The share of rural areas in the total FMCG products consumption in India is on the rise. Major FMCG companies are taking concerted steps towards increasing their presence and market shares in rural areas. Part of the reason for the thrust towards rural markets is the threat of reduced growth rates in urban markets. Gradually, some of the constraints to marketing in rural areas are being overcome. However, the threat of increased input costs and prices of end-products together with other impacts of the economic slowdown could shift the rural demand towards fake products and illegally-imported goods.

The rural hinterland is more attractive for FMCG companies compared with tier I and II cities as penetration levels are drastically lower for numerous products, unlike urban markets which are highly saturated.

Fast Moving Consumer Goods (FMCGs) have been more fas- cinating to the rural people than to their urban counterparts. The total market for FMCGs in India is $15 bn (€10.9 bn). Rural areas account for 52% of the total market, and this figure is expected to increase to 57% by 2010. The share of urban areas in the total FMCG sales has been steadily declining; while that of the rural areas is on the increase. The younger generation in rural areas is now spending more on personal care and grooming products.

FMCGs are penetrating more and more households in rural areas. According to FICCI, in 2007, approximately 143 million people from rural areas used FMCG products, compared to 136 million in 2004. According to the latest estimates released by industry chamber Assocham, the attention of 180 million rural and semi-urban people has already been drawn towards FMCG products. This demonstrates that there is substantial increase in the number of rural masses who have got into using branded consumer goods. The sale of Dabur's rural tooth paste brand Babool has grown 35% and Nestlé's sales too has picked up in rural areas. Rural India is now being termed as a "high opportunity" region for FMCG products and is projected to yield rich dividends in the years to come as well. Currently, FMCG products are witnessing 10% annual growth in rural India.

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