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.