High ad spends to strengthen FMCGs rural footprint

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New Delhi, Jan 24: Aggressive advertising spend is expected to push up the FMCG market by 10% in the rural and 6% in the urban areas, according to a Assocham report. According to the report, national media and regional media have helped the FMCG market to expand to 180 mn in rural and semi-urban areas.

In the first nine months of the current fiscal, the advertisement budget of FMCG companies witnessed an increase of nearly 20%. Assocham estimates the rural markets to constitute around 52% of the FMCG market in the country, and the figure is projected to reach 57% by the end of March 2008. The semi-urban market is expected to constitute around 19% of the companies' market and this is expected to grow to 21% by March-end.

Assocham president, Venugopal N Dhoot said that while the share of these two segments would increase in future, the share of urban India is expected to dip to 22%. The trend indicated a change in the consumption patterns of urban India that was switching over to organic products, owing to the greater health consciousness amongst the urban population. Pegging the urban market size at 120 million, Dhoot said that the shift was happening despite the huge price differential between the organic and the inorganic FMCG products.

The chamber's study has pointed towards the growing young population of rural and semi-urban India, as the primary growth driver of the FMCG products consumption.