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

The Economic Times - - Companies: Pursuit Of Profit -

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.


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