Markets waiting to be tapped

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Packaged consumer goods take up around one-tenth of the total expenses of urban Indian households. The expenditure can be divided into two main categories—processed food and personal care, accounting for 43% and 53%, respectively, with betel leaves, tobacco and intoxicants making up the remaining 4%.

With consumer aspirations merging across India, a large part of these goods have become daily necessities for urban households, and there are various brands catering to the disparate income segments. Over the past decade, there has been a huge surge in this market, and today there is a wide range of goods and brands in the market, with the high end creating the aspirations for consumers all across the country.

Looking at the income segments, the largest contributor to the personal care and home products market comes from the lowest income groups because of their large population size making up close to three-quarters of the urban population. The two lowest income segments account for nearly half the total urban market for these products. At the other end of the charts, 6% of the urban population—households earning more than Rs.10 lakh a year—account for close to 20% of the urban market.

So with rising incomes, packaged consumer goods take up relatively lower shares of household budgets, yet at the same time the average annual expenditure per household on such products increases, from less than Rs.10,000 for the poorest households to more than Rs.75,000 for the richest households. Discretionary income in the hands of the richer households is spent on high-end products, and this is true for processed food, personal care as well as intoxicants.

There are again some regional variations in how households spend their money.

The northern states spend a larger part of their spend on personal care, instead of on processed food. They have the lowest per-household average expenditure on processed food and the second highest per-household expenditure on personal care.

The southern states have the highest per-household expenditure on both processed food and personal care. Interestingly, Kerala stands out as the state with the highest preference for processed food, followed by Tamil Nadu, while Chhattisgarh and Punjab have the highest preference for personal care products. The largest city markets for such goods are of course Mumbai and Delhi, which together make up a little more than 16% of such urban spending.

While the richest households account for close to 20% of the overall urban Indian spending on packaged consumer goods, in some cities these households contribute more than one-third of the market. Gurgaon, Gandhinagar, Faridabad, Panchkula and Noida are the top five cities here. Clearly, the kind of goods being sold in these markets would be quite different from the cities where the richest households account for less than 10% of total expenditure—Bikaner, Amravati, Bhopal and Salem, to name a few. In cities such as Bhopal and Salem, the lowest inco

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Markets waiting to be tapped

  1. 1. Published: Mint dated 12th September, 2011The heterogeneitythat characterizesthe modern Indianconsumer hascreated a mazethat marketerswould like tounravel in order totarget theirproducts andservices precisely.In this fortnightlyseries, IndicusAnalytics willpresent the variousfacets of urbanconsumers, acrossgeographies andsocio-economicgroups Indicus Consumer Data Products
  2. 2. Packaged consumer goods take up around one-tenth of the total expenses ofurban Indian households. The expenditure can be divided into two maincategories—processed food and personal care, accounting for 43% and 53%,respectively, with betel leaves, tobacco and intoxicants making up the remaining4%.With consumer aspirations merging across India, a large part of these goodshave become daily necessities for urban households, and there are variousbrands catering to the disparate income segments. Over the past decade, therehas been a huge surge in this market, and today there is a wide range of goodsand brands in the market, with the high end creating the aspirations forconsumers all across the country.
  3. 3. Looking at the income segments, the largest contributor to the personal care andhome products market comes from the lowest income groups because of their largepopulation size making up close to three-quarters of the urban population. The twolowest income segments account for nearly half the total urban market for theseproducts. At the other end of the charts, 6% of the urban population—householdsearning more than Rs.10 lakh a year—account for close to 20% of the urban market.So with rising incomes, packaged consumer goods take up relatively lower shares ofhousehold budgets, yet at the same time the average annual expenditure perhousehold on such products increases, from less than Rs.10,000 for the pooresthouseholds to more than Rs.75,000 for the richest households. Discretionary incomein the hands of the richer households is spent on high-end products, and this is truefor processed food, personal care as well as intoxicants.
  4. 4. There are again some regional variations in how households spend their money.The northern states spend a larger part of their spend on personal care, instead ofon processed food. They have the lowest per-household average expenditure onprocessed food and the second highest per-household expenditure on personalcare.The southern states have the highest per-household expenditure on bothprocessed food and personal care. Interestingly, Kerala stands out as the statewith the highest preference for processed food, followed by Tamil Nadu, whileChhattisgarh and Punjab have the highest preference for personal care products.The largest city markets for such goods are of course Mumbai and Delhi, whichtogether make up a little more than 16% of such urban spending.
  5. 5. While the richest households account for close to 20% of the overall urban Indianspending on packaged consumer goods, in some cities these households contributemore than one-third of the market. Gurgaon, Gandhinagar, Faridabad, Panchkulaand Noida are the top five cities here. Clearly, the kind of goods being sold in thesemarkets would be quite different from the cities where the richest householdsaccount for less than 10% of total expenditure—Bikaner, Amravati, Bhopal andSalem, to name a few. In cities such as Bhopal and Salem, the lowest incomesegment accounts for more than 40% of total spending.Given the range of goodsand brands that exist in the large market, finer cuts within each income segment andwithin the various goods that make up the segment are indispensable to marketers.The diversity across the country, however, does go to show that there is a marketsomewhere for everything, a market that is waiting to be tapped.

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