecast and make it to minus 1 to minus 3 percent at this point of time,” Ray told CNBC-TV18.
The situation has improved significantly during the September quarter, Ray said.
“We actually saw a positive growth in Q3 2020 (July-September) versus 2019. E-commerce actually has driven growth quite a lot in Q3. Rural is driving growth in the FMCG market in India at this point of time,” Ray said.
Ray expected rural growth at 10.6 percent for the September quarter.
“We see rural growth to 10.6 percent in Q3 CY20 which is phenomenal compared to the metros. Reversed migrants and 83 lakh households got added into the MGNREGA are the factors that led to the rural growth. Alongside that we also had a monsoon which has given boost to the agriculture,” he said.
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