New trends to boost Indian FMCG sales

16 November 2011

NEW DELHI: Sales of fast-moving consumer goods through organised retail channels are set to rise rapidly in India, benefiting major brand owners and the private-label competition, according to a study.

The Nielsen Company, the research firm, reported that the annual FMCG revenues generated by modern retail formats – like supermarkets and convenience stores – stand at $1.8bn at present.

Although modern retail thus represents just 5% of category sales in India today, returns have climbed by 31% year on year over the course of 2011 to date.

Looking forward, Nielsen forecast the revenues delivered by this channel should hit $5bn in 2015, almost trebling the 2011 total, as customers embrace the new "experience" on offer.

"The Indian consumer is clearly enjoying the modern trade shopping experience and is increasingly shopping there," Roosevelt D'Souza, executive director of Nielsen India, said.

Among the further trends Nielsen identified was the likelihood of rising private-label sales, from the contemporary $100m to $500m by 2015.

Own-label lines currently take 7% of organised retail FMCG sales in India, well ahead of the figure of 1% recorded in China, the firm's analysis added.

Packaged rice, floor cleaner, tissue paper, glass cleaner and packaged atta - a popular ingredient in many Indian dishes - are the most popular private label products at present.

"Indian consumers have always been value conscious but now even more so, given inflationary pressure on the household budget," said D'Souza.

Elsewhere, Nielsen predicted traditional outlets such as kirana stores would witness additional growth thanks to factors such as simple convenience and their long-established relationship with consumers.

A parallel development, however, will see web users – expected to reach 300m in number by 2014, according to Google – use social networks and similar platforms to research and discuss products, the company argued.

"Marketers who understand the future of Indian retail environment and how consumer shopping behaviour is changing will thrive in this dynamic and expanding market," D'Souza concluded.

Data sourced from The Nielsen Company; additional content by Warc staff