Research indicates growth potential in rural India

The FMCG (Fast Moving Consumer Goods) category, of which a significant percentage is made up of soaps, shampoos, toothpaste and other every day toiletries and personal care goods, is likely to jump by 10 per cent in rural India by 2010 and by 6 per cent in semi-urban areas as an increasingly young population adopts western personal care habits. The total FMCG category in India is currently valued at $15bn (€10.9bn), of which $2.85bn is attributed to rural areas and $4.2bn is accounted for semi-urban areas. Currently the organisation estimates that the percentage of this total spend on personal care products is approximately 8 per cent, a figure that is expected to grow markedly in coming years. But as spending patterns and demographics shift, it is expected to be in rural areas where consumer patterns will be most affected. As an example of this, the total market share of FMCG in India within rural populations is currently estimated at 52 per cent, a figure that is estimated to reach 57 per cent by 2010. Likewise, the market share for the semi-urban population is expected to increase from 19 per cent to 21 per cent in the same time-frame. The growth in market share in these areas is expected to impact the urban India market, where the size is expected to fall from 29 per cent to 22 per cent, representing a fall of 25 per cent up to 2010. The government association claims that this fall will be accounted by the fact that consumers in urban areas are expected to reject excessive FMCG consumption and start to move towards the use of more sophisticated products, including naturals and organics. The study also highlights that growth in rural and semi-rural areas will focus on the fast-growing younger population, who are also, statistically speaking, more likely to spend greater amounts on personal care products as their grooming and personal care habits are changing the fastest in India. The population of those aged below 20 is currently estimated at 180 million and continues to rise in line with the Indian birth rate. On the back of a fertility rate of 2.81 children for each woman the total population exceeded 1 billion in 2000 and is continuing to rise. Assocham president Venugopal Dhoot stresses that the reason why the profitability of FMCG companies operating in India has risen by 20 per cent in the period 2006 - 2007 is mainly due to market growth within the semi-rural and rural and rural areas, further emphasizing the belief that the market is already undergoing significant realignment. The data suggests significant opportunities for international personal care players, and the biggest players have all made considerable efforts to increase their footprints on the market in recent years. Most recently the world's largest FMCG players, Procter & Gamble, has increased its presence in the skin care market in India with the launch of four new Oil Of Olay products in the country. The launch, which was announced at the beginning of this month, aims to tap in to current annual market growth within the skin care sector of 16 per cent.