The fast moving consumer goods (FMCG) market, which is about Rs. 1,42,500 crore today, is expected to increase manifold by 2020 owing to more and more middle India towns behaving like metros — it is about time marketers sat up and took notice.
So, while metros and key cities remain a staple for marketers today, distribution and presence in smaller towns cities will be key to their growth in the future.
“At present, about 40% of the total FMCG turnover comes from small towns and middle India and this is set to grow further,” said Justin Sargent, MD-Consumer, Nielsen India.
“Increasing a small town footprint will be critical for volumes in the long run as there is a growth opportunity that is vastly under-rated by many marketers today, which could emerge as a key growth engine for the next 10 years,” said Sargent.
At present Middle India, a region made up of approximately 400 towns each with a population of 1-10 lakhs, is home to 100 million Indians and constitutes about 20% of the country’s FMCG consumption.
Middle India will grow from an FMCG market worth Rs. 28,700 crore today to over Rs. 400,000 crores in value by 2026.
“Increasingly a number of companies have begun reaching out to smaller towns with customised product offerings. This trend is further finding support with small town customers opting to premiumise. As a result marketers are stepping up efforts to address both needs of the small town consumer,” said Sargent.
“Even as smaller Indian towns are leading the demand surge, modern retail is yet to play catch-up for numerous reasons including lack of consensus in foreign direct investment (FDI),” he said.