Whalesbook
A recent report from Worldpanel by Numerator highlights a significant shift in Indian consumer spending towards premium and "super-premium" Fast-Moving Consumer Goods (FMCG). The premium segment alone accounts for approximately 15% of the total Indian FMCG market, valued at ₹98,000 crore.
Emerging within the premium category is a "super-premium" segment, now comprising nearly 40% of premium brand volume. This segment features products priced, on average, 1.5 times higher than the category norm. Notably, it includes both international and increasingly, local brands, such as Sikaram Groundnut oil in Tamil Nadu, which is priced twice the category average and holds a substantial 26% volume share in the super-premium oil market there.
Major FMCG players are capitalizing on this trend. Nestle India, for instance, is sharpening its focus on a ₹7,500 crore premiumization opportunity, attributing demand to consumers willing to pay for quality and better nutrition. Dabur India is also strategizing to unlock higher value by premiumizing and contemporizing its product portfolio.
While metro middle-class shoppers spend more per kilogram or litre (₹153) compared to tier-2 middle-class shoppers (₹136), the latter group exhibits higher overall consumption, buying about 196 kgs of FMCG in the past year, 17% more than their metro counterparts.
Impact: This trend indicates a maturing Indian consumer base, willing to spend more on perceived quality and enhanced experiences. It will likely lead to increased revenues and profitability for companies that successfully innovate and market premium products. This shift may also influence investment decisions towards FMCG companies with strong portfolios.
Difficult Terms:
Premiumisation: The trend of consumers choosing higher-priced, better-quality products over cheaper alternatives.
Super-premium: A sub-segment of premium products that are even more expensive and exclusive than regular premium offerings.
FMCG (Fast-Moving Consumer Goods): Products that are sold quickly and at a relatively low cost, such as packaged foods, beverages, toiletries, and other.
Volume Share: The proportion of total sales volume in a specific market or category that is held by a particular product or brand.
Price Index: A measure that compares the price of a product or basket of products to a base period or base product, often expressed as a multiplier.
Contemporisation: The process of making products or brands more modern, relevant, and appealing to current tastes and lifestyles.