The increase in demand for FMCG products in rural India, particularly in the home care, packaged foods, branded commodities, and personal care categories, has led to a significant boost in rural sales in February 2023. This is a positive sign for the Indian economy, as rural areas account for a significant portion of the country’s population and GDP.
According to data from Bizom, which automates retail execution at 7.5 million kirana stores, rural India is experiencing real growth for the first time since August 2022. This growth is significant, with rural sales expanding by 12.4% compared to the same period last year, while urban sales only grew by 5.5%.
Bizom’s chief (growth & insights) Akshay D’Souza, said, “We’ve seen a double-digit growth in FMCG sales on the back of a strong performance in rural. In five of six categories, we’ve seen rural outperform urban sales in February 2023.”
Dabur India’s COO Adarsh Sharma said, “While rural India has been a key driver of growth for some years now, we have seen rural demand lagging urban in the early part of the current fiscal. We believe this demand slump in rural has bottomed out as we are now seeing some green shoots of revival in the hinterland. Rural demand, for us, has already started showing a recovery.”
The home care category saw the fastest growth rate, expanding over 27% in rural areas compared to 19.5% in urban regions. This is likely due to increased awareness of health and hygiene, as well as the rise in home deliveries and online orders in rural areas. The packaged foods category also saw significant growth in rural areas, with an increase of 16.4% compared to only 2.2% in urban regions.
The branded commodities category, which includes products like beauty and personal care items, also experienced growth in rural India, expanding by 13.3%. In contrast, this category shrank by 4% in urban areas. This may be due to the growing awareness and desire for personal grooming and self-care in rural areas.
Interestingly, the chocolates and confectionery category was the only one to show a different trend, decreasing slightly in rural areas but growing rapidly by 19.5% in urban India. This may be due to increased disposable income and the rise of e-commerce platforms in urban areas.
Looking ahead, companies like Dabur India have already started investing in expanding their rural footprint to capitalize on the growing demand for FMCG products in rural areas. With plans to cover over one lakh villages, these companies are poised to take advantage of the significant growth potential in the rural market. This, in turn, could help boost the overall Indian economy and create new opportunities for businesses and consumers alike.