Friday, February 04, 2011

Consuming Middle India

Recent past has seen a drop in exports in teas, coffees, spices, fruits viz pomegranates. Interesting ? Thanks to the increasing incomes of the middle class, there is higher consciousness about 'what they consume'. The richer crust of middle India finds brands with the export quality sticker more suited for consumption be it - green tea, pepper, coffee from the finest beans , milk and dairy products etc.. The exporters of these items find it more lucrative to sell to Indians who are willing to pay more than the foreign counterpart. An indicator for increased consumption is the price increase for milk is ~20% while the demand has increased by ~7%. The perception is that 'higher price' = 'better quality'

Infact there is also growing demand for fruits like pomegranates owing to their medicinal properties and 'general goodness' to health. The middle class Indian does not mind paying over Rs.200/- for a kilo of pomegranate.

Is that a good or bad sign, I wonder. Isn't this going to affect food inflation?! Any thoughts ?

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