[LOOKBACK 2011] Middle India on overdrive

29 Dec,2011

By A Correspondent


While metros and mini metros are the flavour of the season for marketers on one side, and rural on the other, it is Middle India that is growing the fastest as far as consumerism is concerned, as per the Middle India Gold Rush, a study released by Nielsen India in December 2011.



To define Middle India, it comprises 400 towns of population between one to 10 lakh per town. Put together these towns have an approximate populace of 100 million.


Interestingly, the study states that Middle India would benefit disproportionately from consumerism of middle class (classified as strivers – annual household income of Rs 500,000, and seekers – annual household income of at least Rs 200,000). The reason is simple, a large percentage of the middle class resides in Middle India.


In these towns, the markets benefit from the fact that they are easier to penetrate than metros due to sparse competition, and also easier to penetrate than rural areas due to better infrastructure.


Nielsen tracks 81 FMCG categories, and in early 2011, 49 saw faster growth in Middle India. As per the study, Middle India is showing strong value growth and as per MAT May 2011, it has moved from 16.9 per cent to 20.1 per cent growth, while for metros, the growth has moved from 16.4 per cent to 19.1 per cent, and on All India level, from 18.5 per cent to 18.8 per cent.


Middle India is growing at a much faster pace vis-a-vis all India. From the year 2002 to 2010, Middle India saw 3.5 times growth in FMCG sector, vis-a-vis 3.2 of All India. Per Capita FMCG consumption too is much higher in Middle India as compared to All India. In the year 2010, both stood at Rs2,800 and Rs1,200 respectively.



FMCG players, obviously, are not oblivious to these growth numbers. Top FMCG players have added Rs35.8 billion from these 400 towns in the last two years. As of May 2011, FMCG per dealer off take increased to 14+ per cent in Middle India, up 2.7 points as compared to 1.5 points of metros.



This, in turn, led to increase in number of FMCG stores in these 400 towns, at an average, 250 stores were added per town in the last three years. The total number of stores in these towns increased from 8,23,000 in June 2008 to 9,26,000 in May 2011.


The growth story becomes even more interesting, if one looks at the subsection of 350 towns with population of 1 to 5 lakh. These towns are growing at over 20% and 56 of 81 FMCG categories outperformed All India growth rates.


Marketers, thus, ignore Middle India at their own peril, because people residing there want to check out all the categories from potato chips to skin care and from shampoos to fragrances. They do not only want options in categories they have been using, but newer categories as well.


Click here to download the complete report.


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