Even though 70% of
Rural Indian markets, whose potential has historically been dismissed, house 700 million people and account for more than 50% of fast-moving consumer good (FMCG) sales, and 60% of the durables market. The annual size of the rural market for FMCGs has been steadily growing and is estimated at $11 billion (pg. 3).
The shift to rural markets has only recently begun in full force as companies have realized that it is too costly to ignore this market any longer. While the per capita income of rural
In overcoming the difficulties of penetrating rural markets, companies are turning to the rural poor not only as potential consumers, but as retailers as well. Collaborating with microcredit clients has proven to be good business.
The most revolutionary example of such partnership is between Indian company Hindustan Lever Limited (HLL), a subsidiary of Unilever, and CARE Indias multi-state microfinance program. By linking HLL with self-help groups throughout
The joint venture, named Project Shakti, has already expanded to 12 states and aims to include 40,000 (up from 16,000) women by next year. By penetrating rural markets through access points such as microfinance institutions, an important catalyst to increase scale is emerging, with immense potential for future growth.
Additional Resources
1) Main article discussed in entry, Wall Street Journal: "With Loans, Poor South Asian Women Turn Entrepreneurial."
2) "HLL Inks Strategic Alliance with CARE India."
3) Book Review: "The Fortune at the Bottom of the Pyramid," C.K. Prahalad
4) Financial Express: "Competing Visions of Rural India."
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