BW Summit: Rural population consuming more digital content than urban: Prasun Basu
At the Businessworld Marketing Whitebook Summit, Prasun Basu, President, South Asia, Nielsen, spoke about the 'State Of Union'
Prasun Basu, President, South Asia, Nielsen, delivered the first Knowledge Address at the BW Whitebook Summit held in Mumbai on Thursday.
Speaking on the ‘State of Union’, Basu threw light on how to understand the slowdown that the FMCG sector is facing currently and why the digital growth in India will be driven by the rural areas.
“We know the last quarter, in terms of various genres, did see a clear slowdown. The question is: what is the state of the union today, sitting in the third quarter of this year?” he asked.
“In the print and digital mediums, it is being termed as the great Indian slowdown. GDP is 5.8 per cent, which is lowest in a long time. It was 5.3 per cent four years back. Support data says inflation is going up from Jan to June. IIP shows low growth. So the question is: Is it a soft patch for a couple of quarters or cyclical slowdown or a structural change?”
Talking about how the FMCG sector is going through a slowdown, Basu pointed out, “Clearly, there is a slowdown in FMCG. If I look at Q3 2018, 16 per cent growth YoY for that quarter has gone down to 10 per cent. Would I call it a slowdown? Yes. We need to start interpreting our sectors and verticals for the different signals that they are producing. It’s important how we read and interpret data. Q2 2019 sees 10 per cent growth. One year back, it was 10.6 per cent. It can go up to 12 per cent or go down to 8 per cent as well in the next quarter.”
Basu believes there are two facets of slowdown in FMCG. “One is clearly driven by rural. Rural was getting 40-50 per cent more growth than urban in the last two-three years. There is clearly a much bigger slowdown in rural at almost a 10 per cent drop between Q2 and Q3. Rural this quarter is showing 10.3 per cent growth while urban is showing 9.8 per cent growth. Rural is still getting 0.5 per cent more growth. So it is important to understand this slowdown. Rural is still at the same space. Then in case of the small manufacturers, in the back of demonetisation and GST, lot of playing fields changed. Surprisingly, in FMCG, we found that small manufactures really started to shoot up. Lot of small manufacturers took advantage of the buoyancy of the market, infrastructural and fiscal changes. All these enabled them to avail this opportunity. But it slumped dramatically.”
Citing reasons, Basu added, “If we look at the last year’s data, innovations, new launches and brand extensions have slowed down. It is a clear drop in innovation. We had 16K innovations a year back, but this year, it is 13.5K innovations. It’s a clear drop of around 10-15 per cent in term of launches.”
But despite all that, the Consumer Confidence Index (Urban) Q2 2019 has been doing fairly well. “If I look at FMCG market in India and compare the growth rates with other big markets in the world, India has 14 per cent growth in the last one year. So it still looks like a high ticket market to me.”
Moving on to e-commerce, Basu revealed that India is leapfrogging from emerging to growing stage. “E-commerce entered FMCG much later than other sectors. In a period of two years, the share of all FMCG sales in e-commerce is already contributing 2 per cent which is up from 0.5 per cent two years back. It is led very much by the East and not the West.”
Talking about the growth of digital, Basu predicts the drivers in the coming years will be rural population and people in the older age group.
“There’s huge growth in all mediums, including television and print. But it’s mostly digital. Growth is happening a lot in small towns, rural areas and includes old age groups as well. In the last one year, 30 minutes more time was spent on a mobile handset. It’s no longer a metro phenomenon.”
“Furthermore, media consumption is growing in the rural sector. It has gone up from 60 to 70 per cent in the last two years. Rural population is consuming more digital content than urban. So digital will grow a lot in rural, small towns and old age groups in the next few years.”
Basu’s forecast for FMCG in 2030 is: “Even at the current 10-11 per cent growth, which we are seeing as the lowest one, we can expect an upside growth to nearly 4X to 6X in the next 11 years now."
Read more news about (internet advertising India, internet advertising, advertising India, digital advertising India, media advertising India)For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube