The Indian growth story is now spreading itself to India's hinterlands. Rural India, which accounts for more than 70 per cent of the country's one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.
According to a study on the impact of the slowdown on rural markets commissioned by the Rural Marketing Association of India (RMAI) and conducted by MART, the rural economy has not been impacted by the global economic slowdown.
Moreover, the rural consumer market, which grew 25 per cent in 2008 when demand in urban areas slowed due to the global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak. That will be double the 2004-05 market size of US$ 220 billion.
According to the study, the rural market is seeing a 15 per cent growth rate. Fast moving consumer goods (FMCG) sales are up 23 per cent and telecom is growing at 13 per cent.
FMCG
According to figures released by market researcher AC Nielsen, demand for personal care products grew faster in rural areas than urban areas during the period April-September 2009.
Several FMCG companies such as Godrej Consumer Products, Dabur, Marico and Hindustan Unilever (HUL) have increased their hiring in rural India and small towns in order to establish a local connect and increase visibility.
Leading FMCG companies such as Godrej Consumer Products, Marico and Hindustan Unilever (HUL) have increased their hiring in rural India and small towns, in order to boost sales and increase connect and visibility. In fact, Dabur sources close to 50 per cent of its sales and marketing personnel from Tier-II and Tier-III cities.
Retail
The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.
DCM Shriram Consolidated (DSCL) has undertaken the process of improving the business model of the rural retail chain of the company, in order to strengthen the company's system of product sourcing.
Consumer durable companies, meanwhile, such as LG India and Godrej, have increased their marketing efforts in rural areas. 'Rural melas' are being organised by Godrej in order to access potential rural consumers.
Pharmaceuticals/ Healthcare
According to a report by McKinsey, the rural and tier-II pharmaceuticals market will account for almost half of the growth till 2015. The Tier-II market will grow to 44 per cent by 2015, amounting to US$ 8.8 billion.
The Health Ministry is setting up a mechanism to screen people in rural areas for lifestyle diseases such as diabetes. Union Health Minister, Mr Ghulam Nabi Azad, said that in the case of diabetes, the government was working out a strategy to diagnose those in the age group 30-40 years in rural areas, for diseases.
The multinational drug company, Sanofi-Aventis, has launched 'Prayas', a marketing initiative to market generics in rural areas and small towns. Through this initiative, the company looks to share medical knowledge with a body of practitioners and specialists in rural areas through workshops.
