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The rural demand in India has experienced a remarkable transformation, shifting from a period of relative stagnation to becoming a pivotal driver of economic growth. For FMCG companies, this shift signifies a tremendous opportunity to expand their reach and influence. The Reserve Bank of India's latest bulletin highlights a notable increase in rural spending, particularly in non-food items, indicating a change in personal spending habits that now favor rural areas. 

This is a crucial development, as it highlights the untapped potential of rural markets in India. Rural demand for everyday goods has surpassed urban demand for the first time in two years, with rural FMCG sales growing by 7.6% in the previous quarter compared to 5.7% in urban areas. This surge which is driven by robust demand for home and personal care products underscores the necessity for FMCG companies to prioritize rural markets in their planning. Embracing this shift not only opens new revenue streams but also strengthens the overall market presence and resilience of FMCG brands in India.

To sustain this growth momentum and expand nationwide, FMCG companies must deepen their market penetration by tapping into rural markets. In my view, three key factors are driving this growth: infrastructure development, electrification of rural India, and the success of Digital India, and direct distribution and engagement strategies. Improved infrastructure enhances accessibility and connectivity, significantly reducing travel time for both residents and industries. 

This progress enables FMCG companies to connect more efficiently with their distribution channels, further fueling rural demand growth. 
Additionally, increased rural electrification enhances the accessibility and penetration of FMCG products, opening avenues for products that rely on electricity, such as liquid vaporizers. As more households gain access to electricity, consumers are increasingly motivated to invest in products that enhance their health and well-being.

Initiatives such as Digital India have empowered rural consumers by providing greater access to information. This increased awareness about available products enables consumers to make more informed purchasing decisions, driving their aspirations to improve their lifestyles. The combination of electrification and digital connectivity plays a crucial role in transforming rural markets and boosting demand for various consumer goods. Adapting to the evolving landscape is essential to effectively reach and engage with rural consumers.

Outreach programmes have to be extensive as rural India is opening up. For example, Godrej Consumer Products have identified that ‘Kirana’ stores have traditionally been the backbone of FMCG distribution in rural areas. To further amplify our reach, we are championing rural outreach program engaging 300,000 outlets across rural India. This program emphasizes direct distribution, delivering products like hair care items and liquid vaporizers door-to-door. 

Additionally, this will also incentivize consumers by offering discounts on our products, which in turn boosts brand acceptance and enhances rural engagement. Products like Godrej Expert Rich Crème and Godrej aer have also started establishing a base in these markets. To further accelerate this growth, we plan to double our outlet coverage and triple our village coverage, ensuring that more consumers have access to our products and can benefit from the convenience and savings offered by our direct distribution initiatives.

FMCG companies must continually evolve by observing, learning, and adapting to new rural strategies. The heart of India lies in these rural areas, making it crucial for FMCG companies to address their evolving needs. By staying attuned to the changing dynamics and continuously refining their approaches, companies can effectively tap into the growing potential of rural markets and drive sustained growth. The future of FMCG growth in India is deeply intertwined with the prosperity and development of its rural markets, and it is imperative that we continue to innovate and invest in these areas to achieve long-term success.

As we look ahead, the opportunities in rural India are vast and varied. The FMCG sector must embrace these opportunities by developing products and strategies tailored to the unique needs and preferences of rural consumers. By doing so, companies can not only drive growth but also contribute to the overall development and well-being of rural communities. The key to success lies in understanding the nuances of rural markets and building strong, lasting relationships with consumers. By fostering trust and delivering value, FMCG companies can ensure their place in the rapidly evolving landscape of rural India.

<strong>Amit Jain is the National Sales Head at Godrej Consumer Products Limited. Views expressed are personal.</strong>


Unlocking rural riches: How FMCG brands can win in the hinterlands

Mumbai-based homegrown foods company Parag Milk Foods Ltd has reportedly floated an RFP (Request for Proposal) for its media planning and buying account. The account size is approximately between Rs125 crore and  Rs 140 crore, industry sources told Storyboard18.  


This RFP is for ATL marketing only and does not include digital buying or selling. 


Parag has had multiple agencies on board in the past. Some of them include the likes of GroupM’s m/SIX, Gozoop, Carat, Scion, J Walter Thompson India (now VML India) and others. 


Overall, Parag Milk Foods Ltd has been witnessing strong growth. Quarterly net profit for the brand stood at Rs. 34.17 crore in December 2023 up from Rs. 9.26 crore in December 2022. Their EBITDA stood at Rs. 68.65 crore in December 2023 up from Rs. 38.04 crore in December 2022.


The net sales also saw growth. It grew from Rs. 735.89 crore in December 2022 to Rs 800.84 crore in December 2023.


Last year,Parag Milk Foods gathered a lot of attention with the company's shares seeing significant gains. Between last year and now the stock has seen over 120 percent gains. 


The company has also seen some top level hirings in the recent past. This includes the appointment of ex Amul and ex Lactalis India executive, Rahul Kumar Srivastava as the chief operating officer (COO) and a former Reliance Brands executive Sumit Jain as President of Finance. 


Parag’s milk products have a global presence as the brand is present across multiple countries like the USA, Philippines, Mauritius, Australia, Korea, China and Singapore. 

EXCLUSIVE: Parag Milk Food’s Rs 125-140 crore media business up for grabs?

The advertising industry in the country clocked 8.6 percent growth in 2023, reaching a market size of Rs 93,166 crore and the FMCG (fast moving consumer goods) category held the largest share as contributors. According to a recent dentsu report, the category saw a 34 percent growth contributing Rs 31,428 crore to the total AdEx of the year. 

This was followed by e-commerce contributing 14 percent at Rs 12,803 crore spends, consumer durables at 6 percent with Rs5,540 crore as spends and automotive at Rs 5,223 crore spends contributing also contributing 6 percent to the AdEx.  “Historically, approximately one-third of the annual spends in the Indian advertising industry has been attributed to the FMCG category. In 2023, FMCG category witnessed an ad spends growth of 22.6 percent over 2022.

During the same timeframe, notable expansion was observed in the travel and tourism sector, recording a growth of 73.4 percent over 2022, followed by government advertisements with a 62.2 percent increase, and real estate experiencing a growth of 41.7 percent over 2022,” said the report.The travel and tourism category has seen a huge increase in the post pandemic era.

In fact, the sector has seen the highest growth. According to the report, this surge can be attributed to the expanding urbanization and the increasing income of the middle-class, resulting in a growing demand for multi-modal transportation services as travellers gradually return to their pre-pandemic travel routines. 

“To bolster inbound tourism, the government launched the ‘Visit India 2023’ campaign and provided unprecedented support for promoting sustainable tourism. Additionally, there has been a focus on technological advancements to develop and transform the air, road, rail, and waterways sectors, aiming for more efficient, faster, and safer modes of transportation,” the report said. 

Another category witnessing rapid growth in advertising spends is the Government and social organisations, especially in the wake of Assembly and General elections. In 2023, Government advertising spends have grown by 62.2 percent over 2022. Similarly, the housing and real estate segments are undergoing remarkable growth. 

The sector has seen unprecedented expansion due to the rapid growth of the middle-class population, urbanisation, and increased transparency through government incentives and policies. As per the report, advertising spends in real estate grew by 41.7 percent in 2023 compared to 2022.

FMCG stood out as highest spender in 2023 with Rs 31,428 crore ad spends: Reports

<span data-mce-type="bookmark" style="display: inline-block; width: 0px; overflow: hidden; line-height: 0;" class="mce_SELRES_start">﻿</span>Sudhir Sitapati joined the homegrown FMCG giant Godrej Consumer Products as MD and CEO last year when the world was beginning to open up in a post-pandemic era. 

In a candid interview with Storyboard18's editor Delshad Irani, Sitapati tells us how he articulated his vision for GCPL and his approach towards marketing and brand building. Sitapati also shares how Godrej is democratising categories, his advice for young marketers and leaders, and what he thinks is the secret to creating brands and businesses that are built to last.<span data-mce-type="bookmark" style="display: inline-block; width: 0px; overflow: hidden; line-height: 0;" class="mce_SELRES_start">﻿</span>

<iframe width="885" height="498" src="https://www.youtube.com/embed/-_5ThtcH_6w" title="In Conversation With Sudhir Sitapati On Godrej Consumer Products' Biz Outlook | Storyboard 18" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

In conversation with GCPL's MD & CEO, Sudhir Sitapati