The Indian rural market is expected to grow more than tenfold to become a USD$100 billion opportunity for retail spending in the next 15 years, The Nielsen Company has found.
Details of the findings were unveiled today at Nielsen’s flagship Consumer 360 conference in New Delhi, India. The study showed that in more than half the largest FMCG categories, rural India is now contributing more to their growth than urban. One of the key drivers of this trend appears to be the unprecedented growth of smaller packaging options in rural India.
“While the ability of lower priced packs to improve accessibility is known, their pace and presence has been unrelenting” said Prashant Singh, Vice President, The Nielsen Company, India. ” In addition, premium skin care brands typically associated with urban areas are growing nearly twice as fast in rural,” he added.
“The good news is that the opportunity needn’t overwhelm smart marketers. For instance, even a mere 2.5 percent of villages, if selected correctly, can generate a 20 percent jump in sales growth,” Singh added.
The rural market is currently worth approximately USD$9 billion in consumer spending in the FMCG space annually. The study findings show that food categories are currently driving the bulk of the additional USD$91 billion into the marketplace by 2025.
One of the most telling points is “the unprecedented pull of consumer demand fueled by an overdrive of awareness and acceptability. This will allow, and propel manufacturers to swing into full gear,” said Prasun Basu, Executive Director and Vice President, The Nielsen Company.
The study also found a surprising set of priorities. In rural areas, education of children ranked second after having a good crop.
On the consumption front, a third of rural consumers are eating biscuits for breakfast and one in six rural buyers of hair dye now uses colors other than black to indulge in the trend of externalized beauty that is picking up fast in rural areas.
“These emerging cues that seem to be on the fringes of the larger market, or ‘EmerFringe’ trends are the signs of a future that has arrived. The rural consumer is no longer merely experimenting with urban products because of a phase of prosperity – rather, she is reveling in it and indulging unabashedly, providing gratification to her senses and her self-esteem,” said Basu.
The study also revealed that:
New Strategies to Win
Now that the new phase of rural consumption appears here to stay, marketers will need to evolve new strategies to connect and communicate with a more aware and unreserved consumer than ever before, the study found. With this, product and brand development cycles will need to undergo a dramatic change. This growth is proving to be systemic and sustainable as multiple factors converge:
“Today’s rural consumer is not just indulgent, but ‘smart’ too: she wants products that carry the best of traditional wisdom and modern science; ones that provide her convenience and individualism in one go. This means product and brand strategies that respond to these demands are more likely to succeed” said Basu. “This bolder and more individualistic consumer is unafraid to exhibit and ‘externalize’ the need to indulge. Recognizing this and coupling it with ideas that offer ‘individualized convenience’ will separate the brands that will win from the others.”
“These findings have wide-ranging, practical implications for creating successful portfolio strategies and packaging formats that recognize these traits and appeal to the rural consumers’ senses. Combined with a smarter selection of locations and targeted distribution plans, brands can transform their plans for growth dramatically and profitably to make the most of the next big rural opportunity,” added Prashant Singh.