Anand Rathi: India Consumer -CII National FMCG Summit 2011 – Key takeaways

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India Consumer
CII National FMCG Summit 2011 – Key takeaways
Panelists of the ‘CII National FMCG Summit 2011’ opined that
the India consumption story is intact; they expect consumption
to continue its double-digit growth over the next two decades.
Their confidence was skewed to consumption in rural areas and
small towns, the only worry being the volatile and high inflation.

 Various in-place triggers to drive consumption. Panelists said
that triggers such as rising number of working women, growing
modern trade and cold chain, penetration by media and internet,
government initiatives such as NREGA, and a higher ‘young’
population are already in place and ensure consumption growth.
 Working women making ‘buying’ decisions. Panelists
indicated that rising influence of working women will determine
consumption patterns. Women consumers contribute around
~50% of consumer spending in developing economies with the
average being ~42% in India.
 Volatile inflation impacts consumption growth. Some
speakers said that rising inflation impacts consumption growth;
they also indicated that volatile inflation in India (ranging over
-4% and 15% in 1.5 years) impacts consumer confidence.
 Same media usage as urban drives rural aspirations too.
Panelists said that rural consumers were influenced by the same
ads on television, radio and internet as urban consumers. Also,
aspirations across rural and urban youth are turning similar.
 Local celebrities enjoy better brand recall. While discussing
case studies, panelists indicated that rural consumers connect with
local celebrities more than national or international stars. This fact
is observed more in southern and eastern India.
 Faster development of micro finance to change growth
patterns. Panelists indicated that higher penetration of micro
finance and rural credit will drive growth of some sub-segments
(such as television and two-wheelers, which, in turn, will drive
aspirations and accessibility respectively).
 Small towns more crucial than villages, panelists indicated, as
villagers do some shopping on their visits to small towns as also at
melas (fairs) there. As inventory & cold-chain management as well
as implementation of software can be better managed at the smalltown
level, consumption will grow faster than in rural areas.
 Gujarat, Bihar and AP to remain strong growth areas. Based
on investments by the government and the corporate sector,
panelists believe Gujarat, Bihar and Andhra Pradesh are states to
watch, on the growth front.