FMCG companies eye small town move

Packaged items firms are growing their deal with rural and non-metro markets, the place a requirement rebound is anticipated to strengthen over the following six months, market researcher Nielsen mentioned in a report on Friday.

“As metros are more impacted by the incidence of Covid and reverse migration, rural and middle India are driving growth and hence, the industry is focusing on these growth pockets,” mentioned Diptanshu Ray, retail intelligence, South Asia, Nielsen Global Connect.

Most fast-moving client items (FMCG) firms mentioned that rural and small cities are driving progress, in response to a survey of 14 prime executives of FMCG and retail firms by Nielsen in September.

“The majority of the top executives that we interacted with in September said they would focus more on middle and rural India. Though some said metros remain important because of the contribution and the presence of competition, very clearly middle and rural India will be a high focus from the planner’s and executor’s standpoint,” mentioned Sameer Shukla, govt director, Retail Intelligence, South Asia, Nielsen Global Connect.

India’s prime metros account for 30% of general gross sales by worth for FMCG firms, whereas rural areas contribute to 38%. “FMCG consumption was the hardest hit in bigger cities in India during the lockdown period, the impact was the least in villages that retail close to 40% of industry sales,” the report mentioned.

Given the beneficial monsoon this 12 months, together with the federal government’s push on agrarian reforms to tide over the financial impression of the lockdown, FMCG firms are more likely to carry out higher in rural India, Shukla mentioned.

Rural markets have lagged behind city for greater than a 12 months between 2018 to 2019. In reality, within the September 2019 quarter, rural India grew on the slowest tempo in seven years.

However, because the pandemic surged in India’s cities and other people left cities to return to their properties in villages, the gross sales progress of packaged items in these locations has seen an uptick.

“There is definitely a strong tailwind for rural. Monsoon has been good and all those reforms in the agrarian economy is going to push rural growth,” Shukla mentioned.

Shukla mentioned producers and distributors should broaden their attain within the markets to capitalise on consumption.

Nielsen additionally reported a bounce in e-commerce transactions in small cities with a inhabitants of lower than 1 lakh. Value contribution of on-line gross sales from small-towns rose by 9% in May to August.