Rural India continues to outpace urban market with 8.4% volume growth in Q2 FY26, FMCG industry records 14% growth

India’s rural market continued to outpace the urban market during the April-June quarter, recording a volume growth of 8.4% against a 4.6% increase in urban areas, as per a NielsenIQ report. 

This marks the sixth consecutive quarter when rural markets surpassed urban markets in volume growth, the data analytics firm said. However, the gap is narrowing gradually as urban areas recover sequentially. 

The Fast Moving Consumer Goods (FMCG) industry in India recorded a growth of 13.9% in value on the back of sustained rural demand and a steady urban recovery. 

"The market recorded a 6% rise in volume alongside a 7.45% increase in prices, with unit growth outpacing overall volume growth—signaling a stronger consumer preference for smaller packs," said NielsenIQ, FMCG Quarterly Snapshot Q2’25.

The urban markets are now showing recovery, driven by smaller towns, while metropolitan areas continue to experience a drop in consumption because of channel shift, the report stated. 

Segment-wise consumption

In the June quarter of the current fiscal year, food consumption largely remained stable at 5.5%, fueled by increased volumes in staples and impulse categories, the report said, sharing segment-wise consumption data.

"Meanwhile, Home and Personal Care (HPC) saw stronger momentum, with 7.5% consumption growth," it said.

Over-the-counter categories (which include products often sold through pharma channels) posted a 14.2% jump in value sales driven by an 11% rise in prices. 

Within the sales channels, e-commerce continued to show strong momentum, helped by fast-paced growth from hyper delivery platforms. The e-commerce segment continued its upward trajectory, gaining ground in eight Metros on modern trade (MT) channels, including shopping arcades and hyper malls.

"Southern metros are leading the e-commerce charge, with a higher share at 18.4%, compared to 15.8% in eight Metros in Q2’25," it said.

While e-commerce accounts for just 11-13% of FMCG value share in metro areas, it’s already delivering over half of the omnichannel growth, the report added. 

"Despite the pullback of quick commerce dark stores, Q2’25 consumption in e-commerce surged—driven by higher shopper penetration and consistent spending, even among new shoppers," it said.

Further, small manufacturers continued to drive FMCG consumption in Q2 2025, supported by steady volume growth across both Food and HPC categories on a lower base.

"In contrast, large players saw stable growth. A combination of strong rural demand and easing inflation has enabled small players to outperform overall industry growth," it said.