Manju Kumari, 28, a factory worker's wife in a remote town of Madhya Pradesh, has added talcum powder and fairness cream to her little make-up box. "We have also consumed packaged noodles once," Kumari said. She owns a dual-SIM mobile phone that came for Rs 1,500.
Small town and rural consumers are buying more premium health, hygiene, personal grooming and packaged foods. The recent years have seen surging consumer demand from towns with a population of less than one lakh, a Nielsen- CII survey indicates. In 2011, these small towns led an impressive growth story of 15% versus the 12% recorded by the metros. Distribution grew by 4% in villages compared to 3% in small towns.
Sectors including telecom, pharmaceuticals, consumer durables, beverages and packaged foods are leading the trend in rural India today. Airtel and Idea Cellular launched internet usage services at a monthly Rs 5 to encourage internet browsing in remote areas of Rajasthan.
"Companies are devising smaller pack sizes at reasonable prices for toothpastes, biscuits, hair removal creams, deodorants and beverages, to push up demand in rural markets. Urban foods such as pasta, noodles and packaged flour are trending aggressively," said Pawan Bansal, COO, Jagran Solutions, a brand activation agency with clients including ITC Foods, Dabur, Red Bull and Lotus Herbals.
A report by IMRB International says that premium brands including Dove, Pears and Dettol grew in double digits in rural India.
"The divide between urban and rural markets has narrowed down. This has led us to expand our basket of offerings, which includes Vivel and Superia soaps, and shampoos, in rural markets," said ITC spokesperson Nazeeb Arif.
A few months ago, Dabur reported a surprising growth in orders for its Real range of packaged juices in variants as unusual as plum, peach and apricot from remote towns of the north east. "Health consciousness has largely been an urban phenomenon, but we are now seeing this trend emerge even in the hinterland," said Praveen Jaipuriar, marketing head - foods, Dabur India.
Rural India is also buying products such as Dettol, Harpic and Lizol, as hygiene concerns expand. "There has been growing awareness about health, hygiene and home care among rural consumers," said Chander Mohan Sethi, senior VP, South East Asia, Reckitt Benckiser. The company's low-smoke mosquito coil also saw increased rural traction.
While most FMCG companies define a rural market as one having less than a 5,000 population, most consumer durable and personal products companies consider markets with a population of 50,000 as rural.
Dual-SIM mobile phones are catching on fast in rural India. "Rural markets added around 28% to our total turnover last year. We have devised new flat panel TVs, refrigerators and feature- and dual phones at pocket-friendly prices for the rural markets," said Ruchika Batra, spokesperson for Samsung India.
Hindustan Unilever has more than doubled its direct reach in rural India, covering more than two million outlets in the past three years. PepsiCo India has increased its sales force, sharpened its go-to-market strategy, invested in its supply chain and coolers, and increased capacities.
Beverage companies still face some challenges. "Two huge challenges are getting more people introduced to consuming beverages in a ready-to-drink, packaged form, and making them available chilled," said a Coca-Cola India spokesperson. The company has already installed close to 300 coolers through green technology in rural India.