Rural revival spurs 9% growth in India's consumer goods sector
The consumer goods sector in India experienced a 9% surge in value during the third quarter, fueled by increased purchasing power in rural regions, as per a NielsenIQ report. The study disclosed that rural markets sustained their recovery, with sales volumes rising 6.4% from 4% in the previous quarter. This growth comes after a decline in rural market volumes of around 2%-5% over the past four quarters.
Factors contributing to the rural revival
The report credited the rural resurgence to slower price hikes, reduced unemployment, and the government's move to slash cooking gas prices. Satish Pillai, Managing Director at NIQ India, remarked that these factors enhanced consumers' propensity to spend. India's retail inflation climbed to a 15-month peak in July but softened in August and September. Unemployment dipped to 7.1% in September but rose again in October to over 10%, according to data from the Centre For Monitoring Indian Economy.
Shift toward discretionary spending in rural areas
NielsenIQ's report also underscored a rise in consumer expenditure on discretionary categories such as personal care and home care products, indicating that rural consumers are starting to purchase items beyond basic necessities. "Impulse food categories continue to exhibit strong growth, and we see a growth recovery in habit-forming categories such as biscuits, tea, noodles, and coffee after five quarters," noted Roosevelt D'Souza, head of customer success at NIQ India.
Urban consumption remains stable, modern trade grows
While rural markets demonstrated signs of recovery, urban areas maintained a steady pace of growth in consumption. In the retail sector, modern trade encompassing large supermarket chains, expanded by 19.5% during the quarter. Traditional trade, consisting of small family-owned stores, experienced a 7.5% increase in consumption. "This renewed optimism across the country augurs well for the festive season," D'Souza added.
