Godrej Consumer Products Limited (GCPL) is anticipating a recovery in rural areas in terms of consumption and demand. With the upcoming 2024 budget, Sudhir Sitapati, MD and CEO of GCPL, expects the government to stimulate domestic growth. He also discussed the trend of premiumization in India.
Regarding budget expectations, Sitapati told Storyboard18, “I do feel that domestic consumption needs to be spurred. GDP growth was 8 percent last year but domestic consumption is only 4 percent.”
He further said, “Domestic consumption is often a measure of the income growth of the bottom of the pyramid because poor people only consume. So, 4 percent domestic growth needs to go up. Consumption growth and GDP growth have to be in tandem, you can’t have such a big gap. I’m sure that the Government will take measures to spur domestic consumption.”
Recently, GCPL launched anti-mosquito incense sticks. It’s important to note that the anti-mosquito incense stick market is currently a Rs 1,200-crore industry dominated by unorganized players and largely driven by illegal Chinese imports.
When asked if the GCPL product has impacted illegal Chinese imports in India, Sitapati said, “We launched the agarbatti only a few months ago, and during summer, these products are hardly sold. But our sales of the newly launched agarbatti are doing well, and it will definitely make a dent in illegal Chinese imports.”
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Discussing the premiumization wave in India, Sitapati said, “There is a clear trend of premiumization that we are witnessing. It is a K-shaped economy where there are issues in rural and lower segments, while the top segment is doing well. At GCPL, we are continuously innovating at the top of the pyramid.”
Expanding on how GCPL is leveraging this trend, Sitapati added, “Last year, we introduced a Matic air freshener. This year, we are about to launch a Matic household insecticide. We have also launched body washes. We are increasing our innovation intensity at the top of the pyramid for e-commerce and modern trade.”
He further explained, “At the same time, we are trying to make products for the bottom of the pyramid more accessible. So, GCPL has a twin strategy.”
Talking about rural demand and growth, Sitapati said, “I hope there will be growth in demand. Many people are saying there are green shoots, but we need to wait and see. It is too early to tell. However, since COVID-19, the bottom of the pyramid and rural areas have faced tough times. I hope they recover soon.”