Sales volume growth in the Indian consumer goods industry slowed sequentially in the October-December quarter due to lackluster sales at mom-and-pop businesses, according to market researcher NielsenIQ on Tuesday, even as rural regions closed the gap with prospering metropolitan areas.

Consumer goods manufacturers have seen lackluster sales in the hinterlands in recent quarters as individuals cut back on both needed and discretionary purchases owing to pricing concerns.

The sector’s sales volume climbed 6.4% in the fourth quarter of calendar year 2023, slower than the previous quarter’s 8.6% growth, according to NielsenIQ, as growth at smaller stores lagged that of major supermarkets.

However, there was an increase in rural demand.

For the first time in 2023, consumption gaps between urban and rural markets are narrowing,” said Roosevelt D’souza, NielsenIQ’s head of customer success in India.

According to NielsenIQ, rural sales volume increased by 5.8% in the December quarter, while urban sales increased by 6.8%. During the preceding three quarters, urban consumption outpaced rural consumption by 3.8 to 6.2 percentage points.

In rural India, “habit-forming categories” such as cookies and noodles prospered as product prices fell 0.4% throughout the country, the first drop in more than two years, according to NielsenIQ.

Packaged food businesses, such as Marico, which makes Saffola cooking oil, and Britannia Industries, which makes Good Day biscuits, have dropped prices in response to lower commodity prices to compete with smaller rivals.

Consumer goods companies Hindustan Unilever, Pepsi India bottler Varun Beverages, Adani Wilmar, and ITC have all announced mixed December quarter earnings. Meanwhile, Dabur India reported that rural development exceeded urban zones.

NielsenIQ predicts that the consumer goods industry will increase 4.5% to 6.5% in 2024, with the government’s efforts to promote the rural economy bode well for enterprises having a strong presence in rural regions.

India’s rural market is big and diversified, accounting for around 70% of the country’s population. It has a large demand base and is an important aspect of the economy. 

Rural marketing refers to the process of creating, advertising, and distributing products and services in rural regions. It is an essential component of every company’s marketing strategy.

The desire for branded items in rural India is growing, leading to a boom in consumption. The rural FMCG industry is predicted to grow to $220 billion by 2025, more than double its size in 2020. 

Rural areas also have several monthly marketplaces, which are tiny haats that run once or twice a week. These markets sell everyday items, including agricultural food.