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Digital has 'profound' impact on FMCG

News, 22 December 2015

NEW DELHI: Alongside the ongoing demographic shifts taking place within India, the rise of the digital consumer is expected to have a "profound" effect on the FMCG sector, according to a new report.

Re-imagining FMCG in India, produced by Boston Consulting Group and the Confederation of Indian Industry, forecast that within five years almost 150m consumers would be digitally influenced in the sector and would be spending around $40bn across all FMCG categories.

The study projected sector growth of 13-14% over the next five to ten years and said FMCG would be a $220-240bn industry by 2025, the Economic Times reported.

"The impact of digital [will] be profound," said Abheek Singhi, senior partner and director at BCG.

A recent report from Omnicom Media Group India and MICA also highlighted the impact digital is having on the expectations of Indian consumers and suggested brands were going to have to "reimagine marketing" as a consequence.

Within the FMCG context, however, many FMCG companies are unclear on the opportunity and the stance to take and the report suggests they will have to consider how they can best incorporate digital into the way they do business.

"The single most important challenge will be multiple usage of channels by shoppers and consumers," according to Suresh Narayanan, chairman and managing director at Nestlé, quoted in the report.

"Ecommerce platforms will jostle for share of wallet traditionally going to unorganised and organised trade banners," he said.

While digital will play an increasingly important role within the FMCG sector, it is by no means the only factor driving change.

The report also pointed to an anticipated 70% increase in income levels over the next decade and the emergence of a new middle class, continued urbanisation and the growth of new cities.

"We expect greater premiumisation, tier 2-4 towns to be the drivers of growth," said Singhi.

Data sourced from Economic Times; additional content by Warc staff