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Mobile is a rural essential

News, 13 July 2016

NEW DELHI: FMCG brands in rural India are wondering how best to tackle the "selfie" effect as consumers there are prioritising spending on ensuring their mobile phones are working to the detriment of other products.

The effect has become especially notable following two successive years of poor monsoons which have hit rural incomes, according to the Economic Times.

"The 'selfie culture' is making consumers spend more on their phones rather than on fast-moving consumer products, which are discretionary," said Suresh Narayanan, managing director of Nestle India.

The mobile internet user base in rural India almost doubled in 2015, while the sales growth of soft drinks and confectionery slowed to around 5%. Low-cost recharge options – the Rs 10 talk-time mobile recharge is now the best-selling pack in the country – are now in direct competition with colas, for example, where leading brands such as Coke and Pepsi have cut prices to as little as Rs 5 per serving.

"In a lot more homes, the mobile is a necessary expense now," noted Varun Berry, managing director at biscuit maker Britannia. "They (consumers) have to take that money from elsewhere.

"So in some ways, it is impacting consumption of discretionary products," he added. "To what extent is tough to say, but we know it is."

That was echoed by Ramesh Jayaraman, managing director at confectionery maker Perfetti Van Melle, who observed that spending on mobile recharges or low-priced entertainment options had "been directly impacting a category like ours and we've been observing this for the past four-five quarters".

And as 4G services roll out across the country and connectivity improves, the pressures on such FMCG brands will continue as more rural consumers explore the entertainment options that will open up for them.

"There is a huge pent up demand when it comes to consumption of digital content in rural India," according to Tarun Pathak, a telecom analyst at Counterpoint Research.

Data sourced from Economic Times; additional content by Warc staff