The Hindu Business Line : FMCG, consumer durables markets set to `explode' in next 20 years

MARKETS for housing, consumer durables and FMCGs are set to explode over the next 20 years (according to data collected from the CMIE and the 2001 Census, before the bifurcation of Bihar, MP and UP).

Those now in the 5 to 24 age groups, among whom mortality rates are negligible, will move into the 25 to 44 bracket, thereby generating a `population explosion' for this cohort.

Meanwhile, per capita income, and life-time expected earnings will increase - the former possibly more than doubling in value - if past trends are any indication; and the latter increasing much more than that.

The population in the 25 to 44 age group over the next 20 years is slated to increase by about 45 per cent in both rural and urban areas in States with high per capita GDPs in 2001 (namely Punjab, Haryana,Maharashtra, Gujarat, Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and West Bengal, in that order).

For States lower in the per capita GDP ranking (namely Rajasthan, Madhya Pradesh, Orissa, UP and Bihar), which already have higher population densities (accounting for about half the total 25 to 44 group in rural India, and 60 per cent in cities), rates of increase in this cohort too are expected to be higher — around 60 per cent. The all-India 25 to 44 age group will register an increase of about 60 per cent, from 314 million people to 508 million.

As for per capita incomes, there was an across the board increase in all the listed states, and in India as a whole, of around 100 per cent (at constant prices), over the period 1981/2001. For India as a whole per capita GDP increased from Rs. 5,908 to Rs 11,763 over the 20-year period. Increases in states with higher per capita incomes in 2001 were somewhat greater than those lower down the scale; the size of the increase corresponding roughly to the per capita ranking.

A few additional points are worth noting. Costs of `comparable' consumer durables will keep going down - apace with costs for technology related products in general - and the same could hold true for housing as well, as settlements expand to more distant suburbs, and the housing market, driven by prospective volumes, focuses more on relatively low-cost housing units. Migration from rural to urban areas over the 20-year period has not been taken into account. This could swell the relatively higher purchasing power of the urban 25-44 group quite a bit, while leaving rural figures not much lower.

The moral of the story is that top management will have to set its sights and targets very much higher than what is warranted by likely or possible increases in penetration rates alone. It's a sink or swim situation.

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FMCG, consumer durables markets set to `explode' in next 20 years