Local brands are gaining faster than the MNC brands everywhere and in India we are seeing another trend, the growth of hyperlocals.
In FMCG, global brands are growing at 4.5 per cent, local brands at 6.7 per cent a year. Also, there are more local brands, 9,000 vs 6,000. The country is the world for local brands. This is especially true in the food and beverage business rather than cosmetics, beauty and healthcare where global brands are more dominant. Nevertheless, the global brands are still growing.
What is behind their growing power?
Access is important. Local brands are better able to work with the existing infrastructure while global brands are better able to work with modern trade. Also, they are affordable. Local brands are double in size with respect to global brands in the price point below $2. But, we should not forget that global brands are still more than 50 per cent in terms of FMCG sales revenues.
In India, too, the country is the world for local brands. Hyperlocals know everything in terms of consumer preferences, retailer and distributor chain about the one or two states they are in.
The dominance of local brands is greatest in the food and beverage business. They understand the amount of spice that works in a market, the palate, etc.
Does that mean Indian consumers are no longer as enamoured with foreign brands?
Not really in that sense. The movement upwards among consumers is not in terms of the brand but in terms of the format. For example, consumers want to move up from bar soaps to detergents not so much from one brand to the other.
What is the role of social media in branding?
Social media helps propagate every message. It is good for the brand. The brands are also listening to what is going on. In a way, you cede control to the consumers but the brands are taking advantage, too, because they understand what the consumer wants.
Are consumers more fickle today?
We have a term for them, polygamous consumers. Overall, the nature of the relationship that the brand had with the consumer is changing and companies must realise that.
In all, markets, most consumers are buying your product only once or twice. The greater the penetration, the greater is the frequency with which your products will be bought and this builds loyalty.