FMCG experiences hike in sales across rural areas in India
Fast Moving Consumer Goods being the fourth largest sector with household and personal care products accounting for about 50% of its sales. ITC, Godrej, Emami, Marico who are the leading FMCG players are now witnessing strong sales, especially in rural and semi-urban areas. In the last few years, they are already growing at a fast pace in rural India when compared to urban India.
Interestingly, the firms are now witnessing a spike in sales. They are experiencing good sales especially in sales of hygiene, health and wellness, immunity-boosting products other than the food products category. They started experiencing this hike especially after offering items in value packs. As soon as they started experiencing this hike they also expanded their markets in semi-urban and rural areas which have been growing ahead of urban areas.
Dabur India’s Chief Executive officer Malhotra states that Dabur has witnessed good sales across rural areas than in urban areas. Dabur has seen visible growing demand because lockdown has been less intense in rural areas than in urban areas. He also expects that this rural demand will continue to keep on growing and may outpace urban demand.
Strong reasons for the hike in demand
- Rural consumption will see an uptick as migrant workers are returning to their hometowns along with the government’s additional spend on MGNREGA and higher MSP’s announcements.
- Expectations of Good monsoon that could improve and supplement farmers’ incomes.
Even a recent report from Edelweiss research states the same, ” Government initiatives and a good monsoon will supplement farmers’ incomes ” and that would lead to a hike in demand for FMCG goods. It also stated that rural recovery will lead to positive growth at the beginning of Q2 FY21.
Following this, Emami, the Kolkatta based company is expecting double-digit growth in these markets this year who are already experiencing stable growth in rural demand post-March. Emami director Harsha V Agarwal says that Emami’s smaller packs are growth drivers across the rural market and their new launches for personal hygiene have shown good signs of demand across the market. They are also about to make investments in digital marketing to connect with their rural consumers.
Following Emami, ITC has also witnessed encouraging demand for hygiene and immunity-boosting products. ITC spokesman states that, besides demand for sun feast and yippee noodles, awareness among rural consumers has increased the demand for handwashes especially. To meet this demand, ITC has launched hand sanitizer pack priced at just 50 paise to target the markets.
As the rural demand continues to grow, FMCG companies are now extending their network in rural areas who aim to connect with 60,000 villages by the end of this fiscal. They are also anticipating a bounce back from urban areas as soon as lockdown measures get reduced.