Tamil Nadu Has Become FMCG’s Goldilocks Zone, Says Godrej Consumer CEO— Here’s Why

If you want to know what India is going to buy tomorrow, a visit to Chennai or Coimbatore is a must, says Godrej Consumer Products MD and CEO Sudhir Sitapati. The South Indian state has "all the Goldilocks conditions", making it a perfect launchpad for FMCG breakthroughs.

Highlighting this trend in a recent LinkedIn post, Sitapati jotted down several factors that contribute to Tamil Nadu's rising appeal.

Firstly, Tamil Nadu is almost Southeast Asia, he says. FMCG companies often look to categories that have done well in Southeast Asia as inspiration for an India launch. With a per capita income 1.6 times that of India (over $4,000), Tamil Nadu mirrors Indonesia or Vietnam more than the rest of India. Unlike Telangana or Karnataka, which have similar income levels, Tamil Nadu’s wealth is not concentrated in a single metro, he explained.

Secondly, the state is "media-isolatable". For scale launches, linear TV remains the most cost-effective medium in India. If you wanted to test-launch in Haryana, an equally rich state, you’d have to advertise across all Hindi satellite channels.

Even a state like Karnataka has a large number of non-Kannada speakers who don’t watch Kannada satellite (KanSat).

Tamil Nadu is not only entirely Tamil-speaking but also has a concentrated TV network through which you can rapidly reach 80% of the state in under six weeks.

And lastly, while trade in Tamil Nadu is modern, it is not consolidated. New categories do better in self-service stores than in traditional closed-format ones. Consumers can touch, feel, and read the packaging.

But it’s harder to list new brands in organised retailers like DMart or Reliance. They often give you access to a select number of stores to prove your case — but to generate off-take in these, you have to advertise across the entire state.

Independent stores, with their emphasis on relationships, are more relaxed about placing new products, he says.

Tamil Nadu, with its wide network of independent supermarkets (banners here, unlike in Andhra or Telangana, are much smaller), allows for rapid statewide distribution, ensuring your media spends don’t go to waste.

GCPL recently launched two new brands — Ninja, which marked the company’s foray into pet food, and Bloq, a new anti-perspirant brand. Both these brands were launched in Tamil Nadu. So were the company's Fab liquid detergent and Cinthol Bodywash, as were many new brands by other FMCG firms.

Many FMCG executives agree with this trend.

R. Bargav, the founder and chief executive officer of AATHIYAM, an instant breakfast and snacks company, concurred. Responding to Sitapati's post, he wrote Coimbatore and Chennai offer a strong testing ground for gauging product potential and scaling up quickly.

Pallavi Suresh, executive director Nielsen IQ, also said that that the general belief held was that if a launch succeeded in TN then it would definitely do well across the rest of India.

Ramesh Prabhu Ramasamy, senior brand manager, Nestlé Professional for instant coffee, said, "It is truly a market that offers rich insights into future consumption patterns of India. The high digital penetration and active social media usage in the state also complement traditional media efforts, allowing for integrated campaigns that drive both awareness and engagement, especially among the young demographic.

"Furthermore, the robust logistics and supply chain network across the state ensures that once a product gains traction, scaling up distribution is relatively seamless," he stated.

Tamil Nadu has been attracting a lot of investment with several domestic and MNC majors lining up to set up their manufacturing plants in the state in order to cater to the South Indian markets.

In March, GCPL inaugurated its first integrated greenfield plant at Tiruporur near the city. PepsiCo is reportedly launching a manufacturing plant at the Sipcot food park at Manapparai in Trichy district to make potato chips and snacks at an investment of more than 500 crore. Dabur India, too, will set up a 400-crore manufacturing plant, its first ever in South India, at the Sipcot food park in Villupuram district.