Rural Markets Steady FMCG Growth Amid Urban Headwinds in Q4 FY24
India’s rural markets played a stabilizing role in the fourth quarter of FY24, helping the FMCG industry maintain momentum despite challenges in urban consumption. According to data from Kantar’s FMCG Pulse report, rural volumes grew 6.4% year-on-year during the quarter, outpacing urban growth at 5.7%.
This shift marks a notable reversal from earlier quarters where urban demand led the recovery. Rural India now contributes 37% to the total FMCG volume, up from 35% the previous year. Though volume share remains skewed toward urban areas (63%), the rural uptick signals renewed consumer confidence.
Overall, FMCG volume growth stood at 6.5% in Q4 FY24, maintaining its pace for the second consecutive quarter. Notably, the food category remained the key driver with a 7.2% increase in volume, reflecting rising frequency of consumption and affordability-led purchases across both urban and rural segments.
The industry benefitted from easing inflation, especially in staples and entry-level packs, enabling a return to volume-led growth over the price-led growth witnessed in previous quarters. However, average pack sizes and consumption patterns continued to vary across segments and geographies.
Among channels, modern trade registered a robust 12.5% growth in Q4, driven by increased penetration and larger basket sizes. In contrast, traditional trade saw moderate growth at 4.5%, while e-commerce clocked a healthy 10% rise—suggesting that omnichannel strategies remain vital for market expansion.
Regionally, the east and south posted the strongest volume growth within the quarter, buoyed by stronger rural performance. Conversely, parts of the west and north faced slower off-take amid weather disruptions and softer urban demand.
While the quarter brought signs of cautious optimism, sustained growth will depend on continued inflation moderation, stable monsoons, and improved income in agrarian segments. FMCG brands are expected to maintain focus on rural engagement, value packs, and tailored marketing to capture emerging demand patterns in non-metro regions.
As the industry moves into FY25, the rebalancing between rural and urban demand will be closely watched, with companies aligning distribution, innovation, and pricing strategies accordingly.