FMCG Sector Under Pressure As Rural Volumes Fall 5% In June Quarter: NielsenIQ

India's FMCG sector faced a broader consumption slowdown in the June quarter, with rural volumes falling 5% and more than two-thirds of product categories registering a decline, NielsenIQ said in its latest quarterly report.

According to the report cited by PTI, 68% of FMCG categories registered a decline during the April-June quarter, signalling a broader slowdown in consumption amid macroeconomic pressures, rising input costs and weakening consumer sentiment.

"FMCG slowdown is no longer confined to core categories. Until Q1 '26, weakness was concentrated in a few categories. By Q2 '26 (June quarter), macro pressure is visible across a wider basket, creating a more systemic slowdown," NielsenIQ said in its FMCG Quarterly Snapshot for April-June 2026 (AMJ '26).

Category Wise Impact

The report classified FMCG categories into four bands based on the severity of the slowdown, with the impact varying across product segments.

Only 8% of categories fell under the "Least Impact" band, described as "islands of growth amid macro slowdown". These included vermicelli and noodles, packaged rice, hair oils and liquid toilet soaps.

Another 25% of categories were classified as "Low Impact", indicating muted momentum but relatively stable demand. This group comprised packaged atta, non-refined oils, utensil cleaners and palmolein oils.

The largest share, at 35%, was in the "Medium Impact" category, where emerging headwinds had a moderate negative effect on momentum. Iodised salt, biscuits, salty snacks and shampoo were among the products in this band.

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At the other end, 33% of categories were classified as "Heavy Impact", the most severe band, reflecting strong growth headwinds. Washing powders and liquids, refined oils, detergent cakes and bars, and toilet soaps were among the products in this group, pointing to pressure across home care, personal wash and edible oils.

Overall, 68% of FMCG categories fell in the Medium and Heavy Impact bands, pointing to meaningful growth pressure during the quarter, while only 8% of categories were classified as relatively resilient.

The category-level slowdown coincided with sharper weakness in rural markets, where FMCG volumes declined 5% despite a 2.1% rise in prices, dragging rural FMCG value down 2.9%, according to the report.

Traditional Trade Faces Pressure As Organised Channels Grow

Traditional trade continued to face pressure, while organised channels supported growth in urban markets. Modern trade and e-commerce recorded volume growth of 17.5% and 34.8%, respectively, aided by their expansion into non-metro markets.

"Non-metros are emerging as the next growth driver for E-commerce," the report said. Non-metro markets are growing three times faster than metros in e-commerce, although metro markets continue to account for 68% of e-commerce, it added.

According to NielsenIQ, growth momentum is shifting towards organised channels in urban markets, while consumption in traditional trade has stalled across both urban and rural cohorts.

E-commerce's share has reached 21% in the top eight metros and 25% in southern metros, the report said.

Category-wise, food, which accounts for a 64% share, grew 0.9% in value, while volumes declined 1.1%. Home and personal care, with a 32% share, grew 1% in value despite a 4.3% decline in volumes, supported by a 5.4% rise in prices.

OTC products, which account for a 5% share, contracted 3.1% in value, while volumes declined 5%.

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