March 14, 2006


Building Wealth by the Penny: In Rural India, a Sales Force in Saris Delivers Soap, Social Change (John Lancaster, March 14, 2006, Washington Post)

Consumer culture, spurred by rapid economic growth, is spreading to the vast rural hinterlands where two-thirds of India's 1.1 billion people still live. The trend is creating new opportunities not just for big business, which has long focused on the urban middle class, but also for some of India's poorest citizens.

A 30-year-old mother of two, Kadem is part of a novel Hindustan Lever initiative that enlists about 20,000 poor and mostly illiterate women to peddle such products as Lifebuoy soap and Pepsodent toothpaste in villages once considered too small, too destitute and too far from normal distribution channels to warrant attention.

Started in late 2000, Project Shakti has extended Hindustan Lever's reach into 80,000 of India's 638,000 villages, on top of about 100,000 served by conventional distribution methods, according to Dalip Sehgal, the company's director of new ventures. The project accounts for nearly 15 percent of rural sales. The women typically earn between $16 and $22 per month, often doubling their household income, and tend to use the extra money to educate their children.

"At the end of the day, we're in business," Sehgal said in a telephone interview from company headquarters in Bombay. "But if by doing business we can do something positive, it's a great win-win model."

Hindustan Lever is not alone in recognizing the vast potential for profits in rural India. As urban markets become saturated, more businesses are retooling their marketing strategies, and in many cases their products, to target rural consumers with tiny incomes but rising aspirations fueled by the media and other forces, according to experts.

Companies are offering many products, from single-use shampoo packets that sell for less than a penny to $340 motor scooters available for monthly payments as low as $4.50. Banks are targeting first-time customers with $10-minimum-deposit savings accounts. Cellular phone companies are upgrading rural networks while offering monthly plans for as little as $3.40.

"In four to five years the rural market will be a major sector that is well beyond anyone's imagination," said Rajesh Shukla, principal economist for the National Council of Applied Economic Research in New Delhi. "Nobody was expecting this was going to happen."

Posted by Orrin Judd at March 14, 2006 10:23 AM

--"Nobody was expecting this was going to happen."--

Rural people don't want to wash, brush their teeth or ride motorcycles?

They're too ignorant?

Posted by: Sandy P at March 14, 2006 11:48 AM

Sears and Roebuck pioneered the concept that there was money to be made selling to rural populations a hundred years ago.

Posted by: Mikey at March 14, 2006 12:58 PM

It's not so much that rural people don't want to wash or brush their teeth, (although globally speaking, many of them don't), it's more that until now, few rural peoples could afford to use brand-name commercially produced products, such as Lifebuoy soap or Pepsodent toothpaste.

Posted by: Noam Chomsky at March 14, 2006 2:21 PM

But Noam, India has been Socialist for over 50 years. Perhaps not Pepsodent or Lifebuoy, but the state must have provided Glorious Worker's soap and toothpaste by now. What could have changed in India?

Posted by: ed at March 14, 2006 2:37 PM

In many Third World areas, water is too precious to be wasted on brushing teeth or daily bathing.

Posted by: ratbert at March 14, 2006 2:37 PM

Once people stop being fatalists and begin to shape their own destiny, they'll figure out a way to get more water.

Posted by: erp at March 15, 2006 7:58 AM

Well, that's the trick, innit ?

How do we get them to stop being fatalists ?

Mere exposure to Captains of Destiny doesn't seem to be enough to spark in them the desire to command the world.

Posted by: Noam Chomsky at March 15, 2006 3:12 PM