subject: Untapped potential for FMCG cos [print this page] India's FMCG sector is the fourth largest in the economy, with a market size of over Rs 110,000 crore (around USD 22 billion) and is estimated to grow to over Rs 185,000 crore (around USD 37 billion) by 2014. The lower-middle income group accounts for over 60% of the sales for the sector. Rural markets account for 56% of the total domestic FMCG demand. Several global FMCG majors have been present in the country for many decades. However, in the last decade, many smaller-rung Indian FMCG companies have gained in scale. As a result, the unorganized and regional players have witnessed erosion in market share.
The Great Indian Mandi
The total size of the rural market is estimated at about 74 crore people or 74% of the Indian population (according to the 2001 census). Additionally, as per a recent study by the Rural Marketing Association of India (RMAI) rural income levels are on the rise, driven largely by continuous growth in agriculture for four continuous years. The rural consumer market USD 425 billion in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak, in November 2009. The figures are expected to double the 2004-05 market size of USD 220 billion. Every FMCG company has its eyes firmly set on the rural markets.They are planning new marketing strategies and extending their distribution reach, by increasing the number of stockists and even participating in rural markets and melas. Though rural markets are growing from a smaller base, the numbers can be stark in some categories. Mass products like soaps, hair oil and biscuits have good sales, and almost all companies are now relooking their strategy.
