Q2 2020 FMCG GROWTH

SNAPSHOT
“THE QUARTERLY STORY”

30th July 2020

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 STARK DIP IN CONSUMER CONFIDENCE AND
MACRO ECONOMIC OUTLOOK
CONSUMER CONFIDENCE INDEX
Global India
GST
132 GFC 2007-2009 2013 RECESSION

122 15 PTS
Vs Q4’19
112
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102
14 PTS
92 Vs Q4’19
▼20 PTS
82 IN 5 QTRS
72
Q3'05
Q1'06
Q3'06
Q1'07
Q3'07
Q1'08
Q3'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
Q3'10
Q4'10
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q2'17
Q3'17
Q4'17
Q1'18
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
GDP Growth % Global India
7.1 Diff vs Diff vs
6.2 Q2’20 Q2’20
5.6 5.7 5.2 Q4’19 Q4’19
4.4 4.1
3.1
CCI 92 -14 123 -15
Personal
49 -12 67 -16
Finance

Right time
41 -9 63 -10
-4.9 to buy
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Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 2020 Forecast
Job
40 -16 63 -12
Basis Calendar Year Prospects
Source: Secondary Data (Trading Economics, IMF Forecast);
The Conference Board Consumer Confidence Index in association With Nielsen. 2
 MUTED REVIVAL IN JUN’20
IIP GROWTH % INFLATION (CPI)
6.7
5.8 6.1
1.6 0.2 2.7 3.2 4.5 1.3 4.9 1.8 0.1 2.1 4.6
4.6 4.8
-1.1 -4.3 -3.8 3.9
3.5
3.1
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-18.3
2.6 2.5
-34.7

-57.6

Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 JUN'20
CPI Inflation for April and May 20 have not been released

UNEMPLOYMENT RATE
24 24

Global India
11
9 Diff vs Diff vs
6 7 7 7 7 8 7 8 Q2’20 Q2’20
5 6 6 6 5 6 6 Q4’19 Q4’19

Job Prospects 40 -16 63 -12

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Source: Secondary Data

Nielsen Data Science South Asia 3
 A LOCKED DOWN QUARTER, UNLOCK HELPS JUNE
FIGHT BACK

ALL INDIA U+R

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Average Store Closure

(days) for Traditional Trade
11.5 5
13.9%
13.7% 13.4% 10.8%
9.8%
9.2% 10.0% 8.1% 7.0% 6.3% 6.3%
7.3% 6.5% 4.0% 4.5%
1.0% 5.3% 5.3%
3.3% 3.7%
0.2%
MAT MAT MAT Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q1'20 Mar'20 April+ Jun'20
Jun'19 Dec'19 Jun'20 May'20

-17.1%
-17.9%
-27.7%
Value Growth Value Growth (Inc E-Comm)
Source: Nielsen RMS
Nielsen FMCG Quarterly Snapshot – Q2’20 -28.4% 4
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Copyright © 2020

IMPACT
DECODING THE
CHANNEL
DYNAMICS
MARKET
DYNAMICS

5
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Copyright © 2020

IMPACT
DECODING THE
CHANNEL
DYNAMICS
MARKET
DYNAMICS

6
 BHARAT REVIVAL OUTPACES INDIA
POP-STRATA OVERVIEW Value Gr vs YA

METRO* TC-1 ROU RURAL

31% 16% 17% 36%

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Avg. Store Closure (days)

for Traditional Trade 13.5 7 13.5 5 13 4 7.5 3

12%
6%
7% 6% 7%
5% 5%
3% 3% 3%

Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20
+ + -2% + +
May’20 -4% May’20 May’20 May’20

-11%

-20% -20%
-23% -23%

-27%
*Including E-commerce -34% -33%
Source: Nielsen RMS 7
Nielsen FMCG Quarterly Snapshot – Q2’20
 NORTH AND EAST DRIVING REVIVAL
Rural COVID cases per
Value Gr vs YA Contribution 10 Lakh Population

EAST (21%) NORTH (31%) SOUTH (25%) WEST (23%)

47% 157 37% 450 32% 532 33% 822

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9%
8% 8%
5% 5% 5%
3% 3% 3%
2%

Q1’20 Q2’20 -0.4% Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20
Mar’20 + + + + -2%
May’20 May’20 May’20 May’20

-16% -15%
-19%
-23% -22%

-28%
-31% -33%
Does not include E-Com
Source: Nielsen RMS
8
Nielsen FMCG Quarterly Snapshot – Q2’20
 TRADITIONAL TRADE & E-COMMERCE BOUNCE BACK
Val Contribution to FMCG (All India)

Traditional Trade Modern Trade E-Commerce

87% 10% 3%
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56%

44%
38%

26%
20%
16%

4% 5% 3%
1%
Q1’20 Q2’20 Mar’20 Jun’20 Jun’20
Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr
+ -5% -4% -6% +
May’20 Apr May’20
+
-19% May’20

Source: Nielsen RMS -31% 9

Nielsen FMCG Quarterly Snapshot – Q2’20
 ‘NON FOODS’ SEES STRONG RECOVERY WITH UNLOCK
ALL INDIA (U+R) Val Contribution to FMCG

FMCG FOODS NON FOODS

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57% 37%

8% 7%
6% 5% 3% 6%
1% 2%
0%
Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20
+ + +
May’20 May’20 May’20

-13%
-17%
-20%
-23%

-28%

E-Com for Foods and Non Foods is at Metro level -38%

Source: Nielsen RMS
10
Nielsen FMCG Quarterly Snapshot – Q2’20
 RECOVERY SEEN ACROSS PERSONAL AND HOME CARE

ALL INDIA (U+R)

Staples Non Staples Personal Care Home Care

(33%) (24%) (23%) (14%)
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15%
9% 8%
7.0% 6% 3% 6% 6%
5%
0% 1%

Q1’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20 Q1’20 Q2’20 Mar’20 Apr Jun’20
-1% + + + +
Q2’20 May’20 May’20 May’20 May’20
-8%
-13%
-18%

-26%
-28%
-30%
-36%
Includes E-Commerce
Source: Nielsen RMS -42%
11
Nielsen FMCG Quarterly Snapshot – Q2’20
 PREMIUM SEGMENT DECLINED DURING LOCKDOWN
NORMALCY RETURNING WITH UNLOCK
Val Contribution (All India U+R)

FMCG PRICE SEGMENT Q2'20 Q2 vs Q1 Jun’20 vs Q1

Mass 16.6 -0.2 +0.1

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Popular 59.6 +2.5 +0.8

Premium 23.8 -2.3 -0.9

FOODS NON-FOODS OTC

Price Q2'20 Q2 vs Q1 Jun'20 vs Q1 Q2'20 Q2 vs Q1 Jun'20 vs Q1

Q2'20 Q2 vs Q1 Jun'20 vs Q1
Segment
Mass 13.7 -0.7 -0.3 20.5 +0.5 +0.4 21.0 +0.4 -0.5

Popular 69.4 +3.3 +2.1 47.7 +0.9 +0.6 38.7 +0.9 +1.2

Premium 16.9 -2.7 -1.7 31.8 -1.4 -0.9 40.2 -1.2 -0.7

Contribution Change
< -0.5 -0.5 to 0 0 to +0.5 >+0.5
Source: Nielsen RMS 12
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Copyright © 2020

IMPACT
DECODING THE
CHANNEL
DYNAMICS
MARKET
DYNAMICS

13
 E-COMMERCE REACCELERATES POST LOCKDOWN
WHILE TRADITIONAL TRADE GAINS BACK SHARE OF TRADE
Val Contribution to FMCG (All India)
Value Growth vs Year Ago
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All India Traditional Trade Modern Trade E-Commerce

87% 10% 3%

Q2’20 -17.1 % -19.3% -4.6% 15.7%

June’20 4.5 % 4.7% -6.2% 38%

METROS Q2’19 Q1’20 Q2’20 MAR’20 APRIL+MAY’20 JUN’20

TRADITIONAL TRADE 72.2 68.0 65.0 68.5 62.1 69.4

MODERN TRADE 21.8 24.7 26.4 25.4 29.8 21.4
E-COMMERCE 6.0 7.3 8.6 6.1 8.2 9.3

Source: Nielsen RMS 14

Nielsen FMCG Quarterly Snapshot – Q2’20
 IN METROS, GAINS FOR TRADITIONAL TRADE AND
ECOMMERCE PROPELLED BY PERSONAL CARE REVIVAL
METRO FOODS NON-FOODS

Value Growth vs Year Ago STAPLES NON-STAPLES PERSONAL CARE HOME CARE
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Q2’20 -11% -39% -35% -30%

TRADITIONAL
TRADE June’20 2% -24% -2% -3%

Q2’20 16% 6% -24% -16%

MODERN June’20 7% -1% -21% -16%

TRADE

Q2’20 43% 112% -19% 30%

E-COMMERCE June’20 48% 134% 11% 46%

Source: Nielsen RMS 15

Nielsen FMCG Quarterly Snapshot – Q2’20
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Copyright © 2020

IMPACT
DECODING THE
CHANNEL
DYNAMICS
MARKET
DYNAMICS

16
 RURAL GREW 3X OF ALL INDIA IN JUNE’20
Value Growth vs Year Ago Value Growth Index to All India
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ALL INDIA URBAN RURAL

64% 36%

-17.1 % -20.4 % -11.2 %

Q2’20

June’20 4.5 % 0.04% 12.5 %

Val Contribution to FMCG (All India)

Source: Nielsen RMS

Nielsen FMCG Quarterly Snapshot – Q2’20 17
 LOWER COVID INCIDENCE, GOVERNMENT STIMULUS AND
AGRICULTURAL IMPETUS BOOSTS RURAL SENTIMENTS
NORMAL & TIMELY
COVID CASES RURAL EMPOWERMENT FLOURISHING AGRICULTURE
RAINFALL
Higher Area of Coverage of Higher offtake of
NUMBER OF CASES • Rs. 40k Cr increase in PROGRESS OF
Pre- Monsoon Summer crop Fertilizers
TILL JUNE’20 allocation of MGNREGA SOUTHWEST MONSOON
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SALE OF FERTILIZER
POS in lakh tonnes
• 116 districts of UP, 82.81%
Jharkhand, Odisha, MP,
315.6 L
Rajasthan & Jharkhand,
included in the 'Garib 154.5 L 61.05 111.61
Kalyan Rojgar Abhiyan’ - 40-60% higher water
to ensure opportunities 104.25% availability in the
reservoirs
to the migrant-labourers
as per their skill set

• Upskilling of 3 lakh 56.7

29.2
migrant workers with
Cases per Million short-term programmes L=Lakh hectares. As of June 25,
nearly 30% out of the ‘normal area’ of BCM= Billion Cubic Meter,
Population 1,064 lakh hectare *As of June 25

• Rs. 1L Cr Agri Growth In Tractor Sales

<245
245-600 Infrastructure Fund for
1- June-20 to 25- July-20 92888
>600 farm gate infrastructure Tractor Sales
57355 58091
75859
60441
for farmers DEFICIT NORMAL (Excluding
Exports) 11827
LARGE DEFICIT EXCESS
2019 2020
Source: : COVID Cases from Secondary sources April May June
IMD Rainfall Data 2020, CWC, Agriculture Ministry, Tractor and Mechanisation Association
18
 STRONG RURAL GROWTHS ACROSS LED BY REVERSE MIGRATION
HOTSPOTS
Q2’20 GR YA | FMCG | ALL INDIA Q2’20 GR YA | FMCG | URBAN Q2’20 GR YA | FMCG | RURAL
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GR INDEXED TO
ALL INDIA
High Impact (<90%)
Moderate impact (90-110%)
Low Impact (>110%)
Source: Nielsen RMS
Nielsen FMCG Quarterly Snapshot – Q2’20 19
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Copyright © 2020

FUTURE OUTLOOK

20
 2020 : HEADWINDS,TAILWINDS, FUTURE OUTLOOK
RURAL GDP PLUNGE INFLATION
COVID-19 Impact & Government Policies 7.1 6.2 6.7 6.5
5.6 5.7 5.2 4.4 4.1 3.1 4.8 5.8
• Lower COVID cases in Rural -4.9
4.6 3.9 2.6 2.5 3.1 3.5 3.1
• Reverse migration expected to give a
positive uptick Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 2020
Q1'18 Q3'18 Q1'19 Q3'19 Q1'20 Sep'20
• MNREGA wages at an all time high
• Rural disbursement more than 2X of same
• IMF projects GDP growth rate at an all time
• Inflation expected to ease at 3.1% in Q3’20
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period last year

Rainfall
• The progress of the southwest monsoon so
far has been bountiful. Flood impact very low
compared to last year, restricted to 2-3 states
Agriculture
• 40-60% higher water availability in reservoirs
• Increased sowing area coverage
• The Rabi harvest in April was good and with
a good monsoon Kharif harvest is expected
to augurs well too
• The MSP prices for crops have also seen a
significant increase
low and to stay at -4.5% even in Mar2021
INDUSTRIAL PRODUCTION
LOCKDOWN RELAXATION
• IIP hit a -57% in April, continues to be
negative • With continued relaxation of Lockdown
• Massive impact observed for industries like businesses, offices, malls and
manufacturing and service sector with a entertainment centres opening up and
few exceptions e.g. Tractor sales have expected to play a major role in creating
picked up strongly along Rural belts positive sentiments in Urban areas
UNEMPLOYMENT
24 24
9 11
5 6 6 6 5 6 6 6 7 7 7 7 8 7 8

FESTIVITIES
Jan-18

Mar-18

Jun-18
Jul-18

Jan-20

Mar-20

Jun-20
Feb-18

Nov-18
Dec-18
Dec-19

Feb-20
Aug-18
Sep-18
Apr-18
May-18

Oct-18

Apr-20
May-20
• Second half of the year has some of the big
festivals across India. Spends are expected
to revive during this time to compensate for • Though Unemployment has come down post
the loss of dine-out and entertainment. hitting a 24% peak in April/ May it still continues at
Copyright © 2020

• Food categories are expected to see a 11% level

higher growth because of this • Loss of jobs across different sectors is expected
to hit consumption demand
Source: Secondary Data; Nielsen Data Science South Asia
Nielsen FMCG Quarterly Snapshot – Q2’20
21
 NIELSEN REVISES FORECAST FOR 2020 TO FLAT GROWTH

ACTUAL
9 to 10% 9.7%
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COVID impact started FORECAST

8 to 9%
from Mar’20 onwards
7.5%
6.1%
5 to 6%

-6%
-1 to +1%
Full Year 2019 Q1'20

Forecast
Full Year 2019 Q1’20 Jan+ Q1’20 (in Apr-20) Forecast
Feb’20 (in July-20)

Full Year 2020

* COVID Impact due to stringent All India lockdown in April’20

All the numbers are Including Ecommerce
Source: Nielsen Data Science South Asia
Nielsen FMCG Quarterly Snapshot – Q2’20 22
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