India Consumer Key takeaways:: Anand Rathi

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India Consumer
Key takeaways
 Conference. Anand Rathi Institutional Equities’ India Consumer
Conference, ‘The Changing Face of the Indian Consumer’, was
held in Mumbai over 25-26 Nov ’10. It featured 15 listed
companies and two panel discussions.


 Panel discussion on growth strategies. Panellists indicated that
the India consumer story is just beginning to unfold. They averred
that sub-segments in health, beauty and wellness will grow rapidly
in the coming decade. Rising penetration of nuclear families,
increasing number of working women, India getting younger and
rising income levels would lead to segments such as functional &
health foods and ready-to-eat products growing well during the
next ten years.

 Panel discussion on rural consumers. Panellists opined that
70% of population living in rural areas is a huge untapped market
for the sector. With better road connectivity, government
initiatives such as NREGA and rising incomes from sources other
than farming, off-take by rural consumers would rise. Panellists
also indicated that rural consumers visit nearby towns for their
weekly/monthly shopping. Hence rural consumption partly
contributes to off-take in urban areas. Small SKUs and shelf stable
products would see more off-take in rural areas.

 Product differentiation is key theme. With rising competition,
most consumer players are looking at launching differentiating
products. As various large MNCs and Indian companies are seeing
aggressive spend on advertising and trade promotions, consumer
companies are planning niche-product and variant launches.

 Maintaining margins not a major concern. With inflationary
pressures easing and most companies resorting to price hikes or
weight reductions, consumer companies do not seem worried
about maintaining profit margins. They are focussed more on
revenue, especially through volume growth.

 Interesting stock ideas. Zydus Wellness (health), Emami (new
launches, possible acquisitions), Marico (improving margin
outlook), Colgate (market-share gains), Dabur (strong focus on
ayurved). Nilkamal (lifestyle retail turned profitable) and Piramal
Glass (increased contribution from the high-margin cosmetics &
perfumery-C&P segment).