Digital to influence 40% of FMCG consumption by 2020

The Google – BCG report projects that 40% of FMCG consumption in India will be driven digitally, translating to a value of $45 billion by 2020.

The report finds that while time spent on digital is the same as TV in urban India, share of digital advertising spends by FMCG companies was only 10% in 2016. This is, however, expected to grow substantially to reach 25 -30% by 2020.

The report highlights that there will be 650 million internet users by 2020, driven by increasing mobile penetration, with the highest growth coming from non-metros. From an audience perspective, the report estimates that online consumers spend 2X more on FMCG purchases than offline consumers. India’s 28 million affluent and elite households will contribute to around 40% of overall online FMCG consumption by 2020, of which 60-65% will be digitally influenced.

On the back of assortment, convenience and availability along with discounting, the ecommerce segment within FMCG is expected to grow to become a $6 billion market in 2020. Sharing insights on customer preferences across metro and non-metro cities, the report predicts while availability of options is critical for users in large cities, consumers from tier 2 and 3 markets care more about factors such as express delivery and easy returns.

Speaking about the challenges that marketers face today, Abheek Singhi, Senior Partner and Asia Pacific Head of Consumer Practice, BCG said, “Digital influence is no longer something in distant future – It is here and now. Like other markets – the urban India consumer already spends more time online than on print and TV. In FMCG, 40 percent of spend will be influenced digitally by 2020 and this will be driven by the 3 V’s – video, vernacular and views & opinions.”

Advising marketers on their online digital advertising strategy for the FMCG space, Vikas Agnihotri, Industry Director, Google India said, “FMCG was considered the last bastion for digital adoption but not anymore. It’s growing rapidly and much faster than the industry imagined. Mass Brands need mass reach and online video today has the critical mass required for brands to drive business impact. Digital today is mainstream and we are seeing successful CPG companies investing behind not just media but insights and analytics to decode changing user journeys across categories.”