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Health drinks, shampoo to drive FMCG

Ratna Bhushan

NEW DELHI, Jan. 2

DEEPER understanding of the Indian consumer and an ability to deliver quality products at low costs are what will impact the FMCG sector in the next five years, according to the latest projections by the National Council of Applied Economic Research (NCAER).

If it's health beverages and packaged biscuits within foods that are expected to grow in the next five years, then it's shampoos that could exhibit a growth trend by 2006-07.

Take health beverages. In 1998-99, 140 households per thousand were consuming health beverages. In 2001-02, the number is expected to touch 175 households per thousand. And in 2006-07, 247 households per thousand are expected to consume health beverages, according to NCAER.

Another category on the growth path within the foods sector is that of packaged biscuits. From an observed penetration level of 349 per thousand households in 1998-99, the category's penetration is expected to go up to 480 per thousand households in 2006-07.

Among personal care products, while toilet soaps have reached saturation, there is immense potential for penetration of shampoos in Indian households, according to NCAER. Shampoo penetration is expected to grow from 314 per thousand households in 1998-99, to 502 per thousand households in 2006-07. The penetration of washing powder is also expected to go up from 660 per thousand households in 1998-99, to 770 per thousand households in 2001-02.

Meanwhile, the rural consumer continues to have scant regard for brand loyalty, according to Mr R.K. Shukla, Senior Statistician, NCAER. It is smaller pack sizes, functional products, value for money, reluctance to shift from one brand to another and zero brand consciousness that continue to call the shots here.

In 1998-99, the share of rural consumption among health beverages stood at 25.4 per cent, and within packaged biscuits at 31.8 per cent. Among edible oils, rural consumption stood at 64.2 per cent, while toilet soaps consumption was a high 48.2 per cent. The consumption of washing powders among rural markets stood at 48.5 per cent in 1998-99, with shampoos recording a low 28.1 per cent share in 1998-99, indicate the findings by NCAER.

Within health beverages, higher penetration within rural markets will bring about the maximum change in market size, followed by income. Within packaged biscuits too, category penetration followed by income in rural markets will impact market size in a big way.

Among toilet soaps, intensity of use is what will impact market size the most among rural markets, Mr Shukla said. In sharp contrast, category penetration is the key to growing the shampoo market, according to NCAER's projections.

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