FMCG market to cross $80 bn in small towns: Nielsen

With changing lifestyle and increasing consumer demand, the Indian fast moving consumer goods market is expected to cross $80 billion by 2026 in towns with population of up to 10 lakh, according to a study by market research firm Nielsen.

As per the study titled 'Managing the Middle India Gold Rush', the FMCG market in about 400 small Indian towns with populations of 1–10 lakh, is expected to surpass $20 billion by 2018.

"Although big Indian metros remain the staple for FMCG marketers and rural India is proving to be critical for volumes in the long run, the next wave of the Indian urban demand revolution may be found in these 400 small towns," Nielsen Executive Director Ranjeet Laungani said.

Of the total $28 billion in FMCG sales in 2010, goods worth about $6 billion crore were consumed in these small towns. Since 2002, the FMCG sector grew 3.5 times in these towns of 1-10 lakh population, compared to 3.2 times at the all-India level, the study said.

"The demand revolution has percolated down to Middle India and these towns will behave like the metros of tomorrow... Middle India leads the pack across urban and rural segments," he said. Middle India stands for the 400 small towns.

The study said the 'middle India' consumer is changing and evolving, and is experimenting with categories that were never a part of the household basket and is trying out newer categories.

Some of the categories which have shown huge growth in these areas include health and wellness, personal grooming and home improvement.

"Marketers will need to cultivate their brands with Middle India and build loyalty now while habits are changing, so that they can flourish when spending increases manifold in the coming decade," Laungani said.

The study was conducted across housewives (25-50), youth (M/F; 18-24), and working men (35-50) in 4 centres of Bhatinda (Punjab), Anantapur (Andhra Pradesh), Nanded (Maharashtra), and Jhansi (Uttar Pradesh). Pune (Maharashtra) was selected as a benchmark city to represent a larger mini metro, Nielsen added.