Unlocking rural riches: How FMCG brands can win in the hinterlands

The Reserve Bank of India's latest bulletin highlights a notable increase in rural spending, particularly in non-food items, indicating a change in personal spending habits that now favor rural areas, writes Amit Jain, National Sales Head, Godrej Consumer Products Limited.

By  Storyboard18Jun 24, 2024 8:57 AM
Unlocking rural riches: How FMCG brands can win in the hinterlands
Amit Jain, National Sales Head, Godrej Consumer Products Limited

The rural demand in India has experienced a remarkable transformation, shifting from a period of relative stagnation to becoming a pivotal driver of economic growth. For FMCG companies, this shift signifies a tremendous opportunity to expand their reach and influence. The Reserve Bank of India's latest bulletin highlights a notable increase in rural spending, particularly in non-food items, indicating a change in personal spending habits that now favor rural areas.

This is a crucial development, as it highlights the untapped potential of rural markets in India. Rural demand for everyday goods has surpassed urban demand for the first time in two years, with rural FMCG sales growing by 7.6% in the previous quarter compared to 5.7% in urban areas. This surge which is driven by robust demand for home and personal care products underscores the necessity for FMCG companies to prioritize rural markets in their planning. Embracing this shift not only opens new revenue streams but also strengthens the overall market presence and resilience of FMCG brands in India.

To sustain this growth momentum and expand nationwide, FMCG companies must deepen their market penetration by tapping into rural markets. In my view, three key factors are driving this growth: infrastructure development, electrification of rural India, and the success of Digital India, and direct distribution and engagement strategies. Improved infrastructure enhances accessibility and connectivity, significantly reducing travel time for both residents and industries.

This progress enables FMCG companies to connect more efficiently with their distribution channels, further fueling rural demand growth. Additionally, increased rural electrification enhances the accessibility and penetration of FMCG products, opening avenues for products that rely on electricity, such as liquid vaporizers. As more households gain access to electricity, consumers are increasingly motivated to invest in products that enhance their health and well-being.

Initiatives such as Digital India have empowered rural consumers by providing greater access to information. This increased awareness about available products enables consumers to make more informed purchasing decisions, driving their aspirations to improve their lifestyles. The combination of electrification and digital connectivity plays a crucial role in transforming rural markets and boosting demand for various consumer goods. Adapting to the evolving landscape is essential to effectively reach and engage with rural consumers.

Outreach programmes have to be extensive as rural India is opening up. For example, Godrej Consumer Products have identified that ‘Kirana’ stores have traditionally been the backbone of FMCG distribution in rural areas. To further amplify our reach, we are championing rural outreach program engaging 300,000 outlets across rural India. This program emphasizes direct distribution, delivering products like hair care items and liquid vaporizers door-to-door.

Additionally, this will also incentivize consumers by offering discounts on our products, which in turn boosts brand acceptance and enhances rural engagement. Products like Godrej Expert Rich Crème and Godrej aer have also started establishing a base in these markets. To further accelerate this growth, we plan to double our outlet coverage and triple our village coverage, ensuring that more consumers have access to our products and can benefit from the convenience and savings offered by our direct distribution initiatives.

FMCG companies must continually evolve by observing, learning, and adapting to new rural strategies. The heart of India lies in these rural areas, making it crucial for FMCG companies to address their evolving needs. By staying attuned to the changing dynamics and continuously refining their approaches, companies can effectively tap into the growing potential of rural markets and drive sustained growth. The future of FMCG growth in India is deeply intertwined with the prosperity and development of its rural markets, and it is imperative that we continue to innovate and invest in these areas to achieve long-term success.

As we look ahead, the opportunities in rural India are vast and varied. The FMCG sector must embrace these opportunities by developing products and strategies tailored to the unique needs and preferences of rural consumers. By doing so, companies can not only drive growth but also contribute to the overall development and well-being of rural communities. The key to success lies in understanding the nuances of rural markets and building strong, lasting relationships with consumers. By fostering trust and delivering value, FMCG companies can ensure their place in the rapidly evolving landscape of rural India.

Amit Jain is the National Sales Head at Godrej Consumer Products Limited. Views expressed are personal.

First Published on Jun 24, 2024 8:57 AM

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