Wednesday 15 May 2019


There has been a lot of talk on the street about an economic slow down in India, the key indicators being taken as a proof for the same are sluggish auto sales trend and a few fmcg majors like HUL (Unilever Plc) moderating their growth forecasts for the Indian market.
I feel, this is not an economic slow down but a major economic shift that India is going through. The high young population percentage of India means a lot of decision making and disposable income coming into the hands of millennial and if we have to think or talk about the future we need to get an inside scoop of the millennial thinking, How young India thinks and acts.
Note: This is not a well researched piece so pardon me for inaccuracies, This is more of what I have observed or heard from people as I travel or talk to people across India and try to observe them, their thinking pattern and catch a trend. Since this is more of general talk, I am not attaching data of any kind to the whole thing but just logic that i feel is correct.
I pen down a lot of my thoughts on a very scattered way on Twitter, so I thought of writing this one piece where I can integrate many of it into one.
So here are some interesting observations or say my own millennial thinking on stuff :-
Retail banking was a pretty big theme for investing in India, 10-15 years ago a large percentage of our population was not connected to the banking system.
Today, almost entire India is connected to the banking system after Jan Dhan Yojana. Leaving aside a small percentage of population that continues to be disconnected to the banking system.
Therefore, any new bank or even a old bank trying to get hold of a lot of accounts might not really work out even if they expand their branch networks aggressively.
Infact, Technology which has replaced the middle-men across the sectors will emerge as a major threat to traditional banking system going ahead. With the emergence of Fin Tech Companies: Your mobile wallets, digital bank accounts and mPOS have already started to disrupt the financial world. Now going ahead, traditional banking which is the largest middle man in the economy will witness challenges from P2P lending and many such intriguing concepts. The banking giants which actually slept on technological innovation will have to wake up and smell the coffee sooner or later to compete with these fintechs and smaller banks aspiring to grow big have to create fintech brands or keep trying to talk about biting the retail banking cake and end up being eaten.
Auto Sector:
On my personal twitter handle, Last year in September I had posted about an impending auto-slow down.
In real terms the auto slow down came a bit late but now it is the biggest talking point on the street.
While many are taking this as an economic indicator of prosperity and financial power I feel otherwise.
We had a good amount of growth in the 2 wheeler and 4 wheeler space in India, most of the metro cities in India are over populated both with humans and vehicles, Parking is a huge issue for all the car owners, Maintenance costs are high, Petrol Diesel haven't been really cheap despite Acche Din.
The car buying is slow not because people dont have money but because people have options like Uber & Ola in big cities, they are now venturing into small cities as well.
The buying a second car idea is not even on most minds anymore.
If you have options to spend small and get services like Uber & Ola you might not instantly look to spend big on a vehicle and pay EMIs, you would rather spend it on some other things (This is how the millennial thinking is shaping up)
Plus due to the above stated issues a large percentage of people no longer see a car as a status symbol, flaunting an iPhone or flaunting about a holiday on Instagram has become more interesting or worthy rather than driving your tall boy Wagon-R. Now going ahead the Car Sales will soon turnaround because while cities are done with owning a car obsession, smaller towns and cities would witness a trend to buy cars and even if they don't once Uber & Ola start to penetrate your smaller towns and cities you will anyway see amount of growth returning in the sales figures soon.
Meanwhile 2 wheelers will be a growing trend, A lot of second car buying would convert into owning a 2 wheeler for quicker commute, Plus the rise of Swiggy, Zomato, Uber Eats largely the Delivery Boy Culture will also trigger a good amount of growth in 2 wheeler buying.
HUL which is present across so many categories of FMCG has cut its growth forecast in their latest quarterly results and the volume growth was unexciting for analysts.
This whole thing of FMCG slowdown that is being peddled may not be a slow down but a case of shrinking market share for these large mncs.
Just think about it a Patanjali which came out of nowhere and disrupted and grew big even though even that is slower now points out at what?

It points out at a lack of loyalty in the mind of Indian consumer, this young Indian consumer is not shy of trying new brands and things or eat new stuff.
For instance, India's total potato chips market both organized and unorganized stood at close to 18000 crores in 2017 while the leaders continue to grow at exciting or moderate growth rates, the latest entrant with a niche of baked healthy snack, crisps, chips and innovative products like foxnuts and quinoa puffs "Too Yumm" a brand by CESC endorsed by Virat Kohli went on to clock almost 300-500 crore sales in their first year which is not a mean feat. Even DFM Foods in their latest march quarter delivered a 30% revenue growth backed by new launches like cheese balls and more.
The entire thing about India being hugely populated country and FMCG being a huge growth story has caused a lot of start-ups, new companies venturing into this field of business with a renewed focus on pricing and innovation, these small companies with their small brands are so many in number that they are managing to dent the market share of these biggies (It is actually good for India)
Its not just limited to food but across the board, E-Commerce push has also helped to cut off distribution headache and making it easier to sell your new brand to large population.
For instance the best selling shampoo on Amazon right now is WOW's Apple Cider Vinegar Shampoo priced at a discounted rate of 384 for 300 ML and it has 5951 customer reviews already and on an average 4 star reviews.
Their website: tells us that Wow Skin Science is a beauty company based in "Bangalore" so you know now its a start-up.
HUL's clinic plus comes as second best seller.
Across skin care there are brands like Skinsalad, Jovees, mcaffeine and practically a lot many which are slowly starting to have their own set of customers and are biting the market share of biggies.
Another example is that the best seller product in Chips category on Amazon is Too Yumm's Multigrain Dahi Papdi Baked Chips and the second best seller is Lays American Onion
So one thing is becoming clearer that the young millennial Indian customer is not a very loyal or attached fellow to any brand, He is not shy of trying things and he/she has a lot of options now compared to what they had earlier.
FMCG / Fast Food/ Restaurants contd:
Packet food is also getting disrupted by availability of fresh food through swiggy and other such food delivery apps which can replace your hunger of Maggi with a paneer wrap from your nearby Dhaba.
QSR, Take Away and Food Delivery is becoming a pretty booming business in India, big cities like Mumbai or Kolkata or smaller towns like Indore: The Demand is Real.
A simple question also is, if HUL’s growth forecast turning tepid hints at recession does the mad growth of food delivery apps and restaurants hint at India becoming an economic super power? NO for both.
This is not such a great news for a Dominos or Mc Donald’s because of variety of options becoming available to people.
But in turn it is also fueling the hunger across people to order so they are not complaining as they all are targeting the Kitchens as well not just each other.
I have left many sectors uncovered here, But the moot point I am trying to make is that the disruption is pretty high and across industries, and there are many opportunities for many companies and start-ups to make it big.
A lot of the listed company’s results or growth forecasts might or might not reflect this due to shrinking market shares for big companies.
But this whole consumption slowdown does not seem very real to me, Investors as well as young businessmen should try to identify new themes in the consumption or service bracket to tap.
There is a lot at stake for FMCG Biggies and also a lot of Stake in the market share to be won by younger companies.

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