Branded Products get to Rural Markets

Essentially what we define as ‘rural’ is really a place which is difficult to access and reach physically — perhaps an urbanite’s definition. The Census defines urban as ‘All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment, board etc. or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square km. Rural India, on the other hand, comprises of all places that are not urban.

With rural consumers warming up to branded products, the urban rural divide is fading away faster than one can imagine. There is now very little difference between the aspirations of rural consumers and their urban counterparts. Certain growth statistics have shattered the myth that the rural consumer is content with unbranded or mass end products alone and gives a strong indication that rural market consumption has picked up and is accelerating faster than urban markets . This has led to their changing consumption pattern.

Demand for top of the drawer FMCG products is no longer restricted to urban India. The rural consumer has emerged as an important cog in the sales growth of premium offerings. Clever pricing, rising aspirations and new marketing mantras are driving this trend.

Dove shampoo a premium end product reported a growth of over 100% in rural market during January-October 2010 over the same period last year. In fact, Dove grew faster than its lower priced cousin, Sunsilk shampoo which reported a growth of around 14% in rural India during the period.

So it is not just mass brands like lifebuoy, Nirma or Wheel which have for decades met the need of rural India. Take a look at the growth numbers of a beauty care product like Pond’s white Beauty and the figures are mind boggling. The brand grew 4,200% in January-October 2010 in rural markets over the same period last year.

Although analysts explain that the high growth is due to a lower base and that actual sales number would be smaller given the recent introduction of the brand, one cannot overlook the fact that there is a demand for such products and marketers can no longer underestimate the aspirations of the rural consumers.

Gone are the days when the rural consumer was content with using mustard oil and plain soap. Today, he/she is seeking special branded products, daily skin and healthcare needs. Rural consumers across income segments are showing a marked propensity towards spending on premium high quality products which are backed by strong brand values.

For instance take food products. Not only has the demand for cream biscuits gone up in rural markets the sale of instant noodles, too is growing nearly twice as fast in the rural market compared to the urban one. What’s more one in every six rural buyer of hair dye now uses colors other than black – something which would have been dubbed as indulgence a decade go. Even the seemingly urbane brands in categories like deodorants and fabric softeners are said to be growing much faster in rural Indian than urban.

Variety biscuits (creams, cookies) are growing significantly faster than glucose. Even in rural market, they are taking away significant consumption from glucose biscuits.

According to a retail audit, the share of glucose biscuits in overall market has changed from 30% to 26% in the last 18 months. Clearly consumers are valuing superior quality and better delivery in product experience and are wiling to pay a higher price for it. The trend particularly serves as a wake up call for those marketers, who still do not have a deep rural reach. It is also a broad based cutting across of categories. The year on year rural growth of premium soap brand Cinthol original during April-September was higher this year at around 28% as compared to 12.5% in the corresponding period last year. Similarly the rural growth of mosquito repellent brand doubled than its urban market growth this year.

  • The growth pattern in rural sales also has to do with improved infrastructure in terns of roads and telecommunication.
    Also, a significant number of children from the so-called rural areas are studying in colleges in cities and are exposed to the branded products.
    It is only prudent that the FMCG companies focus on this emerging market.