Hinterland overtakes cities in FCMG production

Monday, August 25, 2008

It?s a rural resurgence of sorts and has got companies revisiting their bottom of the pyramid strategies. Rural offtake across select categories such as shampoos, toothpastes and hair oils has grown faster than consumption in urban markets this year.

ACNielsen data for the January-July 2008 period shows that growth has been higher in rural markets across each of the categories by value and volume. The growth is being attributed to factors like higher prices of farm produce and farm loan write-offs, resulting in consumers upgrading to branded products.

Firms are addressing the increased demand by introducing SKUs (pack sizes) only for rural pockets, beefing up their distribution footprint and tailoring promotional and ad strategies specific to rural consumers ? an example being upping the celebrity connect.

Take toothpastes ? the category saw a 12.8% rural volume growth against 8.7% in urban markets in January-July 2008. Similarly, in the case of hair oils, rural value growth was 19.3% compared with 15.2% in urban markets during the period. Even an urban-centric product like shampoo saw rural volume growth at 11.8% compared with 8.8% in urban markets.

Continue reading “Hinterland overtakes cities in FCMG consumption

Source: Economic Times (link opens in a new window)