Rural households in India outpaced urban in terms of volume as well as value as the demand for branded products was higher in rural areas in the 12-month period of June 2020-May 2021, shows data from Kantar Worldpanel, which tracks over 82,000 household purchases shows.
From noodles and soft drinks to balms and toothpastes, rural growth drove demand especially in the food and beverage, personal care and household care categories despite the second wave of COVID-19 hitting the hinterlands.
For instance, while demand for bottled soft drinks saw zero growth in urban markets, it grew by 21 percent in rural areas. Meanwhile, noodles’ demand grew 20 percent in rural areas as against a 17 percent growth in urban India and that of salty snacks grew 22 percent in rural versus a 13 percent growth in urban.
Categories such as milk food drinks, spices, tea and personal care products like rubs/balms, and even toothpaste too saw higher growth in rural as compared to urban.
In fact, with work from home not being a phenomenon in rural India, grooming too saw better traction as compared to urban where grooming as a category took a major hit. Talcum powder, for example, saw a 26 percent volume growth as against a 2 percent de-growth in urban markets, and hair colour products saw a 12 percent growth in rural areas as against a decline of 7 percent in urban India.
While rural areas were impacted by the second wave of COVID-19, Kantar says that rural India held up volumes much stronger than urban. The trend is also evident from comments of top FMCG majors that said despite rural seeing higher cases as compared to the first wave, there were fewer restrictions in rural areas, whereas larger cities saw stricter curbs in terms of limited hours of operations of stores, and non-essential stores being shut.
K Ramakrishnan, MD - South Asia, Kantar World Panel said another important factor is that in the past year, the number of categories that a household is buying in rural areas has increased on account of more hygiene requirements. According to Kantar’s data, demand for sanitisers (23 percent) was higher than liquid handwash (18.7 percent) in rural India in the 12-month period ending May 2021.
“Sanitizers and hand washing also found their way into the baskets of rural consumers, again, catapulted by the fact that brands of sanitizers started offering low unit packs - small price packs, etc, which is also enabling rural markets to access them and use them. So in that sense, rural as an economy or a consumption economy in terms of FMCG still seems pretty much strong,” he added.
FMCG majors too have been alluding to higher rural growth. Most recently, HUL said, following its first-quarter earnings, that FMCG demand was seeing a rebound led by rural demand.
Overall, Kantar’s data shows that rural India saw volume growth of 4.4 percent as against 3.3 percent growth in urban and value growth of 11.6 percent as against 10.2 percent in urban markets.
A similar trend was seen across the country, with FMCG value growth outpacing volume growth (11 percent vs. 8 percent) in a move from unbranded to branded and from cheaper to more premium brands, which was observed even in essential categories. This comes on the back of consumers opting for larger brands amid the pandemic, and with increased accessibility of premium products in the market.