MUMBAI|KOLKATA: If biscuits were a proxy for consumption in India, the trends would diverge, depending on who buys them. City slickers are munching more cookies these days, although the rural folk have gone easy on them, according to a report.The overall FMCG slowdown was largely led by rural markets and smaller companies with annual sales of less than Rs 100 crore, Nielsen said in a recent report. “While value categories or small packs are seeing a decline, there has been no issue in consumer demand for premium sub-segments and bigger packs in biscuits, which are still growing,” said Mayank Shah, category head at Parle Products Biscuits are India’s largest consumer product segment, worth Rs 35,000 crore, and grew 2.5% in the April-June quarter. Biscuits costing more than Rs 100 per kilo, the premium version, account for twothirds of the market and grew 8%. The rest of the market — selling for less than Rs 100 per kilo — fell 9%.“Mass products are usually first to get impacted. While premium or discretionary categories are not entirely insulated, they are holding up so far,” said Devendra Chawla, managing director at Spencer’s Retail.“But going forward, we need to keep a close eye on them,” said Chawla. The urban-rural divide holds true for consumption of most fast-moving consumer goods in India. Urban and discretionary products are growing at a faster pace, while a few categories of mass-market goods have been hurt.Daily home and personal products including creams, detergents, toothpastes, deodorants and food items such as chocolates, malted beverages and noodles grew at a higher rate during the April-June quarter, according to officials quoting Nielsen data.Yet, the FMCG market growth fell 60 basis points to 10% during the quarter, led by biscuits, salty snacks, soaps and tea.Marico, which sells Saffola and Parachute oil, said mass-market products have a wider presence in rural India where the slowdown is more pronounced, while discretionary urban products are still holding up due to modern trade and ecommerce.“Apart from lower consumption of mass categories, wholesale is also stocking less due to a liquidity crisis, which is also impacting growth,” said Saugata Gupta, managing director of Marico Consumption in rural India, which accounts for about a third of the market, has been under stress over the past three quarters, even though it has expanded at a faster pace than in the cities. Both markets grew at the same rate in April-June. The farm economy has been under strain, with agricultural production having expanded 2.7% year-on-year in the October-December quarter, the lowest in almost three years.Chocolates, deodorants, malted drinks and noodles are all discretionary in nature, but grew by between 10% and 15% during the quarter. Also, in categories such as laundry, toothpaste and skin cream, the premium variants outperformed mass products, companies said.“FMCG companies are entering into newer outlets to target newer customers, which is leading to growth in the under-penetrated categories. For well-entrenched categories like soaps and biscuits, growth will be impacted unless consumers buy more or upgrade their purchases, which is happening now,” said ITC executive director B Sumant.While value or revenue growth in FMCG has consistently been coming down over the past four quarters — from 16.2% in July-September last year to 10% now, analysts are questioning if it’s due to the base-year effect after a one-off kicker from the implementation of the goods and services tax.“Is it just normalisation with the one-off kicker now in the base? We believe the answer, is somewhere in the middle. There is some underlying demand slowdown, for sure, but the deceleration is not as sharp as the reported growth comps suggest,” Kotak Securities said in a recent investor note.While Nielsen still maintains a healthy outlook of 9-10% growth for the FMCG market in 2019, it’s still lower than its previous estimate of 11-12%.“FMCG is not completely delinked to the state of the economy. But it is not a doomsday scenario,” Hindustan Unilever chairman Sanjiv Mehta said after the company’s earnings last month. The local unit of Anglo-Dutch Unilever, long considered a proxy for broader consumer sentiment in India, saw sales growth narrow to 7% during April-June from 16% a year ago.Growth of FMCG products with higher price tags also mimics other discretionary categories in the larger consumer space. The latest data from market researcher GfK show unit sales of products such as smartphones, smart speakers, washing machines, refrigerators and air-conditioners have grown at a faster pace in the six months from January to June compared with a year earlier.