“Growth of Nepali FMCG market is among the fastest in the world”

  7 min 40 sec to read
“Growth of Nepali FMCG market is among the fastest in the world”

It’s been 25 years of presence for the United Kingdom-based multinational market research firm Nielsen in Nepal. The Nielsen Nepal Company, a subsidiary of Nielsen South Asia, is active in research areas of FMCG market, consumer behaviour, digital marketplace, telecommunications and social research. Since its establishment in 1993, the data and information provided by the Nielsen are highly valued by Nepali marketers and institutions as the insights enable them to have a competitive edge in the market and a greater advantage to focus their organizational efforts.  Prasun Basu, president, Nielsen South Asia was recently in Kathmandu for a visit. Basu, who is in the post since 2016 has two decades of extensive experience in client consulting in several markets across the globe. He is an expert in brand, communications, innovation, new product development and customer loyalty management. In an interview with Ashim Neupane of New Business Age, Basu talked about Nielsen’s activities in Nepal, changing market dynamics and the company’s future plans, among other issues. Excerpts:

How do you assess the 25 years of Nielsen’s presence in Nepal?
The company is doing quite well in Nepal. This year has been wonderful for Nielsen, and we are growing at double digit. We are the biggest company in the market research industry in Nepal. We have always invested in introducing new services and focus on improving our services. We started retail measurement services (RMS) five years after entering Nepal. We do something called 'Universe Upgrade', which make our services very accurate. We did the ‘Universe Upgrade’ in 2004 and 2011. After 2011, we are doing it very frequently. We did a major upgrade in 2014 as we went from 57 cities to 91 cities of the country.

We have invested a huge amount in recent times in different areas. We introduced Hand Held Terminals (HHTs). Earlier, we have to use pen and paper for our services. We have stopped that completely, and on the retail measurement service side, we use HHT which is very advanced and automated. This year, we are upgrading HHT into light hand held terminals. A HHT device is like a mobile phone, but it’s thicker. Light HHTs are very thin compared to HHTs and such devices easier to carry and users can also take pictures.

On the custom research side, we introduced computer assisted personal interviewing (CAPI) machines and devices. Next year, we are entering into more advanced services where we get live alerts from the field. We are also conducting a full market census, in which we will map up all the shops and major business establishments in all main cities of Nepal. This is happening for the first time in the history of Nielsen Nepal. After mapping, the businesses will get better insights about the market. Businesses can also go for store expansion and know better about consumer behaviour. Companies can make strategies to grow their businesses by looking at the situation of the market. This year, we are going for other upgrades too. The machines and equipment in India will be brought to Nepal. We are looking at the areas where our reach is very limited. So, our focus is on telecom and e-commerce. Now, our focus is also to work in social research in which we have done quite well in the past. 

How do you observe the changing market dynamics in Nepal?
Nepal is an emerging market with a lot of growth opportunities. Our estimates show that (FMCG) business in Nepal is growing by 15 to 17 percent which is much higher than the global growth rate averaging two to three percent. Currently, the Indian FMCG market is growing by 10 to 12 percent. In this segment, the growth of beverage market in Nepal is at 20 percent. Other sectors like manufacturing and telecom are also recording a massive growth rate of 30 to 40 percent which is hardly seen in other countries.

Nepal is poised for a higher economic growth as the country now has achieved the political stability. Political and economic stability coupled with good governance will help the domestic private sector and multinational companies to grow their businesses here. Another important aspect in this regard is Nepal’s good relationship with the neighbouring nations which is essential in investment and trade. 

How do you see the consumer behaviour? What is the behaviour of Nepali consumers like?
Globally, the consumer spending is slowly shifting from FMCGs to other sectors like digital marketplace, lifestyle, travel and automobiles, among others. As a result, the global FMCG companies are not growing as per their expectations, while digital businesses are doing quite well globally. But, in Nepal FMCGs have a huge potential. Other sectors like infrastructure and telecom are having growth rate of up to 40 percent.

E-commerce has been the major disruptive force to change the market trends the world over in the last 10 years. How do you see the scope of e-commerce in Nepal? 
Consumers these do not prefer to go to the nearest store to buy products. They grab the nearest digital devices for the purpose. The online retail ecosystem is evolving fast. Digital analytics firm eMarketer projects that online retail sales will more than double between 2015 and 2019 and account for more than 12 percent of global sales by 2019. E-commerce in Nepal is still in its infancy. Nevertheless, the e-commerce business is picking the momentum because the rising internet penetration. But, the digital payment system should also grow side-by-side. In Nepal, cash-on-delivery is common, and digital payment system is rarely used. In India too, e-commerce was very small two-three years ago. But it has grown up sharply with the increasing use of digital payment systems. So, to build a better e-commerce ecosystem, both the government and private sector should look to promote digital payment and increase internet penetration across the country. 

Compared to India, the number of credit and debit card users is relatively less in Nepal which has been one of the obstructing factors for the growth of e-commerce business here. So, developing a strong digital payment system is a must. If India can observe an e-commerce boom in a very short period, Nepal can also achieve the same success because the consumer market here is growing faster than in India.

Nepali FMCG brands are gradually increasing their presence in the market which is largely dominated by foreign brands. What are the trends do you think Nepali brands need to pay attention to, if they are to win the confidence of the consumers?
Some of the Nepali brands are doing very well in FMCG categories such as noodles, confectionaries and cigarette. They can do a lot better and their focus should be on distribution to reach out to every nook and corner of the country. As Nepal has adopted the federal system of governance, all seven provinces hold equal market potential. Businesses should also introduce products in new sizes and looks, which will also increase the number of sales. Products with high level of quality, right size, design and packaging can also help the brands to enter the global market. 

How is Nielsen performing in South Asian and global markets?
In the South Asia region, we have presence in India, Nepal, Sri Lanka and Bangladesh. Expect India, we are seeing a double digit growth in all other countries. India is a big market, and the growth is near double digit there. The country has a very competitive market, and it is not that easy to grow there. Despite the competition, the share of company is growing in India. 

It’s been 94 years for Nielsen since its establishment in 1923. What are the reasons behind the market research firm’s global success?
Nielsen is always ahead when it comes to using technology. We have been increasing investment in digital services. The digital market of the United States is very good. But markets like India, Indonesia, Turkey, Mexico, Africa, Russia, among others, are still growing. We are investing huge amounts of money in such markets that have helped our growth. We always look to automate for better results and services.

We are very good at acquiring the companies that are future focused. We already have presence in 105 countries, and have been acquiring both local and global companies. Acquisitions have helped the company to achieve additional 10 percent of annual growth. Currently, we are looking for new acquisition in one of the countries of the South Asian region.