Why should FMCG Companies focus their attention on Rural India?

We all consume FMCG products in our day-to-day lives. Over the years, there has been a steady rise in the consumption of fast-moving consumer goods in the rural parts of India. In fact, Rural India accounts for 25-40% of the contribution made by major FMCG companies. Overall, the villages of Rural India have a share of more than 35 percent to supplement the total FMCG market alongside that of urban areas. Key factors play a part in Rural growth development that FMCG brands must focus on for the foreseeable future.

Here are the Top Reasons Why FMCG Companies Should Focus Their Attention on Rural India:

1. Sales Volumes - Creating Demand

Rural India is vast and accounts for the bulk of sales value appreciation across all parts of the country. Rural India in the FMCG market has spearheaded its way ahead of urban areas as it asserts dominance over market share, volumes numbers, demand and sales. New products have been successfully introduced and are doing better than expected. The strategy of marketing in smaller towns and villages is designed to generate maximum sales volume by creating demand. This is better explained by comparison to urban areas. As in urban areas people already know and recall these FMCG companies, but in rural settings, the companies have realized that there is a need for such products and there is the bandwidth of people to purchase from them as well.

The pandemic had many migrant workers move back to their place of origin. These people are well accustomed to urban brands and their messaging had struck a chord while working for years in the city. The sudden move back to their hometowns meant that they still preferred and used brands that have been indoctrinated into their daily consumption patterns. The reach of FMCG brands and companies in rural India racked up significantly to fill in this newly created demand as a result of reverse migration, especially in the states of Uttar Pradesh and Bihar.

2. Digital Shift - Rising Tech

The rural landscape of consumer and brand connection has long changed since the days of awareness drives and free sampling surveys. The country has changed and with it, so has the consumer mindset, especially in rural India. Now more than ever before, technology has made it possible for products to reach the remotest of places. And where the accessibility is higher, there is an increasing rise in digital experiences seen by major FMCG companies in rural areas. Digitization has greatly benefited the common man as well. The marketing strategies have completely changed towards consumer pricing and unique brand building at par with its urban audiences.

The villagers are equipped with smartphones and gadgets which helps increase awareness organically. This roadblock of initial years has been cut down, giving FMCG companies a good base to set more elaborate marketing strategies for their rural customers. Creative endeavours are taking flight in rural India as there is a market to gauge this information and leverage sales for FMCG companies.

E-commerce is picking up in rural India as a huge method of sales with its ease and transaction of online payments. Tracking, delivery and doorstep delivery is an avenue which is being explored in most interior locations of rural India, but tier II and III cities have a considerable market for the source and point to point method that the digital marketplace is based on. Digital literacy is doubling at tenfold rates in rural India, being the momentum and driver of growth in the FMCG industry in rural India. The digital era is here to stay and FMCG brands must capitalize on this as its focal point.

3. Building Recognition

The launching of products in rural India has been steadily increasing over the past decade. Of course, the companies that had already established themselves benefited more since they got there first. Brands like Pepsi and Coca-cola have been in rural India since the start and that is important in terms of brand recognition. They were already familiar with the brand before its launch so when the physical stock was displayed at rural stores and kinnaras, the consumers already had the desire and want for the said company’s products and goods. FMCG companies like Emami, Patanjali and relatively newer brands have case studies to reference if at all they need the encouragement of other rural established brand stories.

4. Government Schemes and Yojanas

Social funds and schemes through Central and State governments boost incomes indirectly on a micro to macro scale. The Government schemes and investment in rural communities backed by their push to gradually increase the purchasing power of the common man has propelled the incentive of rural India as an effective stronghold for FMCG products and services.

Due to subsidization and higher incomes, people in rural places are buying products from a range of wide categories like hand sanitisers and body wash instead of soaps. Also food items like branded flour, oil and other staples, Indulgent products like confectioneries and chocolates as opposed to unbranded ones a few years ago.

Updated On May 24, 2022