While the first quarter of 2017 will help companies ascertain the impact of demonetisation on consumer spending, the expected roll-out of the long-awaited goods and services tax (GST) will determine how the rest of the year pans out. As consumers become more health conscious, categories such as herbal foods and personal care products, besides air purifiers, are expected to do well. Meanwhile, digital is going to drive content consumption with over-the-top video streaming services moving beyond English and Hindi to offer regional content.
TRENDS TO WATCH
Yoga guru-turned-businessman Baba Ramdev’s Patanjali Ayurved Ltd, which has had a meteoric rise in the past couple of years, has not only challenged the established multinationals, but opened up a large market for ayurvedic and herbal products. Packaged food and personal care companies—both home-grown and multinational—such as Hindustan Unilever Ltd, Dabur India Ltd, Emami Ltd and Himalaya Drug Co. have started launching more and more herbal or ayurvedic products to address consumer demand. The herbal/ayurveda tag also helps firms command a premium over other products that would eventually add to their profit. Firms in the segment will surely increase focus on herbal/ayurveda in 2017. As per a report by brokerage firm UBS Securities, the volume of herbal personal care products is growing at “twice the segment”, and the share of herbal products in the personal care segment will increase to 10% by 2020, from 6% in 2015.
It’s not without reason that air purifiers are rapidly being adopted by consumers in India. After all, the country houses half of the world’s 20 most polluted cities, leading to respiratory problems, allergic reactions and asthma attacks. Air purifiers are devices that clean the indoor air by removing impurities such as dust particles (including PM 2.5 particles—the tiniest particulate matter that causes the most damage to human health), pollen, smoke and other airborne irritants. Air purifiers saw a spike in sales in 2016 with more companies entering the segment. While still a metro phenomenon, they are expected to get traction across top towns in 2017. Pegged at around Rs150 crore in 2014-15, the market for air purifiers in India is projected to grow at more than 50% per annum over the next 4-5 years, according to industry experts.
With declining attention spans and consumers becoming immune to traditional advertising, brands are looking at experiential marketing to sell products and services. A form of advertising which involves and engages a consumer with a brand, experiential marketing has become even more effective with virtual reality (VR) and augmented reality (AR) coming into play. 2017 will witness marketers aiming to give consumers a personalized brand experience. Chatbots, software programmes that stimulate human conversation, will see greater adoption by service providers and brands to offer personalized solutions to consumers.
Over-the-top video streaming services
India is home to more than 460 million Internet users with access to the cheapest data. An increase in the number of Internet users, cheaper data and large-screen smartphones will fuel consumption of video content on the go, or at home, primarily through streaming on over-the-top (OTT) platforms. With independent video-on-demand service providers like YuppTV raising $50 million from global investment firm KKR-backed Emerald Media, global players like Netflix and Amazon Prime Video entering the market and the television broadcasters-owned OTT platforms namely Hotstar, VOOT and SonyLIV expanding their content libraries, the OTT sector is looking at an increased consumer base and investment in 2017.
Buoyed by the success of their regional channels, television broadcasters are widening their regional portfolios with Viacom18 Media Pvt. Ltd launching a second Kannada entertainment channel (Colors Kannada) and Zee Entertainment Enterprises Ltd investing in regional markets. Regional movies like Baahubali, Sairat and the much-awaited Baahubali: The Conclusion, have also been pushing boundaries to outdo mainstream Bollywood cinema in terms of popularity and revenue. With video-on-demand services like Amazon Prime Video, Netflix and Spuul shifting focus to regional cinema and programming and the government mandating smartphone manufacturers to ensure a regional language (apart from English and Hindi) is included in cellphones, it will be interesting to see how the regional growth story unfolds in 2017.
PEOPLE TO WATCH
Arnab Goswami - News anchor Arnab Goswami made headlines when he resigned as the president and editor-in-chief of news channels Times Now and ET Now. Goswami, known for his flagship Newshour debate and news presentation style, started his career with The Telegraph newspaper and went on to become one of the most popular faces in broadcast journalism. Having been associated with Times Now ever since its launch in 2006, Goswami is now planning a new venture called ‘Republic’, which he believes will change the face of journalism in India.
Ashish Bhasin - The boss at Dentsu Aegis Network made headlines throughout 2016 for acquiring several agencies, winning big ticket accounts, hiring talent and keeping competitors on their toes. Bhasin, who has been associated with the Japanese agency since 2008, took over the India operations in 2015. He has set a rather ambitious target of dethroning American advertising giant Interpublic Group of Companies (IPG) to become the second biggest advertising agency in India by 2017. Whether he manages to achieve the target and take his network to second place behind British advertising major WPP in India only time will tell.
Sanjiv Puri- was redesignated as the Chief Operating Officer of ITC with effect from 22 July 2016, and carries the full responsibility for the day-to-day functioning of the conglomerate. However, in 2017 after Y.C. Deveshwar finally retires, Puri is likely to be the new chairman of ITC.Having steered the consumer products business of the company, Puri will now have to convert the growth numbers into profitability while taking tough calls on businesses such as hotels. Navigating the tobacco business around the news goods and services tax regime will also be a challenge for the new chairman.
Deepika Padukone - From her Hollywood debut, XXX: The Return of Xander Cage, co-starring action star Vin Diesel, that releases this January to period extravaganza Padmavati, touted to be Bollywood’s most expensive outing so far that is to hit screens in December, Padukone is likely to straddle and rule the best of both worlds, a feat rare for any actor of her generation. She is the highest-paid female star in the industry currently, taking home anything between Rs8-10 crore per film and Rs2.5-3 crore per brand endorsement.
Baba Ramdev and Acharya Balkrishna - Patanjali Ayurved disrupted the packaged goods industry in 2016, eating into the shares of established multinationals. Backed by yoga guru Baba Ramdev’s endorsements as the “unpaid ambassador” of Patanjali products, the firm crossed Rs5,000 crore in revenue in FY2016. Forbes named Balkrishna as India’s 48th richest person in 2016, with a net worth of $2.5 billion. With the company aiming to cross Rs10,000 crore in revenue by March 2017, the Ramdev-Balkrishna duo is definitely worth keeping an eye on.
NUMBERS TO WATCH
Rs 54,344 crore: That is the amount of money companies, political establishments and government authorities will spend on advertising across media channels during 2017. This is 11.2% more than 2016, predicted Publicis Groupe-owned media agency Zenith. The reasons: elections in Punjab and Uttar Pradesh as well as sports events such as the Champions Trophy.
Rs 6,196 crore: That’s what advertisers are expected to spend on digital media in 2017, according to advertising agency Publicis Groupe-owned media agency Zenith. The number is 30% higher than in 2016 and includes spends on traditional display (such as banners), online video and social media.
Rs 1.3 trillion: Estimated size of appliances and consumer electronics market in India in 2017, according to a study by Consumer Electronics and Appliances Manufacturers Association (CEAMA). However, demonetisation has already hit the sector hard, resulting in a sharp 40% dip in sales in November.
Rs2,840 crore: With new stations being launched under phase-III of FM radio privatization, the radio industry in India is projected to generate Rs2,840 crore in revenues in 2017, up from Rs 2,340 crore in 2016, according to a study by consulting firm KPMG and lobby group Federation of Indian Chambers of Commerce and Industry.
60 X: That’s the growth rate mobile wallets, such as Paytm, Mobikwik, and Freecharge, among others, are projected to witness in terms of number of transactions by 2020, according to a study by EY. After Prime Minister Narendra Modi announced demonetisation of Rs500 and Rs1000 bank notes on 8 November, the use of mobile wallets saw a big spike. So the growth may actually be much higher.