According to a Kantar Worldpanel report, the FMCG sector is expected to register a volume growth of 6.1 percent in the rural market this fiscal, indicating a strong positive outlook.
Volume growth in the rural market was 4.4 percent a year ago, while volume growth in cities is likely to remain flat at 4.2 percent.
“The rural market will undergo a huge change once there is stability at the macro level,” said the report, ‘The Rural Challenge’.
The report also predicts that in the near future, rural growth will keep pace with urban growth, which is currently greater.
Today, the rural market is a large and important part of the Indian FMCG industry as it generates half of the FMCG volume and value.
The report also shows that FMCG growth is mainly driven by population size and not by consumption in rural areas.
The stagnation in rural consumption is due to factors such as inflationary pressures, a decline in the number of rural households, higher expenditure on utilities such as electricity and gasoline, and a greater emphasis on saving.
Rural markets faced consecutive quarters of contraction after the pandemic and started recovering only since the previous fiscal.
Furthermore, Kantar highlighted the trend of premiumisation in the FMCG sector, as in other sectors, indicating a shift towards higher living standards.
Some categories are improving the consumer experience and the number of people paying for additional premium products has increased. These are products such as food spreads and dressings, facial scrubs/peels/masks, body wash, hair conditioning serums, granola and Korean noodles.
In addition, there are also categories that make everyday life easier and save time, such as liquid dishwashing detergents, liquid laundry detergent, ready-made mixes, cornflakes and oats, frozen products and fabric softeners, to name a few.
In personal care categories that cater to specific consumer needs, such as specific skin creams (anti-acne, anti-aging, blemish-prone), toothpaste for sensitive skin, deodorants in roll-ons and sticks, tampons and cooling powders, growth is higher and buyers are willing to pay extra.
Categories with healthier alternatives, such as healthy bread, healthy oils (olive oil, canola oil, rice bran oil, flaxseed oil), sweeteners, sugar-free soft drinks, dark chocolate and healthy cookies, are also in demand.
Consumers are increasingly turning to e-commerce and fast trade.
There is “significant growth for premium categories in high-speed trading channels,” the report said, adding that “high-speed trading users are purchasing larger packages.”
(Only the headline and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First print: Jul 25, 2024 | 11:32 PM IST