Business Line article

The Indian consumer, 10 years on

Given the rapid changes in the country's demographic profile, marketers and advertisers say
they would be addressing a whole new Indian consumer in the next decade..

Even as the majority of India will be young, there will still be a significantly large retired
population and a very large middle-aged population.

— Ravikanth 

“Just couldn't resist buying it — It comes with 80% extra advertising than its competitors!”

Chitra Narayanan

The end of the year is always an occasion for marketers to look back on a year well spent or as
one of missed opportunities and indulge in some crystal ball gazing on the year ahead. But, the
beginning of a new decade suffuses one with hope and cheer, more so, as the clairvoyants are out
in full force. What will the Indian consumer look like in 2020?

Based on a few reports (The FMCG Roadmap to 2020 by Booz & Co), some trend spotting by
CEOs at the recent CII-FMCG summit and forecasts by experts, BrandLine pieces together the
profile of the Indian consumer a decade from now. The 2020 consumer in the country will be:

A younger Indian

The average age of the Indian in 2020 will be 29, while the average age in both China and the
US will be 37 and in Europe 45. According to Madhukar Sabnavis, Country Head, Discovery
and Planning, Ogilvy and Mather, a significant point marketers should note is that the 25-year-
old Indian in 2020 will be a post-liberalisation child. This, as Giraj Sharma, a Delhi-based brand
consultant explains, means the consumer will be a ‘spoilt for choice' one, exposed to plenty of
brands and options. Also, as Kannan Sitaram, Operating Partner, India Equity Partners and
former COO, Dabur India Ltd says, this generation would tend to be more consumptive,
borrowing from future income for purchases including holidays.

Having said that, Sabnavis clarifies that the North of India will be predominantly young, but
southern India will be comparatively older. Besides this, even as the majority of India will be
young, there will still be a significantly large retired population and a very large middle-aged
population.

A predominantly urban animal

Even as marketers chase the rural markets today, the growing trend of large-scale migration to
the cities could mean changing ratios. The report by the National Council of Applied Economic
Research titled ‘How India Earns, Spends and Saves,' says that 45 per cent of Indians would be
living in towns and cities by 2050. Other estimates suggest that in 2020, the urban population in
India would be nearly 35 per cent of the total. In today's context, urban residents are more
educated, have higher incomes and spend more — but by 2020 the urban-rural divide will no
longer be that strong.

Already, in many parts of Punjab, people residing in the pinds or villages buy the same labels as
their urban cousins. “We are going to see a lot more homogenisation, just like in the US where
the rural consumers' disposition and attitude is similar to that of their urban cousins,” explains
Giraj Sharma. According to him, in the coming years, marketers will not be able to slice India as
rural or urban — the segmentation would have to happen along value terms rather than on
demographic or locational terms.

Agrees Sitaram, “There are strong signs even today of increasing homogeneity between urban
and rural.

“In fact, there are bigger differences within a city than between a city and rural area — for
instance, the South Delhi consumer when compared with the East Delhi consumer may display a
different behaviour as compared to that between a East Delhi consumer and a UP town resident.”

A multi-tasker SEEKING experiences

According to Sabnavis, advertisers will have to look at faster ways of engaging the consumer in
2020 as Indians will be busier and consumer time will be compressed. Also, the emerging new
consumer will be a seeker of experiences — so the engagement would have to be more visual,
more interactive. Brands will need to focus on the experience.

Not-so-price conscious, indulgent

Already, several market surveys and studies have shown that the Indian consumer, even at the
BoP (bottom of the pyramid), is not so much cost-conscious as he is value-conscious. Indian
consumers are already showing tendencies of wanting to indulge in new experiences and new
products. By 2020 when per capita incomes are expected to double and India will be the eighth
largest economy, this will become even more pronounced. The Booz & Co report points to
the ‘increasing premiumisation' of products which will see “consumers trading up the price
ladder in search of additional functionality or brand promise.”

Chittaranjan Dar, Chief Executive of ITC Foods division, describes how cheaper glucose biscuits
are losing share to more premium cookies. Even the rural market experience supports this trend.
As Pradeep Kashyap, CEO, MART, points out, consumers are buying not so much on the
affordability platform as on the accessibility platform. Giraj Sharma, brand consultant, links this
phenomenon to a new marketing term ‘Masstige'— where mass is married with prestige —
leading to the downward extension of the brand. A mass product has to carry some
‘premiumness' and vice versa — a premium product has to go mass.

More aware and educated

As education levels rise (India will have more than 100 million graduates and post-graduates),
the Indian consumer will become more aware. The NCAER report points out how incomes tend
to rise with education and the pattern of saving and spending changes. It also makes consumers
more demanding.

A bit of a brand sceptic

Ambi Parameswaran, Executive Director and CEO, Draftfcb Ulka, says that India and Brazil
have traditionally displayed brand loyalty but things may change. First, India is getting younger
and the youth are typically not so sentimental about brands. Second, the rise of private labels will
give brands a run for their money. Hence, marketers will need to work harder to gain brand
salience.

More health conscious

This trend, which as India Equity Partners' Sitaram points out is already embedded, will
continue, not just with food marketers but other products as well. However, Sitaram says, even
as their disease profile is forcing Indians to become more health conscious, the Indian consumer
wants a pain-free change. “The sweet spot for marketers is to give the healthy option without
foregoing the indulgences,” says Sitaram, citing how consumers may switch to healthier oils but
will not give up oil.

Convenience conscious

With time at a premium and Indians getting busier, marketers will have to provide more ‘on the
go' products. By the next decade, the Indian consumer will be demanding convenience, not just
of products but also of purchase. ITC's Dar describes how Kitchens of India, its ready-to-eat
label, sells more online (on Amazon) than in retail stores.

More individualistic

The family structure will continue to evolve in the next decade — even as the joint family
disintegrates and nuclear units take firm shape, there could also be a rise in the single person
household. The migration of workers to cities, more divorces, could see more singles in the city
and this spells another opportunity for marketers, according to Sabnavis.

“What will also happen is the rise of individualism,” says Giraj Sharma. So, rather than address
the family as a unit, marketers need to talk to individuals — a trend that Dar agrees is already
happening, pointing at how an increasing number of men are making FMCG purchases on their
way from work.

While these are broad trends — with the Indian consumer expected to evolve into a younger,
richer, more educated, busier, more confident entity — marketers warn that there will continue to
be many more Indias at work.