Rural revolution
According to industry estimates, rural India accounts for 74 per cent of India's population and 58 per cent of India's disposable income. As per data compiled by the National Council of Applied Economic Research, rural India now accounts for 70 per cent of toilet soap users, and 38 per cent of two-wheeler purchases come from rural India.
According to a report of the India Brand Equity Foundation, Atlanta-based Coca-Cola is one of the first global majors to have spotted the potential spin-offs from the country's rural markets. It has perfected a unique supply chain to cater to India's vast rural hinterland. The results are working and Coca-Cola India's rural penetration increased from 13 per cent in 2001 to 25 per cent in mid-2003. Over this period, the number of company's rural distributors increased from less than 4,000 to 5,500.
To reach out to rural India, Coke started out by drawing up a hit list of high potential villages from various districts. To ensure full loads, large distributors were appointed and supplied from the company's depots in large towns and cities. The hubs appointed smaller distributors in adjoining areas. The smaller distributors undertook fixed journey plans on a weekly basis and supplied against cash. The distributors also hired rickshaws that travelled to villages every day. At another level, the problem of low working capital of the small retailer was addressed through smaller drop sizes. It was possible to have smaller drop sizes because of higher service frequency. Meanwhile, Coke introduced a 200 ml bottle priced at Rs 5 to attract more customers. Coke now claims that 80 per cent of its new consumers are from rural India, where per capita consumption has nearly doubled between 2002 and mid-2003. By 2003, the rural market accounted for nearly 30 per cent of Coke's volumes. Also, the rural market has begun contributing disproportionately to new volumes, at 36 per cent. The rural market also grew faster: between 2002 and mid-2003, Coke's urban market grew 24 per cent while the rural market grew 37 per cent.
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