Rural market to push up consumer goods demand

NEW DELHI: Increasing demand for FMCG products from rural and semi-urban centres will push the consumer goods industry to touch a market size of over Rs 1 lakh crore by 2012, industry chamber Assocham has said. The industry body, in its research on the future of FMCG products in India, said that the industry is expected to grow at 60% per year to reach a market size of Rs 1,23,363 crore by 2012 from the present Rs 70,000 crore.

Urban pockets, which have the biggest market size for all FMCG products, would in the next 4-5 years switch over their consumption patterns for organic products with a growing number of health conscious consumers, Assocham said in a release. Demand for FMCG products may stagnate by 2012 in urban pockets thus forcing the manufacturers to shift supplies to rural and semi-urban folks.

FMCG products like toothpaste, skin and hair wash, talcum, powder, branded atta, dish wash, instant coffee, ketchups, deodorants and jams, which have less than 30% penetration in rural and semi-urban areas would grow by 50% in next 5-7 years on account of rising per capita income of people in these areas.

As per current estimates, the per capita income of semi-urban population is Rs 14,000-15,000 per annum and that of a person in rural area is less than Rs 7,000 per annum. While the per capita income of rural population would double by 2012 that of semi-urban people would more than double leading to a hike in their consumption patterns for FMCG products, Assocham said in a release.

The FMCG products market penetration in rural and semi-urban areas is 2% in general as against a growth rate of 8%, Assocham president Anil K Agarwal said. He said the Indian rural market with its vast size and demand base offered huge opportunity for FMCG companies. This would put severe pressure on the margins of manufacturers because of cut-throat competition.