FMCG RURAL DEMAND TO SHOW 50% GROWTH IN 2012

In a Press Release on January 3, 2010 , The Associated Chambers of Commerce and Industry in India ( ASSOCHAM) have forecasted an extremely robust growth in the FMCG sector. The Press Release is detailed below

Fast Moving Consumer Goods (FMCG) will be witnessing more than 50% of growth in its Rural and Semi-Urban Segments by 2012 which in totality is projected to grow at an CAGR of 10% to carry forward its market size to over Rs.1,06300 crore from present level of Rs. 87,900 crore, according to an analysis carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

 The growing penchant and insatiable appetite of rural and semi-urban folks for FMCG products will mainly be responsible for this development as their manufacturers will have to deepen their concentration for higher sales volumes in such niche areas.

 Also, the urban population will develop a larger craze for organic products in the FMCG sector from health point of view and as their will not be a large number of products of organic nature in the FMCG sector, this industry will have to look for larger market size in the rural and semi-urban areas, says the Chamber’s analysis.

 In the rural and semi-urban areas, FMCG market penetration is currently about 2% in general as against its total growth rate of about 8%, said ASSOCHAM President, Mr. Dilip Modi while commenting on the Analysis on FMCG Rural and Semi-Urban Prospects.

 Mr. Modi said the Indian rural market with its vast size and demand base offered a huge opportunity that FMCG companies cannot afford to ignore. With 150 million households, the rural population is nearly three times the urban.

 ASSOCHAM Chief said that the FMCG products which will attract the eyes of rural and semi-urban folks will mainly comprise soaps, detergents, cold drinks, consumer durables, toothpastes, batteries, biscuits, namkeens, mosquito repellants, refined oil, and hair oil. In the semi-urban areas which will include townships of larger sizes, the Chamber estimates, a good number of malls will have been put up in the next 2-3 years which will sell large volumes of FMCG products and thereby increase their demand phenomenally.

 Though the rural and semi-urban demand of FMCG products will grow larger and higher, it will put a severe pressure on the margins of manufacturers of FMCG products because of cut-throat competition, says the Chamber analysis. The branded companies in the FMCG sector that will make killings will include a known number like Nirma, HLL, Dabur, ITC, Godrej, Britannia, Coca-Cola, Pepsi etc.

 The rising rural and semi-urban income levels coupled with massive advertisement of FMCG products in the electronic media will spread so much of awakening in the rural and semi-urban folks towards fast moving consumer goods products so much that these will enlarge their affordability for them.

 ASSOCHAM has therefore suggested that to tap the rural and semi-urban market, better infrastructure facilities like roads, better telecom connectivity to rural persons, proper sanitation and healthcare facilities should be created.