Rural consumers spend more on premium brands

Written by Neha Pal | Neha Pal | New Delhi | Updated: Dec 22 2010, 04:19am hrs
Rural consumers are consuming more premium and convenience-oriented FMCG products that are typical of their urban counterparts, according to a study conducted by market research firm Nielsen. Instant noodle sales, for instance are growing nearly twice as fast in rural India compared to urban in both penetration and frequency. Similarly, seemingly urbane brands in categories like deodorant and fabric softener are growing much faster in rural India than urban.

The rural market is currently worth approximately $9 billion in consumer spending in the FMCG space annually. One of the most telling points is the unprecedented pull of consumer demand fuelled by an overdrive of awareness and acceptability. This will allow and propel manufacturers to swing into full gear, said Prasun Basu, executive director and vice president, the Nielsen company. On the consumption front, one in six rural buyers of hair dye now uses colour other than black to indulge in the trend of externalised beauty that is picking up fast in rural areas. According to the Nielsen, the Indian rural market is expected to grow more than 10-fold to become a $100 billion opportunity for retail spending in the next 15 years. Prashant Singh, vice-president, Nielsen said, While the ability of lower priced packs to improve accessibility is known, their pace and presence has been unrelenting. In addition, premium skin care brands typically associated with urban areas are growing nearly twice as fast in rural.

The study has also revealed that faster growth in rural areas is not limited to penetration as the rural consumers frequency of consumption is growing faster as well demonstrating their entrenchment in these categories. Rural purchasing power has grown faster than urban in the last six quarters which shows that rural India is contributing more to the growth than urban in more than half the largest FMCG categories.

One of the key drivers of this trend appears to be the unprecedented growth of smaller packaging options in rural India. The study further says, "Now that the new phase of rural consumption appears here to stay, marketers will need to evolve new strategies to connect and communicate with a more aware and unreserved consumer than ever before. With this, product and brand development cycles will need to undergo a dramatic change. This growth is proving to be systemic and sustainable as multiple factors converge."

Todays rural consumer is not just indulgent but smart and choose the products that provide convenience and individualism in one go,said Basu.