FMCG sales in fast lane in rural areas;

hygiene, immunity products in demand

3 min read . Updated: 12 Jul 2020, 06:36 PM ISTPTI

Largely due to the fact that lockdown has been less intense in rural India than in urban areas, rural
sales have been growing much ahead of urban, performing better than the pre-COVID days

Leading FMCG players such as ITC, Godrej, Dabur, Emami and Marico are witnessing robust
sales in rural and semi-urban markets, bolstering hopes of a speedy recovery from the impact of
the COVID-19 crisis.
Interestingly, the companies are also reporting a spike in sales of health and wellness, hygiene
and immunity-boosting products in these markets, apart from the food products category.
The firms have started to offer these items in value packs and are also expanding their network in
rural and semi-urban markets.
"Rural has been growing much ahead of urban and it’s actually performing better than the pre-
COVID days," Godrej Consumer Products (GCPL) CEO India and SAARC Sunil Kataria said.
This is largely due to the fact that the lockdown has been less intense in rural India than in urban
areas, he added.
Dabur India Chief Executive Officer Mohit Malhotra said his company has also witnessed a
similar trend where rural demand has been growing ahead of urban demand.
"Going forward too, I think rural demand will continue to outpace urban demand. With migrant
workers shifting back to their hometowns and the government announcing additional spend on
MNREGA and higher MSPs, rural consumption would surely see an uptick," he said.
Moreover, expectations of normal monsoon this year would further improve sentiments in the
hinterland, he said.
According to a recent report from Edelweiss Research, several government initiatives and a good
monsoon will supplement farmers' incomes, which should prop up rural growth from Q2 FY21.
"Overall, with supply chains restored and a likely rural recovery, we expect the sector to record
positive growth beginning Q2 FY21," it said.
Homegrown FMCG firm Emami is seeing stable growth in rural demand post-March, which is
overall at par with last year. It expects to clock double-digit growth in these markets this year.
"Smaller packs across our brand portfolio are growth drivers for the rural market. New launches
like sanitisers and soaps from our personal hygiene range are showing early signs of good
demand," Emami Director Harsha V Agarwal said.
The Kolkata-based company has launched initiatives like loyalty programs in these markets.
"We are also investing in digital marketing to connect with our rural consumers," said Agarwal.
According to ITC, in terms of food consumption, it has been witnessing encouraging demand for
Sunfeast biscuits, Bingo! range of snacks and Yippee! noodles in the rural markets.
Besides food, health and wellness, hygiene and immunity-boosting products are now at the
forefront of consumer demand even in the rural markets, it said.
"Awareness amongst consumers on health and hygiene has got heightened across both urban and
rural India. Hand hygiene and specifically handwashes have seen an exponential rise across India
and penetration has increased significantly," an ITC spokesperson said.
ITC has launched its hand sanitiser pack priced at just 50 paise to target these markets.
Marico is also extending its network in rural areas.
"At present, sales from rural India contribute to about 31% of our domestic sales, and we reach
approximately 58,000 villages through our stockist network.
"As the rural demand continues to grow, we aim to drive direct distribution and value to
consumers, as they will be the key growth drivers in rural markets, while continuing to focus on
increasing market share and maintaining volume growth which is independent of category
growth," a Marico spokesperson said.
Dabur is also investing to expand its rural coverage and expects to connect with 60,000 villages
by the end of this fiscal.
"We had invested ahead of the curve in building our rural footprint with our sub-stockist network
going up significantly. This investment paid off as rural demand continued to grow ahead of
urban for Dabur," Malhotra said, adding its rural network has grown from 44,000 villages in
March 2019 to a little over 52,000 villages in March 2020.
"With the lockdown easing now, we are restarting the expansion of our rural footprint and will
take it up to 60,000 villages by the end of 2020-21," he added.
However, experts said the urban markets will bounce back once the situation normalises.
"With the prediction of a normal monsoon, the rural market should do well in the future.
However the urban markets should bounce back once the COVID cases are under control in the
urban markets, lockdowns are eased and uncertainty levels reduce," EY Partner and National
leader, Consumer Products and Retail, Pinakiranjan Mishra said.
In April, market insights firm Nielsen had slashed the growth forecast for FMCG sector by
almost half to 5 to 6% for 2020, citing impact of the coronavirus pandemic and subsequent
lockdowns.