Consumer Cos Take Country Roads to Beat DeMo Blues
Cos bet big on finance minister’s Budget proposal to double farmers income, which will help prop up demand in rural India
Writankar Mukherjee & Ratna Bhushan
Kolkata | New Delhi: Rural is the new buzz word for consumer goods makers and it is resonating like never before in their marketing strategies.
To offset the weak post-demonetisation consumer sentiment and take advantage of the Union Budget’s push to boost rural income, companies, from electronics major Samsung to hair oil maker Marico, are going deep into the hinterlands with products and services tailored for a market that is still largely untapped.
Samsung is creating distinct business plans right up to the district level, with more regional officers and made for India products, while rival Videocon is setting up warehouses and service centres in small cities and towns, and Panasonic is launching a product line and distribution channel targeting rural India. FMCG firms like Dabur, Parle, Godrej Consumer Products and Marico are accelerating hiring to directly serve regional markets and small towns.
“Ever since demonetisation, there is a change in the behaviour of urban households whereby those who used to buy multiple products are now at best buying one product,” said Videocon chief operating officer CM Singh. “Hence, we have to expand presence in small towns and rural India, where there are a lot of first-time buyers … to continue the growth rate.” The November 8 note ban and the cash crunch that followed have badly bruised the consumer goods industry, with buyers staying away from electronics and automobile showrooms and spending less on non-essential FMCG products. Whi- te goods sales fell as much as 25% during November-January, while those were down 35% for FMCG immediately after demonetisation. All listed FMCG companies reported slower growth for the October-December quarter, and predicted de- mand to bounce back only from April by when they expect rural demand to start picking up.
But they are also betting on finance minister Arun Jaitley’s Budget proposals aimed at doubling farmer income in five years, which they expect to stir up demand in rural India and provide them with a growth driver for the future.
Panasonic India president Manish Sharma said the focus on small towns and rural India is also to prepare for future. The company is coming up with a facility to manufacture refrigerators in India.
Biscuits giant Parle Products is directly servicing small and regional markets from the headquarters with dedicated teams, marketing manager Mayank Shah said. Godrej Consumer Products, Marico and Britannia said they will expand their teams and launch more rural-focused products, including packs at price points of .₹ 2, .₹ 5 and .₹ 10.
Britannia managing director Varun Berry last week told ET that distribution inroads in rural would remain the company’s biggest initiative. Dabur India executive director
for HR V Krishnan said the company has been strengthening its presence in the hinterland and ramping up field force both within the company and stockists. It has created a full-fledged vertical for healthcare with a team of 200 professionals for this. “We have been working towards not just enhancing
our presence in the retail channel, but also improving the way we reach out. In addition, with Dabur expanding rural footprint, we are adding feet on street,” said Krishnan.
At Samsung India, it will have marketing and service backups right up to the district level to target each tehsil and village under those.