The Indian consumer goods sector witnessed a deceleration in sales volume growth during the October-December quarter, with softer sales recorded at local convenience stores, according to market research firm NielsenIQ. However, amid this slowdown, rural areas showcased signs of recovery, narrowing the consumption gap with urban centres.

Despite facing challenges such as subdued spending on essentials and discretionary items due to price pressures, consumer goods manufacturers managed to achieve a 6.4 per cent increase in sales volume in the fourth quarter of calendar year 2023. The growth rate, however, marked a slowdown from the 8.6 per cent growth seen in the previous quarter, mainly due to weaker performance at smaller retailers compared to large supermarkets.

Rural demand saw an uptick during this period. NielsenIQ's data showed that sales volume in rural regions grew by 5.8 per cent in the December quarter, slightly below the 6.8 per cent growth observed in urban areas. The shift indicates a reversal from the trend seen in the previous quarters, where urban consumption had consistently outpaced rural consumption by significant margins.

Roosevelt D'souza, Head of Customer Success at NielsenIQ India, highlighted this narrowing consumption gap, stating that for the first time in 2023, there is a convergence between urban and rural markets.

In rural parts of the country, categories such as biscuits and noodles, known as "habit-forming categories," witnessed robust growth. Growth was supported by a 0.4 per cent decline in product prices across the country, marking the first such decline in over two years.

Major players in the packaged food segment, including Marico, Britannia Industries, and others, responded to easing commodity prices by reducing product prices to remain competitive.

While companies like Hindustan Unilever, Varun Beverages, Adani Wilmar, and ITC reported mixed results for the December quarter, Dabur India noted that rural growth outpaced urban growth.

Looking ahead, NielsenIQ projects a moderate growth rate of 4.5 per cent to 6.5 per cent for the consumer goods sector in 2024. The firm believes that government initiatives to bolster the rural economy will positively impact companies with a significant rural presence, further supporting growth prospects in the sector.

(With Reuters inputs)