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Premium category growth double that of entire FMCG sector

The FMCG sector is set for a revival post a slowdown of several quarters

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MUMBAI: Even though the FMCG sector in rural India is facing a slow down for the past few quarters, the number of households buying more than 20 categories in a year saw a jump of nearly 50 per cent in the past year, Kantar managing director for Worldpanel Division south Asia K Ramakrishnan told Indiantelevision.com as he highlighted the key findings from the Consumer Connection 2019 report, which is based on the buying habits of around 8200 households in India across 95 categories.

Ramakrishnan said, “Rural India is in a conundrum. On the one hand, there is a slowdown (for FMCG) and on the other hand, they are trying more categories. Rural aspirations are just like urban consumers’ right now. So, they are trying newer things by cutting on staples like atta, oil, salt, etc. They are rationing it in such a way that they avoid the wastage of these staples and also the stocking.”

One of the reasons behind this increase in categories that the rural consumers buy from are actions taken by various brands in making products available at cheaper price points in the form of trial packs.

Ramakrishnan highlighted that along with Indian consumers’ move towards bigger packs—as compared to their affinity to sachets like earlier—increasing, there has been a substantial jump in the sale of premium category products across the country. “The growth of premium category is twice that of the FMCG category as a whole,” he said.

He further noted, “We see it as a result of several things like there have been strong pricing actions by manufacturers for promoting larger packs; strong promotional actions to popularise these larger packs; and interesting innovations like Kissan’s ketchup sachets with a nozzle.”

Ramakrishnan added, “The premiumisation is showing tremendous growth not just because the base is small, but also because a lot of premium brands are offering trial packs. For example, Surf Excel is a premium brand but it has grown, largely, on its Rs 10 pack.”

He also mentioned that after a slowdown in the FMCG sector, that started from the second quarter from 2018, the industry is now looking towards a revival. The first quarter of 2019 has shown improvements, and Ramakrishnan believes that the worst is over.

Ramakrishnan also elaborated on the increased penetration of e-commerce in the Indian market. He shared that though the category has witnessed 3-time increase in its penetration, it is largely because the base is small. He attributed this growth to the increasing smartphone penetration and cheaper data prices.

Some other key findings of the Consumer Connections 2019 include a dip, of about 50 per cent, in the success rate of newly launched products, a 15 per cent volume drop in the sale of baby foods, and loss of volumes for unbranded products.

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