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Godrej sustains its rural strategy

News, 04 May 2015

MUMBAI: Several major Indian FMCG firms have said they will concentrate on cities for growth because of uncertainty about the impact of this year's monsoon season on rural areas, but Godrej Consumer Products (GCPL) will not be one of them.

Instead, the company will maintain its focus on expanding into rural India where it is achieving double-digit growth, GCPL managing director Vivek Gambhir told the Business Standard

He said rural areas accounted for at least 25% of GCPL's overall revenue - a proportion that it aims to increase to 35% in the next few years - and that rural markets grew at 17.4% in the March 2015 quarter versus 9.4% in urban areas.

"While urban sales in the past three quarters have grown faster than rural in the home and personal care category at an industry level, rural sales growth has been ahead of urban sales by 600-800 basis points in this period," he said.

"My sense is it will stay like this for some time. If that is the case, why should I take my attention off the rural map?" he asked.

GCPL's recently-launched OneRural programme underpins its rural growth strategy, which will focus on the top 20,000 villages out of the 60,000 it currently serves. 

These villages will receive more attention from larger sales and support teams, improved logistics and, Gambhir confirmed, increased marketing and promotions.

By continuing its commitment to rural India, GCPL is running against the tide of industry opinion that there could be below-normal rainfall this year that could hit rural markets

These concerns prompted Sunil Duggal, CEO of Dabur India, to say last week that "attention will have to shift to urban areas. Investments in rural markets, notably in distribution and product portfolio expansion, will have to slow down".

Despite uncertainty surrounding official weather forecasts, GCPL remains confident about a recent forecast from Delhi-based Skymet, which predicted rains would be normal this year, at 102% of the long-period average.

"While climatic changes have afflicted parts of India in the past few months, our assessment, based on international weather forecasts, is rainfall will be normal this year," Gambhir said.


Data sourced from Business Standard; additional content from Warc staff