India’s FMCG sector decline could impact packaging

India’s fast moving consumer goods observed a persistent  decline in the present quarter by 0.2% as per the FMCG quarterly snapshot which was published last week by the market research firm Nielsen IQ.
 

Consumption growth in the urban areas was driven by food, which grew 3.2%, while non-food continued to remain stressed, with a fall in growth of 3.6% in the third quarter of 2022, compared to a 2.7% fall in growth in the previous quarter, Nielsen said.
 

This is bound to impact the Indian packaging sector. Last year, the demand from pharmaceuticals, foods and FMCG was strong and the packaging board and flexible packaging sector was able to market the entire production in addition to reducing stocks. During the year, there were severe increases in the cost of raw material and availability has been a constraint. The packaging sector has been coping on how to pass on the impact of these increases in costs to the market. 
 

Managing director of Nielsen IQ in a press statement Satish Pillai has said "This quarter shows cautious consumption from consumers, primarily due to apprehensions of slowdown and continued inflation”. He added, "While the pressure of inflation continues, variations in rainfall across rural areas in the country have also led to a softening of indicators for rural markets.”


One trend which is worrying is as to how India's villages, which contribute more than 35% to overall annual FMCG sales, have been impacted under inflation-led price hikes and unpredictable monsoons.
 

NielsenIQ said urban markets did better in the quarter, with urban volumes growing 1.2% compared to 0.6% in the preceding quarter, largely led by an increase in demand for food products.

When WhatPackaging? magazine spoke to a paper and paperboard expert during the PrintWeek’s Show & Tell at the Grand Hyatt in Mumbai,  he said, “Overall, the performance of the packaging business is much better. Packaging industry continued to grow at a healthy pace during the year. The main segments of growth being packaged foods, ready-to-eat takeaway foods, pharmaceuticals and FMCG.”  

​The future trends are “There is a growth in demand in packaging boards which is expected to continue with an anticipated growth of 12%-15% per annum for virgin fibre-based packaging boards and recycled boards is expected to grow at 8-9% per annum.”