While overall consumer spends (urban+rural) on FMCG are showing smart rates of growth, the growth in rural markets at 20% plus has overtaken urban markets, which is growing at 17-18%, according to industry estimates.
Industry watchers attribute the growth to rise in rural disposable incomes, following three consecutive years of good agricultural growth. Also, top industry officials said the government has pumped in a lot of investments into rural areas.
In recent years, FMCG companies have invested significantly in effective distribution and tailoring their products and prices to geographic nuances to increase their return on investment (RoI) geographically. These efforts may now be paying off.
AC Nielsen numbers for the April-September 2008 period show that across a wide range of sectors, including skin creams and lotions, hair oils, toothpaste and candies, volume and value growth in rural markets have been significantly higher than urban markets.