Rural consumers have discretionary money, says Mondelez

Rural growth continues to surpass urban expansion and in-home consumption is higher than pre-pandemic levels, according to a media report.

The overall consumer sentiment is extremely positive, The Hindu Businessline reported, quoting Deepak Iyer, President-India, Mondelez International. Vaccination uptake, pent-up demand for particular products and increased mobility are all assisting individuals in socialising and celebrating, he said, adding that all these characteristics are in favour of consumption.

At the same time, there are some concerns, as Covid-19 is still ongoing, and price pressures are also there, he is quoted as saying.

In the September quarter, Mondelez International’s India unit had a double-digit net revenue increase, according to the report. With the exception of three quarters when the pandemic hit, the maker of Cadbury chocolates and Oreo cookies has maintained double-digit growth in India for the past 12 quarters.

Price rise

Talking about managing inflationary pressures, he noted that pricing is managed using revenue growth management techniques. The company gradually increased MRPs on a select portion of the portfolio so that consumers could afford them while maintaining the Rs 5 and Rs 10 price bundles the same. However, price increases are the last resort, and focusing on a variety of different measures such as managing volumes, increasing focus on promoting portions of the portfolio that are somewhat more profitable is important, he said.

The company has been taking strategic decisions with a focus on in-home consumption innovations, such as a concentration on the chocobakery category, including in cakes and biscuits. Energy bars are now available. In the Delhi-NCR region, the company is coming up with a few items, including Bournvita Fills in the morning space and Trisbix, baked savoury cracker product.

Rural growth

Rural growth is still one-and-a-half times that of urban this year, despite the fact that urban areas have made a strong comeback, he said. According to Iyer, one of the important things working in the company’s favour is that some packaged food categories, such as chocolates, have yet to achieve the same level of penetration as other packaged food categories. As a result, there is a lot of room for expansion.

The rural consumer did have discretionary money, he said, adding that the rural market was less hit by Covid-19. These factors will stay, he noted.

Last year, thanks to factors such as good monsoons and government programmes like MNREGA, rural markets received tremendous tailwinds and increased phenomenally for us, as they did for everyone else.