India’s FMCG industry clocks 11% growth in March quarter on higher edible oil prices | Mint

The Indian fast-moving consumer goods (FMCG) industry reported 11% year-on-year value growth in the March quarter, driven by a 5.1% volume increase and a 5.6% price hike, according to NielsenIQ. While overall inflation is easing, high edible oil prices are keeping the basket of staples expensive, resulting in higher value growth. But higher unit growth compared to volume growth suggests consumers are choosing smaller pack sizes.

“The FMCG sector is showing mixed signals—while volume growth is slowing across categories, non-food segments are still outpacing food. Inflation is easing overall, but high edible oil prices are keeping staples expensive,” said Roosevelt Dsouza, head of customer success, FMCG, NielsenIQ India.

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Rural markets continue to drive growth, while metros continue to see a shift toward e-commerce, with higher shopper engagement. Dsouza said with a favourable monsoon forecast and revised tax slabs, consumption is likely to pick up in the upcoming quarters. Interestingly, small players are gaining ground owing to a low base and changing market dynamics, though their long-term momentum remains to be seen, he added. NIQ follows a January-to-December year.

Rural surges ahead

Although rural demand growth slowed slightly in the March quarter compared to the previous one, it still significantly outpaced urban demand, expanding four times faster.

Urban market growth decelerated in the March quarter. Rural markets saw an 8.4% volume increase, a slight dip from the December quarter. In contrast, urban market volume growth slumped to 2.6% year-on-year, declining both sequentially and annually. Across most of India, rural markets continued to perform better than their urban counterparts. 

Large consumer goods companies, which act like proxies for household consumption, have shared similar views in recent earnings calls. Last week Hindustan Unilever Ltd (HUL) pointed to a recovery in rural markets. These markets have been “resilient and robust” over the last few quarters, Rohit Jawa, CEO and managing director, HUL, said after the company’s earnings call last week. 

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“Monsoons have been good, projections have been decent, reservoirs are full, and agri output is strong. We believe this will be an important trigger, given companies like ours have a large rural portfolio. Urban demand has been subdued in recent quarters, but macro tailwinds are building,” he added.

NIQ data revealed that food consumption growth slowed to 4.9% in Q1 2025 from 6% in Q4 2024, primarily due to decreased volumes in staple categories such as edible oils and palm oil, which saw prices increase.  The home and personal care (HPC) category saw consumption growth of 5.7% in Q1 2025, with higher demand in rural areas, NIQ noted.

Meanwhile, small manufacturers are leading the way in driving consumption, supported by steady volume growth in both the food and HPC categories. In contrast, larger players are seeing slower volume growth, which has halved from the December quarter of 2024. A low base, rural growth, and easing inflation are helping small players outpace overall FMCG growth, NIQ said.

Quick commerce impact

The popularity of e-commerce, including quick commerce, was felt across trade channels during the March quarter, with both modern trade and traditional trade reporting a sequential slump in volumes.

Traditional trade volumes increased to 6.2% in Q1 2025 from 5% in Q1 2024, but declined versus the December quarter. Modern trade volumes were down 3.3% year-on-year.

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E-commerce continues to strengthen its presence significantly in eight metros, hitting the share of offline channels. Both modern and traditional trade saw their share decline in the March quarter. Traditional trade reported a 1.5% year-on-year decline in overall share of FMCG trade to 62.5%, while the share of modern trade slumped 2.8% from a year ago. This growth was on account of increasing online shopper penetration, more purchase occasions, and increasing basket sizes (more units purchased per shopper), NIQ said.

E-commerce is increasingly contributing to the revenue of major FMCG companies, with this trend accelerating each quarter. For Nestle India, e-commerce, largely driven by quick commerce, constituted 8.5% of its domestic sales for the financial year ending 31 March 2025.