The demand for consumer products like biscuits, edible oils, snacks, hair oil and shampoo had increased in the last few years.
A C Nielsen has projected the size of the rural market to grow ten folds to USD 100 billion by 2025. The Fast Moving Consumer Good (FMCG) companies are capitalizing on the vast rural potential as well. They are establishing wider distribution network in villages and increased launch of products in ‘Low Unit Packs’ (LUP).
The LUP market forms 35 per cent of the total Indian FMCG market. The market size for LUPs is different for different categories. For example, in shampoos, close to 80 per cent of sales come from sachets than costly bottles.
The LUP attracts consumers who want to consume premium or impulse branded goods without hurting their pockets.
The main reason for the increase in the consumer goods in rural India is the increased purchasing power. The factors led to this are loan waiver by the government, increased agricultural production, more savings and government sponsored development and employment programmes.
As per the National Sample Survey, the monthly per capita expenditure in rural India reached Rs 953 in 2009-10; a rise of 64.6 per cent as compared to 2004-05.
The growth in expenses outpaced the 57.6 per cent rise in consumer prices over the same period, pointing to improved living standard of rural India.
