FMCG growth lies in the rural areas of the country

Piruz Khambatta, Chairman & Managing Director, Rasna Pvt Ltd, talks about the growth opportunities in the FMCG sector.

Do you think retailers and FMCG can collaborate to take FMCG sector to the next level?

India, Asia’s third largest economy, saw urban and rural consumers spend less in the current year due to high inflation, muted salary hikes, and slow economic growth. The rising prices and slow growth made consumers check their household shopping list from soaps to packaged groceries and food items. However, with the help of the government schemes, the growth can see a steady pace if retailers and FMCG manufacturers collaborate. The FMCG sector is still not fully explored and the growth lies in the rural areas of the country. The manufacturers need to work on the best international competitive products at best prices and ensure that the customer gets best goods and services from the retailers. I also believe retailers should not get into private labeling of the inferior products. Increased expenditure capacity of Indians coupled with the increasing demands for international and expensive products coupled with the innovative marketing strategies can help in the overall growth of the industry.

What are the challenges that have been faced by FMCG players while doing the same?

The FMCG sector has been divided for a long time between the organised sector and the unorganised sector. While the latter has been crowded by a large number of local players, competing on margins, the former has varied between a two-player-scenario to a multi-player one. The major challenges are because of the government regulatory body FSSAI, food laws, high tax, multiplicity in taxation, no clarity in procedure of taxation, ever changing rules, etc. All these are acting as roadblocks to innovation.

With modern retailers betting big on FMCG, what is your strategy to increase your penetration through these formats?

The Indian story has been changed in the last few years. With increasing time spent out of home will lead to the growth of the retail culture, and the concept of “experiential shopping” is also leading to consumer preference towards the organised retail industry. Therefore, our strategy is to partner with modern trade outlets for product sampling and promotions. The Indian market is dynamic, and we are also evolving the concept of innovation, contributing to renovation and refurbishment.

How does your retail strategy differ for modern retailers and kiranas?

Based on our consumer learning, modern retailers and the kirana (local 'mom and pop' stores) are completely different and should be treated differently. We believe the consumers who go to the kirana stores also experience the modern trade outlets.