Rural FMCG Market to Grow 6.1% in FY25: Report

New Delhi, Jul 25 (PTI) The FMCG sector is expected to register 6.1 per cent volume growth in the rural market this fiscal, a report from Kantar Worldpanel said, depicting a strong positive outlook.

This volume growth in the rural market stood at 4.4 per cent a year ago, while the urban volume growth is likely to remain flat at 4.2 per cent, it added.

"Rural market is going to see a seismic shift once there is stability in the macro market," said the report titled 'The Rural Challenge'.

The report also predicts that in the near future, rural volumes will catch up with urban growth, which is currently bigger.

Now, the rural market is a big and important part of the Indian FMCG industry as it generates half of the FMCG volume and value.

The report also pointed out that "FMCG growth is majorly led by population, and not consumption" in rural areas.

Stagnation in consumption in the rural market is on account of factors like inflationary pressures, decline in rural household size, higher spending on utilities, such as electricity and petrol, and higher focus on savings.

The rural markets faced successive degrowth for several quarters after the pandemic and have started to revive from the last fiscal only.

Moreover, Kantar also highlighted the trend of premiumisation in the FMCG sector like other sectors, indicating a shift towards a higher standard of living.

Some categories elevate the consumers' experience and the number of people paying for extra premium products has gone up. These are products like food spreads and dressings, face scrubs/peels/masks, body wash, hair conditioning serums, Muesli and Korean noodles.

Besides, there are also categories that aid in making everyday life easier and save time, such as liquid dishwashing, liquid detergent, ready-to-cook mixes, corn flakes & oats, frozen foods, and fabric conditioners, among others.

In personal care categories that cater to a specific need of the consumer like targeted skin creams (acne, anti-ageing, blemish control), sensitive toothpaste, roll-on and stick deo, tampons, and prickly & cooling powder have higher growth, and the buyer is ready to pay extra.

Categories that have healthier alternatives, such as healthy bread, healthy oil (olive, canola, rice bran, flaxseed), sweeteners, sugar-free cold drinks, dark chocolates, and healthy biscuits are also in demand.

Consumers are increasingly adapting to e-commerce and quick commerce modes.

There is "significant growth for premium categories in quick commerce channels," it said, adding that "quick commerce users purchase larger packs".