Monday, January 7, 2008
Homegrown FMCG major Dabur entered into an agreement with Indian Oil Corporation (IOC) to service rural market demand for consumer goods through the latter’s chain of Kisan Seva Kendra (KSK).
Under the agreement, IOC’s over 1,600 KSK across the country would stock and sell Dabur’s range of healthcare, oral care, personal wash, skin care and home care products, the company said in a statement. The agreement is initially for a period of five years.
“Dabur already has a strong rural footprint with a pan- India network of over 2,200 stockists and super-stockists. The agreement with IOC will help Dabur expand its rural footprint and better reach out to rural consumers,” Dabur India Vice President-Sales (Consumer Care Division) George Angelo said.
IOC’s KSK is a chain of one-stop rural retail outlets that offer fuel and other non-fuel value-added services like seeds, pesticides, fertilizers, grocery, personal care, tools, auto spares etc, in the rural markets.
Dabur will now offer its range of consumer goods in the chain. “IOC was looking at widening the product portfolio being offered at its KSK to include FMCG (fast moving consumer good) items and reach out to rural women. We felt it was a good opportunity to further penetrate the rural market,” Angelo added.
2007 has been an eventful year for the FMCG industry, especially for the rural segment. Sale volumes touched $3 billion in the first 10 months, and are likely to go up by another $0.5bn by end December, according to estimates released by Assocham, based on feedback from its leading constituents in FMCG sector.
By end 2007, FMCG size in value terms is expected to be over $18 billion of which its rural segment could be slightly more than 1/5th of total FMCG market. In calendar 2006, total FMCG market size was estimated at $15 billion of which rural segment was measured at around $2 billion.
In India there are approximately 128 million households and the rural population is nearly three times more than the urban. As a result of growing affluence, fuelled by good monsoon and increase in agriculture output to 200 million tones, rural India has a large consuming class with 41% India’s middle class and 58% total disposable income.
Rural market also accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soaps, blades, tea, salt and toothpowder and this market is growing much faster than its urban counterpart.
Reasons for increased market penetration
* Higher consumption patterns of rural population for consumer durables like refrigerator, TV sets, electrical appliances, personal care products, toiletries & soaps and soft drinks
* In 2007 various budgeted products designed for the rural segment were introduced and resultantly sales increased by over 30%In Calendar 2007, FMCG total sale by December 2007 end would be in the range of $3.5 billion thanks to attractive X-mas and year-end discounts
Hindustan Unilever, Henkel India and Proctor and Gamble have been pulled up by the Advertising Standard Council of India (ASCI) for misleading advertisements during July-September in 2007.
The FMCG majors were among total 11 advertisers against whom complaints were upheld by the Consumer Complaints Council (CCC) of ASCI during the period.
Hindustan Unilever had to modify a TV commercial of its product Vim dish wash liquid which according to the CCC was a misleading advertisement. The commercial against which complaint was made claimed that ‘just one drop enough. New Vim drop has 10 times more lime power than the bar´.
Based on the complaint, the advertiser had to provide proof and substantiate that ‘one drop’ of Vim could produce the cleaning effect as visually depicted and claimed in the voice over of the TV commercial.
Eventually the commercial had to be modified as the claim mentioned in the advertisement was misleading as the ‘cleansing protocol´ provided in the report submitted by the advertiser did not appear in the advertisement.
Similarly, Henkel India claimed that ‘each drop of prill has active ingredients which removes grease better than the bar´ and according to the CCC, claim mentioned in the advertisement was not substantiated adequately.
Subsequently, the advertiser conducted the cleaning efficiency test with an independent lab for which they have provided a copy of the report.
Even Proctor and Gamble had to assure appropriate modification of the TV commercial which claimed that one tablespoon of ‘Tide’ was sufficient for washing a bucket full of clothes.
According to a complaint, the advertiser contradicted its own statement in the advertisement of ‘1 spoon´ being required when actually ‘1 scoop´ is required as mentioned on the pack.Besides the leading FMCG firms, United Spirits, Coca Cola India, Perfetti Van Melle, Mahindra Renault, KBM Marketing and Rajvansh Clinic were other companies against which complaints were upheld by the CCC during the period