INSUBCONTINENT EXCLUSIVE:
With the revival in rural demand coupled with new product launches by FMCG companies, revenue growth from the rural segment, which
contributes 40-45 per cent of total income of the FMCG firms, is expected to exhibit a positive growth trend in the coming years.
Consumer
Also the implementation of the goods services tax (GST) put pressure across consumer sectors.
However, the ill effect of demonetisation and
GST has given a major high to the sector by way of an increase in input tax credit on capital goods and input services
Also, there is reduction in logistics costs due to the abolition of check posts, which has helped smoothen the supply chain as
transportation time has reduced significantly and lowered spoilage cost.
In order to support this big reform and control inflation, the
government has made several changes in other laws, namely customs, legal methodology
Among all the growing economies in the world, India has been the centre of attraction due to changes in government policies and developments
in the infrastructure space
After India allowed 100 per cent FDI in retail, many global retailers have started investing in the Indian market, as they see a huge
opportunity here.
Another factor is digital media, which is changing the landscape for marketers everywhere, especially in the FMCG space
The rapid growth of internet and digital media has significantly altered purchase decisions of the Indian consumer
Selling products online gives FMCG companies the advantage of being able to reach consumers beyond a limited geography.
Besides favourable
monsoon, government initiatives, healthy economic growth, changing demographic profiles, increasing disposable incomes, changing consumer
tastes and preferences will continue to support growth in the sector
Due to intense competition between organised and unorganised players, established FMCG brands focus on RD and innovation for product
differentiation.
Innovative packaging, rebranding of products are some of the innovation strategies that FMCG companies are adopting to make
their products more appealing to consumers.
For years, many FMCG companies have been trying to focus on the huge opportunity that the Indian
rural market has to offer
Companies such as ITC and HUL have been taking initiatives such as e-chaupal and Project Shakti to increase awareness among rural people
regarding quality of products and at the same time improve their family incomes.
With a rise in income levels and increased demand for
branded products, the rural market is still an untapped reality
Undoubtedly, growing awareness, easier access and changing lifestyles are key growth drivers for this consumer market
The bottom line is that with increased industrialisation and government initiatives to improve the rural belt, this sector will keep on
growing, which will further improve valuation, and stock prices of FMCG firms
One may look at stocks such as Dabur, ITC, Emami and Godrej Consumer Products to bet on the rural consumption theme.
