FMCG Pulse

February 2024
BIG STORIES
P.S. Pradeep
After the disappointment of 2022, where FMCG
remained static, all eyes were on 2023,
expecting a revival. The year seemed to start
well, growing at 4% in the rst quarter, but
close inspection showed that it was all on the
back of one category, Atta (wheat our). Atta
had grown by 29% in that quarter, and given
that Atta generated 16% of all FMCG volume,
this level of growth caused the FMCG numbers
Declining purchases
After the pandemic, this is the second straight
year where average purchase quantity has
failed to grow. The annual purchases (without
Atta) have stagnated at around 117 KGs per
household since 2021, but spends in the same
time period have jumped from Rs. 15,513 to Rs.
17,907. The 8.5% growth in FMCG spends in
2023, is higher than the average in ation rate
Average Annual Consumption (Kgs)
Figure 1
117.5 117.2 117.1
115.2
112
2020
2023
2022
2019
2021
to burgeon. Atta has continued to grow in
double digits, throughout 2023, and as a result
though FMCG seemed to have grown at a
handsome 6.1% in 2023, removing Atta from
the mix brought the growth down to 2.7%.
Incidentally, 2.7% is also the population
growth in the year, which meant that FMCG
volumes have grown purely on the basis of
household population growth.
of 5.7% for the year.
Out of the over 90 categories and sub-
categories we track, about 50% of them either
lost consumption, or were static. The biggest
such average consumption drop was seen for
Cooking Oils, where 1.4 fewer liters were
purchased in 2023, compared to 2022, while
the average spend on the category has gone
up by Rs. 95. In reality, if shoppers were
purchasing the 2022 quantity with 2023 prices,
they would have been spending Rs. 286 extra,
however, the drop in consumption of the
category has reduced this extra spend to the
afore mentioned Rs. 95.
Cooking Oils is followed by Washing Powders,
which lost 300 grams per household, Basmati
rice, which lost 180 grams, and salt which lost
80 grams. Each of these are bulk purchase
categories, where usage can be regulated, and
that seems to be what is happening here –
reduction in bulk categories to reduce impact,
which allows the shopper some freedom with
the smaller category purchases.
Value growth slows
Ever since the beginning of the pandemic, Value vs. Volume Growth
value growth (without Atta) maintained at
Figure 2
least a 4-percentage point lead over volume in
every quarter, until Q4 of 2023. In the most 18%
recent quarter, the di erence was 1.3 16%
14%
percentage points, a di erence which occurred
12%
way back in the second quarter of 2018. 10%
8%
The growth curves, which were in a tango until 6%
4%
Q2 of 2021 started to de-synchronize as the 2%
e ects of in ation grew severe, and are yet to 0%
achieve sync. The sudden drop in Q4 ’23 is an -2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021 2022 2023
e ect of the surge we saw in Q4 ’22, coupled
with declining prices across big manufacturers. Volume Growth Value Growth

Categories where we see slower value growth

compared to volume growth in the latest indicating there is some downgrading that is
quarter are Hand wash, Body wash, happening in these categories.
Shampoos, Floor Cleaners, Cooking Oils

The winners of 2023

Over the past few editions, we have been
talking about holistic growth. Holistic growth
happens when the following set of criteria are
met:
— Households growing faster than the
population growth
— Per-Household consumption growing
— Per-Household spends growing
— Per-Household spends equal to or faster
than the consumption growth
These rules would ensure that category is
attracting new buyers, at the same time
managing to up the shoppers’ consumption
and also cause premiumization within, which is
re ected in the faster spend growth compared
to consumption growth.
Out of the over 90 categories we track as part
of FMCG, there are only about 14 categories
which showed this kind of holistic growth in
2023. But even within these, let’s tighten our
criteria to the following:
— Categories adding 10 million households or
more in 2023 (faster than the household
population growth of 9 million)
— With a 5% growth in average consumption
(much faster than FMCG consumption

Categories Millions of households added % spend growth % consumption growth

Instant Co ee 21.4 million 11% 5%
Insecticides 20.6 million 20% 20%
Chocolates 15.7 million 32% 30%
Fabric Softeners 14.0 million 26% 13%
Washing Liquids 13.1 million 21% 20%
Biscuits & Cookies 11.9 million 15% 8%
 growth, which is stagnant)
— And a 10% growth in average spends
(faster than FMCG spend growth, which is
at 8%)
Outlook for 2024
The United States economy beat the recession
forecast for 2023, but experts are suggesting
that it is likely to see a mild recession in 2024.
The United Kingdom and Japan have slipped
into recession based on their September –
December 2023 GDP estimates. Ireland and
Finland also are in recession, and as India
Today¹ reports there are 16 other countries
which are at the risk of recession in 2024.
So, there is an inevitable global slowdown
expected this year. India has outperformed the
global growth in the past. The United Nations
had pegged India’s GDP to grow at 6.2% in
2024, and the Finance Ministry had projected
a 7% growth rate recently for FY 2025. So,
growth is not expected to shrink much, despite
global conditions, but it is a stressor.
2024 is an election year, however, the past
election years did not see any surge in FMCG,
on the contrary with all the freebies
announced there was only stagnation or
shrinkage. In 2009 the consumption growth
was 0.7%, in 2014 it was static and in 2019 it
was negative. While the voter, and therefore
the consumer has evolved from then to now,
we really do not see FMCG at the national level
being impacted signi cantly due to the
General Elections.
¹ https://www.indiatoday.in/diu/story/diu-recession-uk-japan-ireland- nland-india-2504744-2024-02-20
— These tightened parameters spotlight the
winners of 2023. Only six categories fell
under this criteria.
The agriculture outlook for 2024 is a mixed
bag. The dry weather due to El-Nino is
expected until the rst half of the year. It
seemed to have an impact on the Kharif crop
harvests. Agricultural growth is projected to be
at 1.8% in 2023-24. This is a seven-year low. As
per the rst estimates of Kharif crops released,
almost all Kharif crops have seen lower yields
due to uneven rainfall. This is likely to impact
the rst half of 2024. However, the Rabi
sowing, though mildly disturbed is much
better, with record hectarage under the wheat
crop. El-Nino is also expected to wane by the
middle of the year, and with the Rabi harvests
close by, without any unexpected weather
phenomenon, the year might yet turn good,
especially in the second half.
But burning summers might help categories
like Bottled Soft Drinks, Ice Creams, Sun
screens, and even laundry products to an
extent. However, the growth in these
categories combined will have a negligible
impact on overall FMCG.
As a result, we do see FMCG growth to be
subdued, at least until Q3 of 2024. Keeping in
mind the stronger rst half of 2023, we may
even end up seeing some stagnation in the
early part of the year, with things getting
progressively better.
ANOTHER YEAR OF OUT OF HOME
Adarsh Bhandari
The Out-of-Home FMCG landscape in India
witnessed signi cant transformation in 2023,
with FMCG volume and value doubling
compared to the previous year. Factors such as
increased mobility, heightened consumer
engagement, and evolving workplace
dynamics, were key in propelling this massive
growth.
Enhanced mobility
The further relaxation of COVID restrictions in
2023 facilitated improved workplace mobility,
leading to consumers making an average of 14
extra trips compared to the previous year. The
yearly number of out-of-home occasions that
shoppers had, stood at 43 in 2023. This
represented a growth of nearly 50% in the
year. With o ces adopting hybrid models and
remote work becoming less prevalent,
individuals ventured out more frequently,
creating opportunities for Out-of-Home
purchases.
Right now, it is not prudent to expect the Out-
of-Home trends to be in sync with the In-
Home trends – one, because the e ects of the
pandemic behaviors are still lingering beneath
the numbers, particularly in the case of Out-
of-Home; and two, because the Out-of-Home
data is based on just eleven of the Food and
Beverage categories.
Increased trips resulted in a notable uptick in
pack purchases, with a staggering 81 more
(twice as many vs 2022) packs bought on an
average. Packs per trip also increased as on an
average one additional pack was purchased in
each trip compared to last year. This surge
re ects a heightened engagement with
indulgent FMCG categories from the snacking
aisle, indicating continued increase in daily
snacking routines. Packs almost doubled
across all categories in 2023.
Shifting spending patterns
Accompanying the increased purchasing
frequency was a signi cant rise in average
spending, with consumers shelling out Rs. 1536
more on FMCG products in 2023 compared to
2022. This brings the average spend on Out-of-
Home FMCG products to Rs. 3,675. This surge
is a result of the increased consumption levels
as noted before.
Delving deeper into spending patterns reveals
Southern surge
South India emerges as a focal point of
signi cant growth and transformation. The
region’s contribution is notable, characterized
by substantial increases across multiple
metrics compared to All India. South
experienced a remarkable surge in shopping
trips, with the total number of trips nearly
doubling compared to 2022.
Accompanying the increased shopping trips
that the bulk of the increase in expenditures
stemmed from food categories and not
beverages. Among these, spends on biscuits
witnessed the most substantial growth,
followed closely by salty snacks, ice cream, and
chocolates. This shift highlights consumers'
inclination towards indulgent and convenient
snacking options, possibly driven by lifestyle
changes and evolving taste preferences.
was an exponential growth in pack purchases
(+185%). In tandem with increased purchasing
activity, consumers in South India also
exhibited higher spending on FMCG products,
with an additional Rs.2261 spent on average
compared to previous year. This uptick in
purchase signi es increased purchasing power
and consumer con dence in the region, driving
demand across various FMCG categories.
THE INDIAN HAIR
CARE REGIMEN
Mahima Bhatnagar
The Indian beauty and personal care industry
is experiencing a surge, with numerous brands
making their mark in the market. The Personal
Care sector grew at 15% in value in 2023 with
products like soaps, deodorants, hair wash,
hair colors growing almost in double digits. The
convergence of e-commerce and the pervasive
in uence of social media has signi cantly
contributed to the escalating demand for a
wide array of personal care products.
However, hair care segment still has room for
Tangled troubles
Figure 3
84%
of population has faced at least
one hair concern in last one year!
Source - Hair Regimen Study, Kantar Worldpanel Division
growth, as the majority of the population,
primarily uses shampoo, hair oils and
occasionally, hair colors at home. Other
products like conditioners, masks, styling
products are still at a nascent stage. If we
consider a basket of hair products containing
shampoo, hair oils, conditioners, hair masks,
hair colors and hair styling products (which
include serums, waxes etc.,), consumers are
picking up just 2 products on average to use
for their hair care routine.
It is not that consumers are devoid of concerns
regarding their hair. A considerable proportion
of the population, grapples with various hair-
related challenges.
About half of the population contends with
hair fall and about one-third of the population
expresses concern about grey hair and hair
breakage. Additionally, dandru and hair
thinning are prevalent issues among
consumers. Females tend to have more
concerns related to hair than males.
Hair problems also vary Figure 4
by regions. Consumers 5%
in East are more % of individuals 27%
perceptive about their having 4 or more
hair problems, while hair concerns in East South
those in South appear to the past 1 year
have fewer issues
related to hair.

Source - Hair Regimen Study, Kantar Worldpanel Division

Tackling hair woes

For the majority of hair concerns consumers
typically rely on the use of shampoos and hair
oils as treatment options. Interestingly, South
consumers are more reliant on hair oils to
address their hair related concerns. However, it
is evident that the more the hair problems the
wider the range of hair care products used.
In East, where about one-fourth of the
consumers are having four or more hair related
concerns, we see more than 30% of them
using 3 or more hair care products. In contrast
to this, in South, where only 5% consumers are
having four or more hair problems, only 10% of
consumers are using three or more hair care
products.

Untapped potential Awareness of Hair products

There is an immense potential for hair Figure 5
segment to evolve. While the established
categories like hair oils and shampoos boasts
68%
high penetration rates (~80%), products like 32% 41%
conditioners, masks and hair styling are low on 8%
awareness itself. Conditioners Hair Hair Styling Hair
Masks Products Colors
The majority of population prefers to manage
their hair care routines at home, with only 13% Source - Hair Regimen Study, Kantar Worldpanel Division

opting to visit a salon for their needs that too

on special occasions. There is de nitely home and the key is to drive awareness about
potential to drive these niche products in- the usage and bene ts of these products rst.
Youthful air
Although, hair styling products and
conditioners remain niche, interestingly, they
have better traction among teenagers than
adults. Over 50% of teenagers aged between
15 and 19 years are familiar with hair styling
products and about 40% of them are aware of
conditioners compared to 41% and 32%
awareness among the general population for
these respective products.

Even the usage of these products is better among teens.

Products Usage in L3M among teens (15-19Y) compared to general population

Hair Serums 1.6X
Hair Styling Gels 2.4X
Hair Conditioners 1.9X

They are also using it more frequently than
general population.
The above excerpts are from the survey that
we did in September 2023 across 6600
individuals comprising of both males and
females and had representation across age
groups. For more information on the study you
can reach out to your Kantar representatives or
write to mahima.bhatnagar@kantar.com.
 For more information, please write to:

K Ramakrishnan
k.ramakrishnan@kantar.com

About Kantar:

Kantar is the world’s leading marketing data

and analytics business and an indispensable
brand partner to the world’s top companies,
including 96 of the world’s 100 biggest
advertisers. We combine the most meaningful
attitudinal and behavioural data with deep
expertise and technology platforms to track
how people think and act. We help clients
develop the marketing strategies that shape
their future and deliver sustainable growth.

Visit www.kantar.com to know more.