Roosevelt D’souza, Executive Director, The Nielsen Company
While food contributed more than half (52%) of the total fast-moving consumer goods (FMCG) sales in India last year, non-food products in key segments such as health and wellness, lifestyle, impulse and convenience products registered more than 20 percent growth and are set to define the shape and direction of the future. This rapid growth is driven by systematic changes in consumer motivation and behavior.
Impulse products are often described as unplanned purchases of products that are easily available and affordable by urban consumers seeking instant gratification. Key impulse categories like biscuits, chocolates, salty snacks and confectionery are registering high double digit growth rates and greater retail presence. The emergence of the modern trade format in India and the ability to reach for these products at checkout counters is contributing to this growth trend.
|Value Growth in 'Impulse' Category Products by Channel|
|Value Growth (%)||Grocers||Gen Stores||>Chemists||Paan Plus||Food Stores||Modern Trade|
|Source: The Nielsen Company. MAT Oct. 2010|
Growth in the impulse segment is being driven by both national players as well as local zonal interests that have introduced a large number of variants, price points and pack sizes that act as a catalyst for growth as they are able to appeal to a greater range of consumers.
On the product formulation front, newer attributes like low fat, sugar free, baked and whole grain are being introduced to entice and attract certain consumer segments by creating greater relevance and empathy with consumers needs.
Health and Wellness Products
The FMCG product portfolio is growing to accommodate the health and wellness segment that caters to the increasingly affluent, urban and health-conscious Indian. This portfolio is no longer about preventive or supportive nutrition, it instead reflects a mix of indulgence, invigoration and narcissism. This trend explains the emergence of ‘modified’ products. For instance, chewing gum, usually considered an item of impulse for children and youngsters, has now assumed a new avatar as an oral health aid for adults.
Categories that outwardly represent ‘health’, such as anti-aging creams, have shown significant growth. Anti-aging products as diverse as lipsticks, eye balms, facial creams and hair lotions have taken their place across shop shelves to cater to the health- and beauty-conscious Indian. Expanding distribution and a wave of consumer interest in these sub-categories have resulted in a surge in their growth rates on a small base.
The market for ‘lifestyle’ products is on the rise. Consumers from lower population strata, such as rural and semi-urban areas are now seen to “trade up” from unbranded to branded products. As the lower end of the market becomes more broad-based, the middle and upper end of the market is growing to include specialized products to encourage consumers to migrate further up the value chain. More importantly, the pace of these changes and their geographical reach signal a genuine shift in purchasing habits and lifestyles.
|Value Growth of Lifestyle Products by Market Type|
|Value Growth (%)||Floor Cleaners||Toilet Cleaners||Glass Cleaners||Pre-post washes||Liquid Toilet Soaps|
|All India (U+R)||27.8||10.8||12.8||26.5||46.3|
|All India – Urban||28.3||10.9||12.4||24.6||45.6|
|Town Class 1||30.4||14.2||15.1||30.8||49.9|
|Rest of Urban||25.7||8.0||13.1||38.8||58.0|
|Source: The Nielsen Company MAT Oct. 2010|
From a distribution perspective, while grocers continue to be the leading channel for this segment, the ‘lifestyle’ segment saw an increased presence of high-end products in modern trade formats such as supermarkets and hypermarkets.
In the last decade, Indian consumers have experienced growing urbanization, increasing disposable income but a decrease in free time, prompting them to move towards convenience food products. This trend appears to have stabilized most notably in the breakfast and mid-meal segment, as these categories have achieved greater consumer acceptance. Marketers have spent their time getting these products right to make them available to Indian consumers across geographic zones by fine-tuning them to local tastes. This process will continue as the market evolves and those who innovate best in accordance with consumers' needs and preferences are more likely to create winning brands.
|Value Growth in the Convenience Foods by Region|
|Value Growth%||All India||North||East||West||South|
|Vermicelli and Noodles||29||34||32||33||20|
|Jams and Jellies||19||13||23||20||21|
|Squashes and Cordials||26||30||20||23||31|
|Source: The Nielsen Company|