According to a recent report by market researcher NielsenIQ, the consumer goods sector in India experienced a 10.6% sales growth in the December quarter, driven by strong demand in rural areas and higher prices of staples such as edible oil and wheat flour. The rural areas, which account for over a third of consumer goods sales, have been a bright spot for the industry, with sales volume jumping 9.9% in the December quarter, outpacing the 5.1% increase in urban centers. This is the fourth consecutive quarter that rural areas have outperformed urban locations, driven by income support schemes and slowing salary increases in cities.
Large consumer goods makers, such as Dabur India and Hindustan Unilever, reported a higher December-quarter profit due to recovering rural demand. However, smaller rivals are also gaining ground, with their sales increasing twice as fast as larger companies during the festive quarter. To counter rising commodity prices, consumer goods makers have been raising product prices, leading to a 3.3% increase in overall prices during the quarter. Additionally, Indians are preferring smaller product packs, a trend noted by Hindustan Unilever.
The report highlights the resilience of rural areas in the face of an inflation-led spending slowdown in cities, with recovery in rural demand driven by a combination of factors, including government income support schemes and a relatively robust agricultural sector. However, consumer goods makers are also facing stiff competition from smaller rivals, who are adapting to changing market conditions by offering more competitive prices and smaller product packs.