New Delhi: 2007 has been an eventful year for the FMCG industry, especially for the rural segment. Sale volumes touched $3 billion in the first 10 months, and are likely to go up by another $0.5bn by end December, according to estimates released by Assocham, based on feedback from its leading constituents in FMCG sector.
By end 2007, FMCG size in value terms is expected to be over $18 billion of which its rural segment could be slightly more than 1/5th of total FMCG market. In calendar 2006, total FMCG market size was estimated at $15 billion of which rural segment was measured at around $2 billion.
In India there are approximately 128 million households and the rural population is nearly three times more than the urban. As a result of growing affluence, fuelled by good monsoon and increase in agriculture output to 200 million tones, rural India has a large consuming class with 41% India’s middle class and 58% total disposable income.
Rural market also accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soaps, blades, tea, salt and toothpowder and this market is growing much faster than its urban counterpart.
Reasons for increased market penetration
* Higher consumption patterns of rural population for consumer durables like refrigerator, TV sets, electrical appliances, personal care products, toiletries & soaps and soft drinks
* In 2007 various budgeted products designed for the rural segment were introduced and resultantly sales increased by over 30%
In Calendar 2007, FMCG total sale by December 2007 end would be in the range of $3.5 billion thanks to attractive X-mas and year-end discounts.