Nielsen projects the FMCG industry growth at 11-12% in 2019

Indian FMCG industry registered a healthy double-digitgrowth (13.8%) in the calendar. With the settling of two major economic reforms, the industry saw a healthy consumption led growth where contribution of volume led growth jumped to 77% in 2018 - a 13 percentage point jump over that in 2017. The healthy consumption growth in 2018 was led by favourable macros (GDP growth and Inflation) and manufacturers passing on the benefits of margin expansion coming out of GST regime. In the OND quarter (Q4 ’18) the FMCG industry growth remained buoyant at 15.9%, however, the quarter brings in an interesting twist with price-led growth starting to inch up. There were significant growth dynamics between 2017 and 2018 witnessed across the zones and states. The outlook for 2019 looks positive for the FMCG industry and Nielsen projects the industry growth at 11-12% in 2019 i.e. a tad lower than that in 2018. In the last quarterly snapshot (released on 14th November) we brought to you the changing dynamics in the FMCG industry post the settling of two major economic reforms Demonetisation & GST rollout. After a decent growth of 16.5% in JAS quarter (Q3’18), the industry posted 15.9% growth in OND quarter (Q4’18). The buoyancy in industry growth is led by:

• Consumer Price Inflation falling from 3.8% in Q3’18 to 2.6% in Q4’18
• GDP growth sustaining at over seven per cent
• Continued government focus on infrastructure and rural development
• Surging non-farm income in Rural India
• Margin expansion for manufacturers on the back of GST rate cuts and allied benefits

The industry growth in Q4 ’18 is led by volume (consumption) that contributes to 75% of total value growth. Rural markets continued to grow faster (18.5%) in the quarter – four percentage points higher than growth in urban India.