nielsen featured insights · compare that to matka where the popular and premium segment commands...

EMERGING CATEGORIES

In a year characterized by high inflation rates and skyrocketing commodity prices, 'price hike' was themantra when it came to India’s Fast-Moving Consumer Goods (FMCG) sector. Mergers and acquisitionstook a backseat and focus shifted to cost-efficiency and increasing profit margins

While the Rural market grew faster than urban in 2010, the situation reversed in 2011. For manycompanies, penetration into rural areas and boosting consumer sentiment became critical. Alongside,'premiumization' was a key strategy adopted to tap the growing middle-class segment especially inurban India.

The Foods sector saw a surge in 2010 with the advent of ‘Convenience Foods’ and the ‘Health & Wellness’segment. These continued to grow in 2011 but the spotlight was on the Non-Foods sector whichwitnessed the launch of innovative products catering to a new set of consumers.

FOOD SECTOR

Impulse and Convenience Foods: Going beyond the Small PacksImpulse Foods: In 2010, innovations focused on impulse foods with the ‘health’ tag such as low caloriesnack bars, products containing vitamins and minerals etc. As per a 2010 Nielsen study, new functionalproducts emerged especially in products like chewing gums, chocolates and salty snacks. However in 2011,this space too witnessed a slowdown.

India's FMCG sector in 2011:Using innovation to feel and look good

By: Roosevelt D’Souza, Executive Director, Nielsen

Nielsen Featured InsightsDelivering consumer clarity

Copyright c 2012 The Nielsen Company. All rights reserved. Nielsen and Nielsen logo are trademarks or registered trademarks of The NielsenCompany.

n Convenience and health foods propel food sectorn Emerging categories drive the growth of non-foods sector n Consumers in key regions begin upgrading to premium brands

All India (U+R) Value Growth 2010 Value Growth 2011

FMCG Industry 18.6% 15.1%

Food Products 22.9% 16.5%

Impulse Foods 29.6% 21.7%

Biscuits 25.9% 18.7%

All Confectionary 22.5% 15%

Salty Snacks 41.1% 28.5%

Chocolates 34.3% 28.5%

Source: Nielsen Dec ‘11 MAT (Moving Annual Total)

INNOVATION: NEED OF THE DAY

Featured Insights 26_option.qxp:Layout 1 30/04/12 4:58 PM

This decline has been observed across both urban and rural markets and across categories. Now,manufacturers will be forced to look at more innovative ways to tap this market as existing tactics likesmaller packs, increased availability and attractive promotions will no longer attract consumers.

Convenience Foods: On the flip side, Convenience Foods continued to grow at a healthy pace in 2011clearly indicating the growing importance of time and value a quick meal affords to the Indian consumer.

Categories like Breakfast Cereals and Noodles grew well in metros, but the real story is in Lower UrbanTown Classes and the Rural market which grew at a much faster rate. This indicates that in spite ofinflation, people in rural and lower urban town classes are increasingly focusing on convenience foods aspart of their lifestyle.

NON-FOODS SECTOR

Consistent growth in the Non-Foods category despite the FMCG sector recording a lower year-on-yeargrowth in 2011 is attributed to the rise of certain Emerging Categories:

• Newer Categories whose reach is limited but are growing rapidly by expanding their consumer base.• Mature Categories which already have good market presence and are exploring premium markets.

Newer Categories: In spite of an inflationary environment when households are looking to cut costs, thissegment which includes products like scouring pads, deodorants, hair removers and home insecticides, hasshown significant growth.


RISE OF CONVENIENCE FOODS

Value Growth % All India Urban Rural Metro Town Class 1 LTC

Breakfast Cereals 26.8 26.6 29.0 22.7 33.4 33.9

Vermicelli and Noodles 28.2 27.3 31.0 23.4 36.8 23.5

Jams and Jellies 19.5 17.2 42.9 19.0 16.7 12.8

Squashes and Cordials 17.5 16.3 23.3 21.3 18.2 -0.1

Source: Nielsen Dec ‘11 MAT (Moving Annual Total)

Value Growth % All India Urban Rural Metro Town Class 1 LTC

Scouring Pads 41.1 33.4 71.0 26.9 31.7 48.5

Perfumes and Deos 33.2 30.2 55.5 23.8 34.4 36.3

Air Fresheners 32.8 31.7 52.1 27.0 34.6 48.2

Liquid Toilet Soaps 32.7 30.9 101.3 24.1 39.2 61.8

Pre post washes 27.7 22.2 50.4 19.5 19.0 36.6

Hair Removers 16.9 15.1 25.8 7.2 20.5 22.2

Home Insecticides 15.4 11.8 38.0 7.3 18.0 18.5

Source: Nielsen MAT Dec'11

RURAL CONSUMER LEADS THE WAY


Here, growth has been led primarily by demand in lower urban town classes and the rural market whichtogether account for 60% of the total value. It is on account of the increase in the reach of thesecategories that new customers are being added and the user base is expanding.

Newer Categories are also expanding by creating a new need for products.• Promoting automatic hand wash and air fresheners in cars have emphasized requirement of a ‘Clean

and Hygienic’ lifestyle• Use of Body Wash and Hand Sanitizer over regular soap• Emphasis on ‘staying fresh’ round-the-clock helped spur a 40% growth in Deodorants category • Emphasis on cleaning clothes pre and post regular wash has helped achieve a 23% growth in the Pre

Post Wash category

Mature Categories: Existing Mature Categories like Toilet Soaps,Laundry etc. too have evolved over the last year by entering newniche markets. While these categories have a good reach,their strong consumer base eroded over the past few yearsforcing players in this field to embrace innovativestrategies.

1. Product Extensions for the evolving male consumerRising aspirations of the Indian male to appear bettergroomed have created the new ‘Male Grooming’ segmentwhich clocked 34% growth in 2011. The increasing numberof Unisex Salons and launch of new products with malecelebrities endorsing them is ample proof of this trend.

2. Enhancing portfolio via Premiumization within categoriesFor Mature Categories, new sub categories offering premium products are showing higher growth. Forexample, the introduction of ‘Pants’ as a premium product in the Diaper segment has increasedprofitability. Similarly, Sanitary Napkins are witnessing high growth partly due to the launch of variantslike ‘ultra’ and ‘night usage’.

3. Premiumization in ‘MATKA’ geographyIt has been observed that consumers in the MATKA zone (Maharashtra, Andhra Pradesh, Tamil Nadu andKarnataka) have been gradually upgrading themselves from Mass to Popular and from Popular toPremium.


All India Growth' 2011 Overall Category Male Segment

Skin Creams 26.5% 40.7%

Deodorants 35.1% 30.8%

Shampoos 19.1% 20.0%

Toilet Soaps 6.9% 43.3%

Hair Colours 22.5% 63.7%

Source: Nielsen MAT Nov'11 data

THE MALE FACTOR



• In the Premium Skin Creams market, while MATKA accounts for 51% share, the All India share is just 27%.

• The Non-Mass market for Toilet Soaps accounts for 79% in MATKA and just 68% All India. • In the Washing Powder category, the share from Mass Market is nearly 60% at an All India level.

Compare that to MATKA where the Popular and Premium segment commands 56%.

4. Consumers shifting to more expensive products across categoriesIndian consumers are now moving from using less expensive substitutes to more expensive products. Thisshift emphasizes premiumization which is happening across categories driving growth.

These findings prove that the Indian consumer is not averse to spending more to acquire premiumproducts if they perceive value; and Mature Categories are growing by capitalizing on this trend. All the factors that support strong growth in the Non-Foods domain are in place – a modern retaillandscape providing the right ambience and target audience, better consumer literacy, sustained brandingand higher disposable incomes. Combined with an increasing middle class consumer base aspiring to usemore expensive products, growth in the premium category is set to accelerate in the coming years.

Source: Nielsen

About NielsenNielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leadingmarket positions in marketing and consumer information, television and other media measurement,online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence inapproximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.For more information, visit www.nielsen.com

MAT Dec ‘10 MAT Dec ‘10 MAT Dec ‘11MAT Dec ‘11

Category (INDIA (U+R) Value Growth % Volume Growth %

LaundrySoap Cakes 8.7 4.0 -2.1 -10.3Detergent Cakes 3.0 4.6 14.6 -2.7Washing Powders 8.7 9.6 16.6 0.2Oral CareTooth Powders 1.2 -1.3 -2.8 -10.2Tooth Paste 13.5 15.1 9.9 8.0Male GroomingDisposables 54.0 9.2 16.0 1.7Systems Blades 10.7 12.7 13.7 83.4Systems Razors 26.4 36.9 24.7 122.9Hair ColourPowders Dye 13.2 -5.4 11.4 -20.0Powder Colour 35.0 40.4 38.3 38.8Creams 24.9 22.1 18.1 9.9

THE LURE OF 'PREMIUM'


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