While the FMCG sector's pickup has been phenomenal, from a decline of 3 per cent in the second quarter of 2003-04 to a growth of 17 per cent in 2005-06, the reason for this is not just the increase in demand from rural areas. Rural growth in the year, thanks to a better agricultural year, was faster than urban growth in most segments "" for shampoos, rural demand rose 25 per cent versus 8 per cent in urban areas, it was 18 versus 5 for skin creams and 32 versus 8 for hair oils. What is more important, however, is that customers who were down-trading a few years ago, that is buying cheaper alternatives, are now back to buying more premium products. In the case of fabric wash, for instance, in the first six months of the year, there was a 10 per cent hike in value despite there being a 6 per cent decline in volume sales. The best example of this is the hike in the share of FMCG-spend in personal products as well as items like laundry. As a result of this, advertising expenditure has also shot up, from 11.8 per cent of sales in 2003-04 to around 15-16 per cent now.
