Cons cos gear up to make most of rural demand

New Delhi: Large consumer goods companies said they are pushing additional stocks to retailers and offering volume linked incentives especially in smaller rural markets in the last quarter of the financial year to leverage strong demand in rural India. "We are focusing on direct market and outlet coverage by adding markets in lower population groups. This together with revival of modern trade from the third quarter onwards and continued impetus on e-commerce channels will yield benefits going forward,” said Sandeep Sule, chief executive, trade marketing and distribution at diversified group ITC, which makes staples, processed foods and personal care products.In the quarter ended December, the fast-moving consumer goods market expanded in double-digits, helped by higher sales of branded staples and commodities which companies intend to further grow with heightened focus on rural markets. Rural demand has been the highlight for India Inc in a Covid struck year, with 55% of rural household incomes indicating nearly 9-10% growth in the current fiscal compared to 2-3% growth the previous year, an executive at Crisil said.“Recovery in low ticket size consumption items has been sharp. Crop profitability across field and horticulture segments show clear signs of improvement of farm incomes in 2020,” said Hetal Gandhi, director at CRISIL Research. A sharp uptick in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) based wage income has also supported overall rural growth and purchasing power. Out of the 650,000 villages in the country, 90,000 villages contributed to a fourth of overall rural sales and these have huge potential to grow, Angshu Mallick, deputy chief executive of Adani Wilmar said. “There is an opportunity to improve sales by pushing more stocks to semi wholesalers and retailers in rural India. Consumers are aware and switching from loose products to branded ones in categories such as edible oil and wheat flour,” he said. The government too has been stepping up focus on rural markets to fuel demand with higher minimum support prices (MSPs) for farmers, and more allocation under the MGNREGA by an additional Rs 40,000 crore over the earlier allocation of Rs 61,000 crore.

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