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FMCG companies focus on rural markets to overcome low demand

Almost all FMCG companies are strengthening rural distribution network to combat the low consumer sentiments


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In order to combat the poor consumer sentiments in the rural markets, fast moving consumer goods (FMCG) companies such as ITC and Emami are scaling up their direct penetration in these markets. These FMCG giants are hoping this move, supported by consumer connect initiatives, can help push sales, Business Standard has reported.

According to the report, in view of the ongoing slowdown, which has impacted demand in rural India, ITC doubled its rural stockist network in the current financial year, with significant increase in coverage across low population group markets. ITC has added more than 25 percent new markets to the existing large serviced base.

The company’s retail base currently stands at 6.2 million outlets and it continued to deploy resources to augment the outlet coverage aggressively, with nearly 80 percent of new handlers added in the current year coming from a rural base.

Emami, which has one of the highest exposures in rural areas among its peers, the company is banking on its Project Dhanush initiative, which it undertook three years ago. In the past three years under this initiative, aimed at reaching the deepest and remotest of geographies, Emami expanded its footprint to more than 20,000 towns with a population of around 3,000.

Van branding and visual merchandising at outlets through point-of-purchase visibility has proved to be an effective consumer influencer fuelling rural market growth for Emami, the Business Standard says quoting a company official.

With more than 3,000 distributors and 600,000-plus square feet of trade assets, which incidentally is the largest in store merchandising in the country, Hindustan Unilever (HUL) also has prioritised increasing its direct distribution reach.

According to an open access journal, International Journal of Research — Granthaalayah, HUL has appointed 6,000 sub-stockists, because of which its distribution network directly covered about 50,000 villages and is reaching 250 million consumers. This translates into reaching 37 percent of rural consumers directly.

According the newspaper, the rural distributor has a set of stockists attached to it that drives distribution in villages using unconventional transport like tractors, bullock carts and others.

Nearly all FMCG giants like Marico, HUL, ITC and the rest have been indicating that the operating environment has been challenging, with drop in consumption, especially in rural areas, severe crunch in market liquidity conditions, and disruptions and floods in several parts of the country.

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