Rural India Laps up Diapers, Colognes, Sanitary napkins.

Rural consumers are buying diapers, salty snacks, colognes and even contraceptives other than condoms like never before, despite signs of falling demand for traditional FMCG categories such as shampoos and soaps in hinterlands due to unabated inflation. Data from Nielsen, a global provider of insights and analytics, shows that tens of contemporary and indulgent product categories including sanitary napkins and chocolates are growing at high double-digit rates in Indian villages (see graphic).

“The rural mindset is open to consumption of newer, more contemporary categories, as a result driving consistent growth,” says Nielsen India VP Prashant Singh.
Nielsen categorises rural markets as those with population of less than 5,000, but there could be some exceptions. It estimates that the country’s rural FMCG market will grow to $100 billion by 2025 from $12 billion in 2011.
For MNCs like Procter & Gamble and PepsiCo, it’s an achievement of sorts to have broken ground in rural markets, by initiating consumers into newer categories such as diapers and salty snacks and upgrading them from unbranded or regional products to branded ones like in the case of cooking oils.
So, how did they achieve this?
P&G adopted the classic and tested strategy of betting on low-volume, lowpriced packages — sachets in the case of detergents and shampoo, and, for diapers, a pack of two at Rs. 15.  The move has paid off.
“We have seen a near doubling of the diaper category in rural India over the last two years,” says P&G Brand Manager (Pampers) Girish Kalyanaraman.
P&G launched the country’s first lowpriced trial pack of two Pamper diapers two years ago, educated people in rural areas about the benefits of uninterrupted overnight sleep for babies; and ran an awareness campaign on Doordarshan and satellite channels. Result: Demand for diapers has grown 90% a year in the last couple of years.
American snacks and beverages maker PepsiCo is another company that achieved tremendous growth in rural areas. Besides using fixed low price points such as Rs. 2, 3 and 5, PepsiCo has been using innovation, backward linkages for procurement and expanded distribution to drive growth in the hinterlands, a PepsiCo spokesman said.
“There’s a massive under-served demand for hygienic packaged snacks; we are expanding our manufacturing footprint and investing heavily in expanding distribution,” he said.
The company has moved away from centralised manufacturing and, instead, partners with local entrepreneurs across the country to cater to regional preferences and tastes, using locally grown ingredients. Examples for this include the extension of Kurkure brand to three local variants — Mumbai Usal, Bengali Jhaal and South India Spice—and testing of Lehar Iron Chusti puffs and biscuits at Rs. 2 in Andhra Pradesh. Kolkata-based Emami—maker of Boroplus anti-septic cream and Zandu Balm pain reliever—broke into the rural cooking oil market with a Rs. 5 pack of its edible oil Healthy & Tasty. “Rural consumers are used to buying unbranded or loose oil from local kirana shops for Rs. 5 or 10,” says Emami Group of Companies Director Aditya Agarwal, explaining the idea behind the low-cost edible oil packet.

Starbucks, PepsiCo and Unilever partner to grow Tazo tea RTD business

Starbucks Coffee Company, PepsiCo and Unilever have announced a licensing agreement for the manufacturing, marketing and distribution of Starbucks Tazo Tea ready-to-drink beverages, including iced teas, juiced teas and herbal infusions, in the US and Canada.

Tazo’s ready-to-drink (RTD) line will be integrated into the Pepsi/Lipton Tea Partnership (PLP), expanding the joint venture between PepsiCo and Unilever.

Mary Barnard, general manger and vice president of PLP, said: “Unilever and Starbucks have both been great partners of PepsiCo for over a decade, so culturally it’s a great fit. By engaging the passionate base of Tazo consumers already established by Starbucks, leveraging the strength of the Pepsi bottling system and employing the beverage expertise of the Pepsi/Lipton Tea Partnership, we’ll be able to share Tazo RTD products with a larger audience than ever before.”

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