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Sudhanshu Ranade

Chennai, Oct 29

Lower income groups have been increasing their expenditure on toilet articles (including bath soaps, toothpaste, creams and shampoos, but excluding detergents). As a result, there has been a steady but seemingly small upward creep in their market share.

For example, the share of the lower two-thirds of the rural population in total expenditure on toilet articles increased from 49 per cent to only 50 plus per cent between 1999/2000 and 2004/5. Though the corresponding increase in urban areas, from 41 to 47 per cent, was larger, the fact is that rural sales accounted for 58 per cent of total expenditure on toilet articles in 2004/5; and this figure is likely to keep going up, judging by the fact that it increased by 5 percentage points since 1999/2000.

The point is that though, at first sight, the increased share of lower income groups in the total spend on toilet articles (excluding detergents) seems small, the change is in fact dramatic.

Firstly because of the rapidly increasing share of relatively-low-income rural areas in total expenditure; from 53 per cent in 1999/2000 to 58 per cent in 2004/5.

The significance of this arises from the fact that the upper limit of annual household expenditure of the lowest one-third in rural India was only Rs 23,000 in 2004/5 as compared to Rs 37,000 for their urban counterparts. The corresponding figures for the middle one-third in rural and urban India that year were Rs 34,000 and Rs 60,000 respectively.

And secondly because differential pricing strategies adopted by FMCG majors (for example, shampoo, powder and face cream sachets costing Rs 1 or 2 cost 50 per cent less a litre or kilogram than large packs) cause published figures to under-reflect the long-term salience of lower income groups.

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