Four key areas of consumption will help drive tens of billions of dollars in sales across rural India in the coming years.
Nielsen estimates that by 2025, the fast-moving consumer goods (FMCG) market in rural India will hit $100 billion and that inflation and pricing will be outstripped by consumption. Prashant Singh, vice president, Nielsen Delhi, identified premiumization, commoditization, indulgence and brand acceptance levels as the components of sales growth that would most matter.
Speaking at Nielsen’s India Consumer 360 Conference in New Delhi, Singh said it was critical that FMCG manufacturers and retailers focused on the unique needs of the rural Indian consumer shopping basket.
Four Key Trends Driving Increased Consumption
4. Acceptability – Increased exposure to the benefits of new products is leading to acceptance and a higher rate of return purchasing patterns.
Rural Shopping Baskets are Changing
Rural Indian consumers are changing their shopping habits and value-for-money purchasing is growing in importance. While small-sized packages are vital for entry into the market, as purchasing power increases, rural consumers are increasingly buying larger packs at a lower cost per serving. Retailers who cater to these changing needs by offering a portfolio of products that provide a value proposition will be poised for growth.
Sustainable Ongoing and Future Growth
Rural India, home to seven-of-10 Indian consumers, will be the driving force for continued and sustained growth in the future. A stable consumer base with high aspirations leads to higher affordability and consumption. Six-of-10 rural Indian consumers intend to stay living where they are today, which contrasts sharply with 43 percent of urban consumers that feel the same. However, when it comes to aspirations for higher education, fully 79 percent of both urban and rural consumers plan to pursue a professional degree.
And reaching rural Indian consumers today is becoming easier. Increasingly, rural consumers are upgrading technology—84 percent have a television and 80 percent own a mobile phone. And as smartphone affordability and accessibility continues to grow, Indian consumers may skip the third screen altogether. Today, only one percent of rural consumers and five percent of urban consumers have an Internet-enabled computer.
Future Spending Habits
What happens to the rural shopping basket when spending power goes up? Nielsen followed the spending habits of two rural Indian families over a three-week time period whereby income increased each week. The research showed that when spending increased three-fold, the housewife took on a greater role in the process, the number of products purchased increased and the type of products purchased was upgraded to premium varieties.
Three Tips When Marketing to the Rural Consumer:
In the continuously changing rural retail landscape, the “average” consumer no longer exists. Marketers who understand the evolving needs and aspirations of the various segments of rural consumer will be poised for success in this growing and dynamic marketplace.