Indian FMCG industry grew 11 per cent in March quarter, rural volume grew 8.4 per cent: NIQ 

Small packs and rising rural consumption drive growth, even as urban demand slows and food inflation persists.

Indian FMCG industry has garnered 11 per cent value growth in value in March quarter year-on-year (y-o-y) backed by 5.1 per cent rise in volume and a 5.6 per cent increase in prices, as per latest data released by NielsenIQ. The growth was largely driven by rural markets and smaller packs. At the same time, e-commerce channel’s sailence continued to strengthen especially in the top eight metros.

However, both rural and urban volume growth in March quarter was lower than December quarter. In March quarter, rural volume growth was pegged at 8.4 per cent y-o-y. Though lower compared to December quarter (9.2 per cent), it was nearly four times faster than urban volume growth (2.6 per cent). In fact, urban demand in March quarter witnessed a further deceleration compared to December quarter (4.2 per cent).

Roosevelt Dsouza, Head of Customer Success – FMCG, NielsenIQ India, stated: “The FMCG sector is showing mixed signals — while volume growth is slowing across categories, non-food segments are still outpacing food. Inflation is easing overall, but high edible oil prices are keeping staples expensive. Rural markets continue to drive growth, whereas urban metros continue to see a shift toward e-commerce with higher shopper engagement.”

Rural-powered demand

Food consumption growth slowed to 4.9 per cent in Q1 CY2025 from 6 per cent in Q4 2024, primarily due to decreased volumes in staple categories like edible oils and palm oil, which saw price hikes. Home and personal care (HPC) segments experienced 5.7 per cent growth in Q1 CY2025, with higher demand in rural areas.

“With a favourable monsoon forecast and revised tax slabs, consumption is likely to pick up in the upcoming quarters. Interestingly, small players are gaining more ground due to a low base and changing market dynamics, though their long-term momentum remains to be seen,” Dsouza added.

Stating that e-commerce continues to strengthen its presence significantly in eight metros, NIQ noted that this is largely volume-driven, supported by increasing online shopper penetration, purchase occasions and increase in basket size. This has impacted the share contribution of offline channels, including modern trade and traditional trade in these top metros, it noted.

Traditional trade (Kirana channe) volumes increased to 6.2 per cent in Q1 CY2025, from 5 per cent in Q1 CY2024. However modern trade channel volumes, through supermarkets, declined 3.3 per cent in March quarter from 15.4 per cent growth in the same period last year.

“Small manufacturers are leading the way in driving consumption, supported by steady volume growth in both food and HPC categories. In contrast, larger players are experiencing slower volume growth, which has halved compared to Q42024. Low base, rural growth and easing out inflation are helping small players to outpace FMCG growth,” NIQ noted.

Published on May 8, 2025