Indians consumed fewer groceries in 12 months ended September from the year-earlier (ended September 2018), but shelled out more overall, according to a study by Kantar Worldpanel.
Kantar Worldpanel is a global consumer research firm owned by communications and advertising giant WPP.
The consumers shopped more frequently but purchased fewer products each time. The study added that the consumers spread their budgets to moderate their finances amid the economic slowdown.
“The average basket size in (the year ended) September 2018 was 222 kg while it dropped 3% to 217 kg in 2019. But spends have gone up 2% from Rs 14,724 to Rs 15,015 in the same time frame,” said K Ramakrishnan, South Asia MD at Kantar as cited by The Economic Times.
Many companies increased promotions in 2018 by offering consumers additional grammage or bigger packs whereas they kept the prices intact. Nevertheless, most of them said that these could have been withdrawn or standardised in 2019, leading to dissimilar value and volume growth trends.
“Even if we sold the same number of packs in both years, volume will still show a drop in 2019 as additional grammage will reflect only in the base year. Also, there could be a shift from large packs to smaller ones, which impacts volume growth,” B Krishna Rao, senior category head at Parle Products told the news daily.
India’s GDP growth rate slowed down further to 4.5 per cent in the July-September quarter of this fiscal. Despite all government efforts to arrest slowdown, this is the slowest growth rate the Indian economy has registered in six and a half years.
Consumption in rural India also slumped to a seven-year low during July-September period (Q2). This is for the first time that the consumption of packaged consumer goods by households in rural areas rose at a slower pace than urban areas.
Rural India, which comprises 36 per cent of overall fast-moving consumer goods (FMCG) sector, has historically been outpacing urban India in terms of growth by three to five percentage points.
A protracted agrarian crisis, which squeezed rural incomes thereby eroding demand for consumer goods, led to the FMCG sector’s worse performance (in rural India) in seven years, a Nielsen report had said, as cited by Livemint in October (2019).