Consumer goods companies step up rural focus with rural-only products

Large consumer goods companies have stepped up rural focus after a gap of at least six quarters, with new products, packs, delivery models and promotions aimed only at rural markets, with consumption in India’s villages growing faster than cities.On Wednesday, beverages maker Coca-Cola inked a partnership with the central government-backed Common Services Centers (CSC) to list its products on CSC’s Grameen eStore platform, a first-time move which will enable doorstep delivery of affordable beverages in rural markets through local entrepreneurs and e-kirana stores. “This partnership with CSC paves the path for digital and economic empowerment of rural citizens; it will enable last mile connectivity,” Coca-Cola India and Southwest Asia president T. Krishnakumar said. The maker of Coke and Sprite soft drinks and Minute Maid juice said the partnership serves the dual purpose of providing last mile connectivity to consumers’ doorsteps and promoting rural entrepreneurship.A spokesperson for hotels-to-consumer goods giant ITC said the company has strengthened direct reach in rural markets by increasing the number of vans to service rural demand. "With health, hygiene and immunity boosting products at the forefront of consumer demand even in rural markets, we are delivering value through innovative formats such as Savlon sanitizers in 50 paise sachets,” she said. “The rural sector has also seen upsizing in snacks, refined oils, tea and juices. We have been witnessing encouraging consumer franchise for Sunfeast biscuits, Bingo snacks and Yippee noodles in rural markets,” she added.A report by Nielsen last week forecasted rural markets to grow twice the rate of urban, riding on higher farm incomes, government spending, minimal retail disruption during the lockdown and migrant workers returning to the home towns. The trend is a reversal from the past two years when subdued demand in the rural markets had negatively impacted the entire fast moving consumer goods market.“We invested ahead of the curve in building our rural footprint with our sub-stockist network going up significantly,” said Mohit Malhotra, chief executive officer at Dabur India. He said the company is expanding its products aimed at rural markets with newer Low Unit Price (LUP) packs, consumer activation across categories to push demand, and increasing its rural footprint by 8,000 villages by 2020-21-end. The maker of Vatika shampoo and Fem bleach has launched a Project RISE (Regional Insights and Speed in Execution) to capture emerging market opportunities, which includes region-specific products, variants and campaigns. Examples include Fem Fruit Bleach for Punjab and a fruit juice-based ORS for North East.South Asia MD at Kantar K Ramakrishnan said the research firm expects rural demand to pick up a lot due to macro factors like monsoon, harvest and MNREGA allocations being very good this year. "The poor growth in April at 1% is more because of the logistical inability of reaching stocks to the last mile," said, adding that urban has been outpacing rural since the past few months even as growth in villages is picking up - from 3.9% in March to 5.7% in May," he said.The country’s biggest consumer goods firm Hindustan Unilever (HUL)’s rural distribution model Project Shakti has increased its woman entrepreneurs base to 1.2 lakh now, an increase of 20,000 over last year. HUL under its rural distribution model Project Shakti now has 1.2 lakhs shakti entrepreneurs or shakti ammas in about 18 states, compared to 80,000 three years ago. In an interview with ET last month, HUL's chairman Sanjiv Mehta had indicated that rural was less affected by lockdown and restrictions but unlike urban consumers, villagers didn't resort to pantry loading. "We have ongoing programmes such as Har Gaon Har Outlet or Total Rural Reach since several years to increase distribution rural markets. At present, the biggest issue now is appointing newer distributors at a time when servicing existing ones is a challenge," said Krishnarao Buddha, senior category head at Parle Products, the country's biggest biscuits company.A Crisil report said rural India should fare better than urban areas because of higher proportion of essential products consumed, government doles, eased restrictions on agriculture activities, and likelihood of a normal monsoon.The India unit of Swiss foods maker Nestle, which is witnessing stronger demand in rural and smaller towns compared to urban India, has tied up with Star India for a sustained regional campaign for its Munch brand of chocolates.