Government may increase spending on rural areas in the budget, FMCG companies are eyeing the village market
FMCG Companies: For the development of rural areas and to generate employment for farmers as well as women and youth, the government is rapidly increasing its expenditure in rural areas. In view of this, FMCG companies making daily consumption items are once again focusing on rural areas.
The government is significantly increasing its investment in rural areas in order to improve them and create jobs for farmers, women, and youth. Along with the Prime Minister's direct distribution of funds to farmers' accounts, MSP has been enhanced. According to experts, the government would raise its spending on rural areas in the future budget as well. In light of this, FMCG companies producing everyday consumer items are once again focused on rural areas. They are concentrating on introducing products that will meet the needs of rural market clients. However, obstacles in rural distribution persist.
Sudhir Sitapati, MD and CEO of Godrej Consumer Products Limited said that rural market and demand play an important role in our business. The way spending is being increased in rural areas and the infrastructure has improved, it makes it easier to reach there. We are introducing new products like household insecticides for these areas. Along with this, we are preparing hair care, and air care products. He said that rural distribution is challenging due to dependence on wholesale channels, but initiatives like our rural van are helping us reach many villages.
HUL Chief Financial Officer Ritesh Tiwari said that due to the expectation of a normal monsoon and improvement in the economic environment, the average demand in rural areas will increase. The company will focus on volume growth while promoting its premium products. I hope that in the coming years, the rural growth rate will surpass the average FMCG growth rate. The main reason for this is economic improvement in rural areas. Tata Consumer Products says that the company is constantly preparing to enter new categories and is expanding its business in all areas.
Sudhir Sitapati says that a normal monsoon brings good news for FMCG companies. Good rains are not only good news for agricultural production, but rural demand is also expected to increase. This is an important driver of industry growth. Improvement in micro indicators and strong and increased agricultural production will improve consumer sentiment. We expect demand for personal wash and home care products to increase from these places. Ritesh Tiwari says that a normal monsoon is good news for everyone. The rural sector has historically been an important driver of demand.
The FMCG sector is expected to grow at 7 to 9 percent due to government efforts to continuously create employment opportunities and initiatives like promoting consumption. According to a report by ICICI Lombard General Insurance, this sector will grow continuously and it will grow at a rate of 7 to 9 percent in 2024. However, rising inflation will increase the challenge for this sector. But there is good hope of sales due to normal monsoon and companies increasing distribution in these areas. The third quarter of 2023 witnessed a robust growth of 8.6 percent across the country. Rural markets have contributed significantly with a growth of 6.4 per cent during this period.
