The Hindu Business Line : The great rural push

Robust offtake for some FMCGs from rural and semi-urban centres pushed up growth rates for categories such as toothpaste, hair oil and shampoo. The 30 per cent growth registered by Dabur’s Babool toothpaste, the 23 per cent expansion in salesof Dabur Red and the surge in Colgate’s toothpaste sales are all explained mainly by the “R” or rural factor.

Industry watchers believe the recent resurgence in rural demand for FMCGs is driven by factors such as higher farm product prices, better rural access to credit and buoyancy in non-farm income, which have stoked aspirational demand for branded FMCGs.

Says V. S. Sitaram, Chief Operating Officer (Consumer Care), Dabur India, “The recent spike in commodity prices has resulted in more money in the pockets of rural consumers, which is pushing higher rural demand. That said, the rural-urban divide is no longer as strong as it used to be a decade ago. There is today a greater linkage between urban and rural India with members of several rural households migrating to urban markets and media reaching deeper into rural markets. The overall prosperity of the urban markets also has a positive impact on the rural economy. So, the aspiration levels in the rural markets are also growing and this growing aspiration is now backed by more money in their pockets. This positive sentiment is expected to continue with indications of monsoon being normal this year.”

Points out Anil Chugh, Senior Vice-President, Wipro Consumer Care, “Last year the FMCG index reported a growth of 15 per cent (urban+rural). Urban approximately grew 16 per cent while rural about 13 per cent. The monsoon was good last year, which supported rural offtake.”

Rural buoyancy also explains why the staid hair oil category accelerated this year and drove strong growth for Marico and Dabur. While plain vanilla branded coconut oils such as Parachute managed a decent 11-12 per cent volume growth, value-added hair oils such as Marico’s Shanthi Amla oil (24 per cent) and Dabur Amla oil (13 per cent) registered stronger numbers.

These trends seem to indicate that consumers outside the urban centres are quickly climbing the value chain, trading up from unbranded offerings to more recognised names.