Hey, Big Spenders

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Typical of the new trend is Samit Kapoor, 28, an assistant manager at Exl Service, a call center near New Delhi. Last year Kapoor took a mortgage to buy a two-bedroom apartment, and this year he purchased a car, a Hyundai Santro, for about $7,000. Four times a month, Kapoor visits New Delhi's top restaurants, among them Italian bistro Flavors or Indian-food specialist Bukhara, dropping as much as $40 a meal. In the process, he ran up about $4,200 in credit-card debt, spread over three cards. Since getting married six months ago, he has been persuaded by his wife to scale back and pay the debt down, but he was never too worried about it. "I see more opportunities to make money in the future," he says. Though not as extravagant as Kapoor, Pawanjit Singh, 25, a manager of a busy McDonald's restaurant in one of New Delhi's main markets, splurged on secondhand golf clubs, which set him back more than $400. He heads out to a golf course (golf is a prestigious hobby in Asia) or a driving range every weekend. "I don't think people my age right now want to save," he says.

Thanks to big spenders like Kapoor, Citibank is finding that its target customer is getting younger. Five years ago, the average age of a Citibank mortgage holder in India was 41; now it's 28. As a result, the U.S. bank has introduced all kinds of programs to attract young Indians. Citibank hooked up with MTV to issue an MTV credit card designed to look like a cassette tape. ATMs are placed in locations where twentysomethings work, such as outside call centers. The bank is even targeting the under-18 crowd with a special debit card that allows kids to withdraw money from ATMswith a spending limit imposed by their parentsand get discounts at McDonald's and Pizza Hut. "The young generation is changing the consumer-financing landscape," says Sarvesh Sarup, Citibank's chief of consumer banking in Bombay. "Targeting of that segment is very, very critical."

Global marketers still have to cater to Indian tastes, which can take some doing. Just ask Vikram Bakshi, managing director of McDonald's India. When McDonald's opened its first outlet in 1996, it had to toss out much of its standard menu: Hindus consider a cow sacred and won't eat beef. Bakshi tried introducing India-friendly alternatives. In place of the classic Big Mac, Bakshi offered a burger with mutton patties, christening it the Maharaja Mac after India's princely historic rulers. The sandwich flopped and was pulled from the menu.

Now McDonald's' menu in India is so customized to Indian tastes that an American would scarcely recognize it. The best seller is the McAloo Tikki burger, a vegetarian fried-potato patty with cheese. The newest entry is the McCurry Pan, a flat pastry filled with hot broccoli or chicken curry. The result: while the floundering fast-food giant scales back and shuts restaurants elsewhere in the world, in India it can't dish out the veggie burgers fast enough. McDonald's has 48 stores in India, 60% of them built in the past 18 months. The outlets see on average 3,000 customers a day, placing the units in the company's top 10%. Bakshi expects sales to grow 40% annually in coming years. "Our products in India should be relevant to the Indian consumer," he says.

Reebok markets sneakers with a similar strategy: taking international campaigns and tailoring them for the young Indian. For example, an ad campaign in the U.S. for Reebok Classics pictured typical figures of Americana, like a little boy with a baseball bat, clad in throwback simple sneakers. In India, Reebok replaced the lad with a grizzled, bearded snake charmer in a turbanwith a flute and a woven, cobra-filled basketand pristine white sneakers. Sales of Reebok footwear are growing at 30% a year. Rajeev Bakshi, chairman of Pepsico India, pushed the same idea a step further. "We took the variable of nationalism," he says. Earlier this year, for the Cricket World Cup, a sporting event in India of Super Bowl importance, Pepsi launched a fluorescent-blue cola matching the color of the wildly popular national cricket team. A television ad for the soda showed a blue-clad movie actor bluntly saying, "Drink Pepsi Blue. Cheer for the men in blue."

Young consumers are also reshaping how large sections of the economy work. Take, for example, the cinema industry. Movie houses have been almost exclusively mom-and-pop outfits and, as a result, old, dingy and broken down. But the young, high-spending crowd is enticing major corporate players to invest. Bombay-based Inox Leisure opened its first two multiplexes over the past year and is investing $50 million to build 11 more, each with as many as six screens, by mid-2005. Shishir Baijal, Inox's CEO, estimates that 100 multiplexes are in the works nationally. Though he charges as much as three times more for a ticket than the old cinemas did, Baijal sees the young set "coming back all the time. They are getting more exposure. They know what they want."

Executives and economists see little chance that the boom in spending will slow down anytime soon. The National Association of Software & Service Companies, an industry group in New Delhi, expects that 1 million people will be working in call centers and other "back office" operations in India by 2008, up from 160,000 in March. "There will be significant opportunities for people to look for higher incomes," says Hemendra Mathur, a manager at KSA Technopak. For all those millions of potential Saurabh Kedias, the news could hardly be better.