Coastal Andhra is a huge marketfrom cosmetics to consumer durables, to two-wheelers and cars. But the biggest attraction is the yellow metalboth as an instrument of saving and investment. Vijayawada and the coastal belt is predominantly gold-oriented. The income sources and growth are two-fold. One, high agri-incomes and more recently, remittances from overseas software professionals.
After Kerala, Andhra is the biggest market for gold, says K Shivram, vice president, World Gold Council. The south contributes about 39-40% of the Indias demand of 825 tonne (January-December 2005), and Andhra ranks number 5 in the country, he adds. Shivram points to the fact that jewellers are fanning out to small towns.
Thanks to easy access to money and growing economic activity, one can see an upward shift in the small town consumers buying profile. We have seen a substantial rise in housing and education loans, says Amitabha Guha, MD, State Bank of Hyderabad.
Another indicator is the growth in penetration of mobile phones. Small towns are considered as the next frontier; the significance lies in their now highly active population. According to K Sridhar of BenQ Siemens, who was formerly with Motorola, Andhras rural and semi-urban market contributes about 40% of the monthly one lakh sales of all brands of handsets and is growing rapidly. Companies as a strategy have low-end models to cater to this. he adds.
Says R Balachandran, CEO, Reliance Infocomm - Andhra Pradesh: As on November 2005, our subscriber base in AP is 13.09 lakh. Around 1.4 lakh rural subscribers were added in the recent past, with our network covering 400 plus towns and 9,700 villages. About 10% of their sales revenue comes from the rural market, he adds.
Unlike a few years ago, big textile showrooms are now moving to small towns such as Rajahmundry, Eluru, Kakinada, Tirupati and Guntur. Vizag, struggling out of its small town moorings, now boasts of a mid-size mall and even an upmarket pub patronised by locals, and more are in the offing.
AP is considered a test marketing centre for white consumer goods, eateries and soft drinks. Says Amit Sharma, branch head of LG Electronics, AP is more a crop-driven market. But we are focussing on semi-urban areas, as the urban market is saturated. The firm is tying up with super and hypermarkets and has set up five area offices in the state.
There are some grey areas for marketing though. Particularly in Telangana and Rayalseema where security is still an issue, FMCG companies are adopting a wait-and-watch approach for policy initiatives.