A Focus on India

Posted by europanel on May 18, 2017

India: A young country of untapped opportunities

 

With 65% of the population born after the 1980s, India’s population is one of the youngest  in the world.

 

India’s Millennials population sums up to 440 Million while Gen Z makes 390 Million people. The population of India is four times that of America, which make them a well of untapped opportunities for consumption, particularly with the strengthening of their economy.
Domestic FMCG firms outpace Multinationals companies in profit growth, and this trend is even stronger in personal care, food and beverages.
Indian consumers’ focus on healthier consumption across regions, with brands such as Patanjali rising high, reaching new consumers in all sectors, particularly higher classes.

 

India is the 38th most competitive economy in the world, up 16 places and biggest leap from last year.

 

A booming economy
In an effort to shrink the underground economy in India, the government discontinued larger denominations of bank notes in autumn of 2016. Thousands of Indians were forced to open bank accounts in order to access their money, and the resultant chaos lead to a slight decline in growth of the economy – despite the drastic change, it seems that little can stand in the way of India’s explosive economic growth, as first quarter estimates show that the country is already bouncing back.

Furthermore, having gained more monetary leverage, banks should increase their loan capacities which will stimulate the growth even more in the upcoming years. Therefore, the forecast is that India’s growth should stay above 7% over the next 5 years, increasing competiveness for the industries and purchasing power for the consumers.

New potential for growing categories A few of the growing trends are:
The booming economy is a great omen for the fastest growing consumer market in the world and leaves huge opportunities for fast-growing FMCG categories, led by baby products, packaged snacks, health, hygiene (hair and skin care), alcohols and beauty while others such as detergents and soaps have plateaued with their current formats and need to evolve to seek growth in newer formats.

Spend on food still accounts for a third of Household spend, but has been declining at an increasing rate over the past years, allowing the non-food categories to grow faster.

Over the past 15 years, the most underpenetrated categories (snacks, beers and soft drinks) have grown the most but still leave a huge headroom space for growth and premiumization.
Other categories such as washing powder, biscuits and soap, whose penetration is close to 100%, are now gaining more growth through promotions than a premium.

 

India’s GDP surpassed UK’s for the first time in a century in 2016, 
both because of India’s thriving growth and the outcome of Brexit.

Rising urbanisation rate
The growing urbanisation rate of India is raising a lot of challenges, but also a lot of opportunities. Challenges all concern a sustainable way to welcome more and more people into cities without widening the gap between classes. One of the main opportunities, that has grown hand-in-hand with the rate of urbanisation, is the growth of household and personal care, which has grown 3% in sales since 2014 and is planned to grow 5% more by 2020, supported by the Indian government in an effort to promote cleaner and healthier lifestyles.

 

India’s per capita spending in 2015 is comparible with China’s in the mid-2000’s.

 

Most of the India’s household spending still goes to the food categories, particularly fresh foods, but personal care and healthcare have both been growing over the past years.

In the same way some channels have known an exponential growth, chemists (pharmacies) are the main example of this, reaching a third of the retail share while supermarkets only reach 20%. This trend is very strong for personal care.

Household Cleaning
Amongst the new categories entering baskets in 2016 we can find floor cleaners, toilet cleaners, insecticides.
Male Grooming
The male grooming market is now worth over $500 million in India, with face wash and bar soap growing the most.
Foods
Some of the new categories entering baskets in 2016 were sauces, particularly ketchup as well as breakfast cereals.

 

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Best wishes,
The Europanel Thought Leadership Team