India could soon become FMCG giant Unilever’s largest market globally driven by the factors such as rising disposable incomes and a large young working population in the country.
Speaking at the inaugural session of the FICCI Massmerize 2019 on Wednesday, Sanjiv Mehta, Chairman and Managing Director, Hindustan Unilever Ltd , said, “ For Unilever, India is currently the largest market in volume terms and the second largest in value terms and in the very near future we clearly see a day when we would become the largest market for Unilever in the world.” He did not specify a time frame for the same.
Mehta’s comments come at a time when the FMCG industry is battling with a consumption slowdown, especially in rural markets.
He said that India’s consumption story is expected to be fuelled by rising affluence as a large chunk of people move from the bottom of the pyramid to the lower middle-class and from the lower middle-class to the upper echelons.
Mehta pointed out that per capita consumption of FMCG products is known to rise by 20-30 per cent with changes in the family structure from a joint family system to a nuclear family system.
Rapid urbanisation, rising number of nuclear families, growing penetration of organised retail and e-commerce channel will also further stimulate consumption in the country, he added.
Betting on kirana stores
He stressed that kirana and general trade stores will continue to play a key role. “In India, we have 10 million stores and for nearly 100 million people food on the table depends on the kirana or neighbourhood stores. So we cannot ignore or bypass them. Today, technology allows us to connect them and bring the science of retail to them,” Mehta said, adding that the onus to make this technological upgradation of the kirana stores also lies on big corporations.
According to a report released by FICCI and Deloitte at the event, Indian retail market is estimated to reach $1,200 billion by 2021 and $1,750 billion by 2026. It added that while the share of the organised retail and the e-commerce channel is likely to increase, the traditional retail is expected to continue to hold a major share of the Indian retail market. “The traditional kirana stores form the backbone of Indian retail, and currently hold an 88 per cent share of the total retail market,” the report said.