Urban markets revive, outpacing rural peers: Kantar

Bengaluru: After a continuous spell of underperformance, urban markets have finally revived, growing 4.4%, while the rural ones have gone up by 2.7% during the January-March quarter 2025, according to a report by Kantar, out on Monday. This was the third straight quarter that the urban market grew faster than the rural. However, fast moving consumer goods’ purchases in the first quarter of 2025, (for in-home consumption) grew at 3.5% - slowest  since the fourth quarter of the calendar year 2022.

In-home and out-of-home (OOH) consumer panels for select categories including carbonated soft drinks, juice drinks, milk-based beverages, chocolates, biscuits, salty snacks, and ice creams grew at 2.4%, in the quarter gone by. However, biscuits are experiencing a mid-single-digit decline in OOH but noted a modest low single digit growth in in-home consumption, suggesting that while on-the-go snacking may be under pressure, at-home consumption remains resilient.

Other concerning signs came from high potential mini metro towns with populations between 10- 40 lakhs across the north, east, and south zones which are now showing signs of consumer strain. As wage growth continues to be stagnant, with rising cost of consumer goods and other categories - this financial stress is dampening discretionary and impulse purchases, leading to a noticeable shift toward smaller, more affordable pack sizes even as the number of trips (outings) remain stable. 

“This decoupling of trips and consumption is a clear indicator of downtrending, suggesting that consumers are becoming more price-sensitive in their OOH spending behavior,” the report added. 

Rising modern trade

The dynamics of distribution channels are also evolving, especially as newer and more online channels become popular. Among the three principal OOH purchase avenues, including traditional trade (kirana stores), modern trade (supermarkets which also offer discounts), and pure OOH Channels such as street vendors, cafes, and bakeries- modern trade has emerged as the fastest-growing. 

In 2024-25, volume in modern trade increased by an impressive 43%, while traditional trade remained flat (18% total share). However, pure OOH channels have witnessed a decline in volume, likely due to reduced footfall and fewer impulse buyers in informal retail and foodservice locations. Traditional trade, which remains under intense pressure, remains the largest channel overall.

Despite the slowdown, food categories continue to anchor most of the spending gains during traveling. South India was the region that had led the sector's resurgence in 2023 with a dramatic doubling of trips, but has now lost some of its steam. The west zone has emerged as the new growth leader in 2024–25, marking a clear shift in regional performance. Meanwhile, the east zone has shown signs of contraction, with food category volumes shrinking by 4%. Even in the South, where growth had been robust, food categories expanded by merely 3%.