Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
On the road
A personal visit to Nadiad in the state of Gujarat served as an eye-opener
on the fast changing consumer landscape in small town India. From the
outside, it appeared that the stores had little to offer, but the shelves told
a different story altogether. With domestic brands and MNCs jostling for
shelf space, the rural consumer is clearly spoilt for choice and the
surprisingly high share for premium brands mirror the rising aspiration
levels. While the sheer variety of products available in a low unit pack
(LUPs) format was a revelation to us, it also underscores that marketers'
rural strategies are still focussed on penetration, with competitive pricing
a key element of this. Expect margins to remain under pressure.
Spoilt for choice; LUPs clearly dominate
q It was interesting (as well as surprising) to find that products/ brands that are
available in top cities are pretty much available in places like Nadiad.
q In segments like biscuits, it seemed that the consumers there have more choices
(than say in Mumbai) due to the presence of both, MNCs and local brands.
q Low Price Points (LUP) strategy remains the key for rural markets with price points
of Re1/Rs2/5/10 dominating across segments.
q For example, Parle’s low-end biscuits, Parle G were priced at just Re1 for a pack of
four biscuits and there were cream biscuits (local brand) of Re1 for a pack of two.
Packaged foods occupy a decent space; so does aspirational HPC
q It was a revelation to find packaged foods/ aspirational HPC products on the
shelves, which are generally perceived to be targeted to urban baskets.
q For example, Nestle's recent launch, Nestea Iced tea premix, Nestle’s Seasoning
mix and Smith & Jones’ Ginger Garlic Paste were available in small packs.
q The retailers indicated that while convenience is important, quality and consistency
are also the rationale for buying these products.
q In home and personal care segments, high-end segments like HUL's Comfort (fabric
care), hair gels (in sachets) were witnessing decent offtakes.
Rural shelves also witnessing competitive action
q Given the significance of rural consumer markets, almost all the MNCs and
domestic giants were present in the stores that we visited.
q Cadbury’s (Kraft) recent launch Oreo biscuits (Mar-11) were available in all the
three stores, with good consumer response in two of the outlets.
q While HUL's Rs7/pack for Fair & Lovely occupied lion's share in all the three stores,
ITC's Vivel Fairness cream at Rs5/pack also appears to be doing well.
q Detergent brand Ghari (regional) was dominating the volumes despite P&G’s
aggressive price cuts in Tide Naturals which seemed to have seen modest response.
Some rural focussed products as well
q While it seemed difficult to find bottled drinking water, locally made water sachets
were perhaps the hottest selling products (considering the peak summer season).
q Priced at Rs1/pack for 250ml pack, these were 70% cheaper than the bottled water
available in Mumbai.
q Interestingly, the margins for retailer were around 35%, though, adjusting for
refrigeration cost, it comes down to around 15% or so.
Outlets need touch up; HUL’s store initiative is a step in the right direction
q The stores, in general, were much inferior (in display, cleanliness etc).
q For example, some of the sachets, despite being right at the entrance of the store,
were just not visible.
q Retailers normally do not make any effort in pushing a product but just sell what
consumers ask for.
q In this context, HUL's initiative of creating perfect store should yield dividends.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
On the road
A personal visit to Nadiad in the state of Gujarat served as an eye-opener
on the fast changing consumer landscape in small town India. From the
outside, it appeared that the stores had little to offer, but the shelves told
a different story altogether. With domestic brands and MNCs jostling for
shelf space, the rural consumer is clearly spoilt for choice and the
surprisingly high share for premium brands mirror the rising aspiration
levels. While the sheer variety of products available in a low unit pack
(LUPs) format was a revelation to us, it also underscores that marketers'
rural strategies are still focussed on penetration, with competitive pricing
a key element of this. Expect margins to remain under pressure.
Spoilt for choice; LUPs clearly dominate
q It was interesting (as well as surprising) to find that products/ brands that are
available in top cities are pretty much available in places like Nadiad.
q In segments like biscuits, it seemed that the consumers there have more choices
(than say in Mumbai) due to the presence of both, MNCs and local brands.
q Low Price Points (LUP) strategy remains the key for rural markets with price points
of Re1/Rs2/5/10 dominating across segments.
q For example, Parle’s low-end biscuits, Parle G were priced at just Re1 for a pack of
four biscuits and there were cream biscuits (local brand) of Re1 for a pack of two.
Packaged foods occupy a decent space; so does aspirational HPC
q It was a revelation to find packaged foods/ aspirational HPC products on the
shelves, which are generally perceived to be targeted to urban baskets.
q For example, Nestle's recent launch, Nestea Iced tea premix, Nestle’s Seasoning
mix and Smith & Jones’ Ginger Garlic Paste were available in small packs.
q The retailers indicated that while convenience is important, quality and consistency
are also the rationale for buying these products.
q In home and personal care segments, high-end segments like HUL's Comfort (fabric
care), hair gels (in sachets) were witnessing decent offtakes.
Rural shelves also witnessing competitive action
q Given the significance of rural consumer markets, almost all the MNCs and
domestic giants were present in the stores that we visited.
q Cadbury’s (Kraft) recent launch Oreo biscuits (Mar-11) were available in all the
three stores, with good consumer response in two of the outlets.
q While HUL's Rs7/pack for Fair & Lovely occupied lion's share in all the three stores,
ITC's Vivel Fairness cream at Rs5/pack also appears to be doing well.
q Detergent brand Ghari (regional) was dominating the volumes despite P&G’s
aggressive price cuts in Tide Naturals which seemed to have seen modest response.
Some rural focussed products as well
q While it seemed difficult to find bottled drinking water, locally made water sachets
were perhaps the hottest selling products (considering the peak summer season).
q Priced at Rs1/pack for 250ml pack, these were 70% cheaper than the bottled water
available in Mumbai.
q Interestingly, the margins for retailer were around 35%, though, adjusting for
refrigeration cost, it comes down to around 15% or so.
Outlets need touch up; HUL’s store initiative is a step in the right direction
q The stores, in general, were much inferior (in display, cleanliness etc).
q For example, some of the sachets, despite being right at the entrance of the store,
were just not visible.
q Retailers normally do not make any effort in pushing a product but just sell what
consumers ask for.
q In this context, HUL's initiative of creating perfect store should yield dividends.
No comments:
Post a Comment