Impulse and Lifestyle Products Define the FMCG Future in India

Impulse and Lifestyle Products Define the FMCG Future in India

Roosevelt D’souza, Executive Director, The Nielsen Company

While food contributed more than half (52%) of the total fast-moving consumer goods (FMCG) sales in India last year,  non-food products in key segments such as health and wellness, lifestyle, impulse and convenience products registered more than 20 percent growth and are set to define the shape and direction of the future. This rapid growth is driven by systematic changes in consumer motivation and behavior.

Impulse Products

Impulse products are often described as unplanned purchases of products that are easily available and affordable by urban consumers seeking instant gratification. Key impulse categories like biscuits, chocolates, salty snacks and confectionery are registering high double digit growth rates and greater retail presence. The emergence of the modern trade format in India and the ability to reach for these products at checkout counters is contributing to this growth trend.

Value Growth in ‘Impulse’ Category Products by Channel
Value Growth (%) Grocers Gen Stores >Chemists Paan Plus Food Stores Modern Trade
Biscuits 18 10 16 18 13 38
Salty Snacks 28 23 29 30. 19 30
Chocolates 19 11 18 28 20 49
Confectionery 14 8 12 12 12 56
Source: The Nielsen Company. MAT Oct. 2010

Growth in the impulse segment is being driven by both national players as well as local zonal interests that have introduced a large number of variants, price points and pack sizes that act as a catalyst for growth as they are able to appeal to a greater range of consumers.

On the product formulation front, newer attributes like low fat, sugar free, baked and whole grain are being introduced to entice and attract certain consumer segments by creating greater relevance and empathy with consumers needs.

Health and Wellness Products

The FMCG product portfolio is growing to accommodate the health and wellness segment that caters to the increasingly affluent, urban and health-conscious Indian. This portfolio is no longer about preventive or supportive nutrition, it instead reflects a mix of indulgence, invigoration and narcissism. This trend explains the emergence of ‘modified’ products. For instance, chewing gum, usually considered an item of impulse for children and youngsters, has now assumed a new avatar as an oral health aid for adults.

Categories that outwardly represent ‘health’, such as anti-aging creams, have shown significant growth. Anti-aging products as diverse as lipsticks, eye balms, facial creams and hair lotions have taken their place across shop shelves to cater to the health- and beauty-conscious Indian. Expanding distribution and a wave of consumer interest in these sub-categories have resulted in a surge in their growth rates on a small base.

Lifestyle Products

The market for ‘lifestyle’ products is on the rise. Consumers from lower population strata, such as rural and semi-urban areas are now seen to “trade up” from unbranded to branded products. As the lower end of the market becomes more broad-based, the middle and upper end of the market is growing to include specialized products to encourage consumers to migrate further up the value chain. More importantly, the pace of these changes and their geographical reach signal a genuine shift in purchasing habits and lifestyles.

Value Growth of Lifestyle Products by Market Type
Value Growth (%) Floor Cleaners Toilet Cleaners Glass Cleaners Pre-post washes Liquid Toilet Soaps
All India (U+R) 27.8 10.8 12.8 26.5 46.3
All India – Urban 28.3 10.9 12.4 24.6 45.6
Metro 27.9 10.2 10.6 18.8 43.0
Town Class 1 30.4 14.2 15.1 30.8 49.9
Rest of Urban 25.7 8.0 13.1 38.8 58.0
Rural 17.4 9.9 19.7 38.5 87.8
Source: The Nielsen Company MAT Oct. 2010

From a distribution perspective, while grocers continue to be the leading channel for this segment, the ‘lifestyle’ segment saw an increased presence of high-end products in modern trade formats such as supermarkets and hypermarkets.

Convenience Products

In the last decade, Indian consumers have experienced growing urbanization, increasing disposable income but a decrease in free time, prompting them to move towards convenience food products. This trend appears to have stabilized most notably in the breakfast and mid-meal segment, as these categories have achieved greater consumer acceptance. Marketers have spent their time getting these products right to make them available to Indian consumers across geographic zones by fine-tuning them to local tastes. This process will continue as the market evolves and those who innovate best in accordance with consumers’ needs and preferences are more likely to create winning brands.

Value Growth in the Convenience Foods by Region
Value Growth% All India North East West South
Breakfast Cereals 26 29 25 29 25
Vermicelli and Noodles 29 34 32 33 20
Jams and Jellies 19 13 23 20 21
Squashes and Cordials 26 30 20 23 31
Cheese 22 20 17 16 55
Source: The Nielsen Company