REUTERS — India has become the next big bet for PepsiCo, Unilever and other packaged goods giants looking to fill the vacuum left by an uneven recovery in China.
As India’s economy expands at the fastest pace among major emerging markets, companies strive to serve its diverse palate with new flavours and size variants to attract the country’s vast population and untapped rural market.
“While the last decade had companies focused on selling into China, the next decade is about selling into India,” said Brian Jacobsen, chief economist at Annex Wealth Management.
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“You have to go where the demographic and economic tailwinds are at your back.”
Major consumer goods companies based in India, the world’s most populous country, are expecting higher government spending, a better monsoon season and a resurgence in private consumption to help consumer spending recover in the coming quarters.
That is expected to boost the combined market share of the top five multinational companies — Coca-Cola, P&G, PepsiCo, Unilever and Reckitt — to 20.53 per cent in 2023 from 19.27 per cent in 2022, mainly in the baby care, consumer health, cosmetics, beverage and household categories, according to research firm GlobalData.
Their total market share in China is forecast to shrink to 4.30 per cent in 2023 from 4.37 per cent in 2022, the data showed.
“China went through a long and extended COVID … they even went through a brief period of negative growth, and after this, growth has been very sluggish. In comparison to that, the growth rate in India hovering around four per cent seems like a healthy growth for total fast-moving consumer goods,” said K Ramakrishnan, managing director, South Asia, at Kantar’s Worldpanel Division.
Both urban and rural segments in India have seen growth, but rural has fared a little better, he said.
On the flip side, China has seen feeble demand.
Nestle reported a reduction in total sales in the Greater China region in the latest quarter and said overall economic and consumer sentiment there was “clearly weaker than expected.”
“China has always been considered kind of the darling of growth for investors, but as we have seen, that bloom is off the rose there,” said Don Nesbitt, senior portfolio manager at F/m Investments.
