More reports on: Soft drinks, Telecom

'Selfie culture' hurting sales of colas, candies in rural India

13 July 2016

With the mobile revolution taking India by storm, people in rural areas would rather spend their limited cash on recharging their smartphone than on a cola or a piece of candy, according to an Economic Times report, which says telecom companies' Rs10 recharge pack is a massive hit in the villages, as people vie to take and send 'selfies'.

While companies are happy, ''those who make low-ticket items that are impulse buys such as colas, chocolate and confectionery'' aren't too pleased, says the report.

Bad monsoons for two consecutive years have diminished the buying capacity of rural India. Therefore, sales of consumer goods such as colas, chocolates and other confectionaries have suffered a setback, made worse by the selfie culture.

''The 'selfie culture' is making consumers spend more on their phones rather than on fast-moving consumer products, which are discretionary,'' Suresh Narayanan, managing director of Nestle India, told the paper.

Coca-Cola and PepsiCo have even pushed down their cola prices to as low as Rs5 per serving. However, that still hasn't helped their sales much. The April-June quarter saw sales in single digits.

A top bottler, pointing out the seemingly dismal state of affairs for cola companies, said, ''In rural areas, there was less money because of two years of deficit rainfall. Whatever little money was in their hands, rural consumers preferred to spend on mobile recharge rather than colas. In urban markets, extreme heat prevented consumers from stepping out and impacted our sales. Besides, there are other options like bottled water and functional drinks, which did better.''

Smartphone sales in rural India account for almost a third of the total sales in the world.

''The small recharge and internet and top-up packs from operators helped end users in rural India to experience the services first and then scale up once the users are hooked onto those services. There is a huge demand when it comes to consumption of digital content in rural India,'' concludes Tarun Paathak, senior telecom analyst, Counterpoint Research.

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