Rural Market Poised for 6.1% Volume Growth in FY25, Kantar Report Reveals

The FMCG sector is projected to see a 6.1% volume growth in rural markets this fiscal year, according to a report by Kantar Worldpanel. This marks an increase from the 4.4% growth observed last year. In contrast, urban market growth is expected to remain steady at 4.2%.

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Rural Market Dynamics

The report, titled "The Rural Challenge," suggests that rural volumes will soon match urban growth, which is currently higher. The rural market is crucial for the Indian FMCG industry, contributing half of its volume and value. However, consumption stagnation in rural areas is due to inflation, smaller household sizes, increased utility spending, and a focus on savings.

Rural markets experienced several quarters of decline post-pandemic but began recovering last fiscal year. The report highlights that population growth, rather than consumption, primarily drives FMCG growth in these areas.

Premiumisation Trend

Kantar also noted a trend towards premiumisation in the FMCG sector, similar to other industries. Consumers are increasingly opting for premium products like food spreads, face scrubs, body wash, and Korean noodles. This shift indicates a move towards a higher standard of living.

Products that simplify daily life and save time are also gaining popularity. These include liquid dishwashing soap, ready-to-cook mixes, frozen foods, and fabric conditioners. In personal care, items targeting specific needs like acne creams and sensitive toothpaste are seeing higher growth.

Healthier Alternatives

There is also a rising demand for healthier alternatives such as olive oil, dark chocolates, and sugar-free drinks. Consumers are willing to pay more for these healthier options.

E-commerce and quick commerce channels are becoming increasingly popular among consumers. These platforms are seeing significant growth in premium categories, with users often purchasing larger packs.

The report concludes by emphasising the importance of stability in the macro market for continued rural growth. As rural volumes catch up with urban ones, the overall outlook for the FMCG sector remains positive.