Godrej Consumer steps up focus on rural areas

A the expectation of a rural recovery gains ground, fast-moving consumer goods (FMCG) companies are redrawing their plans to meet the demand. Godrej Consumer’s OneRural programme, piloted a few quarters ago, will now be rolled out in the central and northern parts of the country, the firm’s India and SAARC CFO Sameer Shah said.
 
The move acquires significance as most firms, including GCPL, expect rural incomes to improve on the back of a good monsoon. The expectation is that the kharif crop, which is being harvested, is good, improving farm incomes. This comes as a breather for FMCG companies, which get a third of their sales from rural areas.

GCPL’s OneRural programme, Shah said, was intended to help the firm take up rural sales to around 37-38 per cent from 28 per cent now. GCPL hopes to do this using a combination of enhanced distribution, marketing and promotional activities in the top 15,000-20,000 villages within its universe, Shah said. The OneRural programme will also see GCPL appoint a single rural head as opposed to multiple regional heads as is the trend now to drive operational efficiencies and direction. The rural head, responsible for all rural markets, will have specialists in managing research, marketing, sales and media as part of his team, Shah said.
 
GCPL is also expected to improve village coverage as part of its rural push. From a total of 15,000 villages a few years ago, GCPL has now expanded coverage four times, taking total reach to 60,000 villages.
 
Shah says the firm will keep adding around 5,000-6,000 villages per year in its drive to improve reach. GCPL, incidentally, is not the only firm to be turning its attention back to rural. Dabur and Hindustan Unilever (HUL), both key FMCG majors, which derive over 40 per cent of their sales from rural areas, are also expected to step up their distribution efforts in the hinterland in the coming months.
 
“We already have the infrastructure in terms of a thousand rural sales representatives who are entirely focused on these markets. Once we see some demand revival in rural, the next round of expansion in rural markets will begin,” Sunil Duggal, CEO, Dabur India, said.
 
Sanjiv Mehta, MD & CEO, HUL, added the virtuous cycle of a good harvest as well as triggers such as the government’s rural and infrastructure push would help lift demand in rural areas, helping FMCG players put the worst behind them.
 
The September quarter, for the record, was marked by muted growth, with the home and personal care market, for instance, growing 4 per cent only. The gap between urban and rural growth shrank to levels of about 2-3 per cent from about 5-7 per cent earlier.