Companies planning on selling luxury goods in India should consider Nielsen’s August 2009 survey. For some, it will be a reality check.
When I read the press release from Nielsen’s survey of Upper Middle-class and Rich (UMAR) households in India, I thought they’d made a mistake… maybe lost a decimal point or so. They figured India had 2.5 million Upper middle-class households, defined as those that both owned a car and a computer. I thought it must be understated; after all, India is reportedly making 2.8 million cars each year. (Income is considered to be widely under-reported in India, so surrogate indicators are used in surveys like this one.)
Nope. I checked with Nielsen, and they stand by their survey, which covered the 35 largest cities in India.
India has perhaps 220 million households in total; 65 million in urban areas; of which these 35 cities have about 26 million households. Around 10% of the households of these 35 cities are affluent.
Nielsen note that India has a stock of 14.5 million cars on the road, and 7 million computers on people’s desks. The intersection of those two sets, they estimate, is 2.5 million.
From this 2.5 million, they break out two further segments:
- The 200 thousand households of the Upper Upper middle class, which not only own a car and a computer, but also an LCD television; and
- the 100 thousand Rich families, which own all those things and have taken at least one holiday overseas.
For companies seeking to attack India’s luxury goods markets, this is a reality check. While the magic of large numbers – the 1.2 billion population – certainly exists, for many international consumer goods companies, their markets will be here: In the top 35 (or even just the top 5) cities; with consumers numbering in the hundreds of thousands rather than in the millions.
According to the survey, the top ten cities were: Delhi, Bangalore, Mumbai (Bombay), Chennai (Madras), Hyderabad, Kolkata (Calcutta), Kochi (Cochin), Pune (Poona), Jaipur and Ahmedabad.