The Unorganised Markets in India - The True Market Creators!

The unorganized market is a very special market feature in the Indian context. There are several categories where we have MNC’s and Indian companies battling out for that 1 percent additional market share in their respective categories… Many knowingly/unknowingly ignore that their measure of the category size is reduced to a drop in the ocean once we add the unorganized market figures to the category numbers…

Some categories where I feel the unorganized players are mighty strong are beverages, snacks, candies, pickles etc in foods to Agarbattis, floor cleaners (phenyl) etc… It is amazing how these unorganized players operate and their size… In beverages – Fruit based drinks particularly – the unorganized market is 10X the organized category size!!!

Some interesting characteristics of this unorganized market that I believe helps them thrive despite the presence of MNC’s with big bucks are listed:

1. They are very very localized companies – thereby – they have advantages in terms of major savings on logistics cost plus they are able to more frequently service markets with fresher products (this model especially works brilliantly for low shelf life products – e.g. Badam Milk down South)a. The bottle water business particularly the bubble top business is thriving due to these extremely localized players!

2. They do not care much for investment in branding/visibility/ etc… they heavily discount trade and ensure that they keep their primary customer the happiest – the Retailer… Hence these brands are generally push brands where the consumer generally is OK with what the retailer gives – more so in captive outletsa. Selling of local brands of Fruit Based Drinks like Sparta, Dailee in captive outlets like Railways/Bus Stands etc. is an example

3. They have unions within themselves which lay down clear ground rules and territories of operation so that everyone can get a piece of the market opportunity cake a. The local Bubble Top water dispenser provider is a case in point. They operate very very specific to certain localities and do not disturb other markets! And just a point they have very high service levels compared to your branded counterpart!

4. They are able to offer local tastes, flavours, traditions in the most authentic format… You can expect a Jeera soda / Jaljira / Aam Panna from an XYZ brand but not so much from a Coke… 

 The unorganized players also thrive because of these small blue ocean opportunities/market gaps that the biggies don’t find worthwhile investment!!These unorganized markets work beautifully and I believe there is a strong learning from these small companies as they are very strong operationally with their limited investments and at the same time they truly unearth insights and opportunities with bare minimum resources!!!