Recent data from Hindustan Unilever shows a notable divergence in consumer behaviour within India’s consumption sector. While premium brands are experiencing robust demand at the country’s leading consumer goods companies, mass-priced products are encountering a comparatively slower pace of sales.
There is a sustained enthusiasm for premium and luxury products as consumers continue to explore and experiment. However, there’s a contrasting trend among value-oriented consumers in Middle India, who are reducing spending occasions to manage their finances.
Hindustan Unilever, the country’s largest consumer company, narrated that its premium portfolio at Hindustan Unilever expanded more than two-and-a-half times compared to the mass segment in recent quarters. This trend is observed even in rural areas, where premium products now constitute a third of total sales.
The dichotomy in purchasing decisions is believed to stem from income disparities, impacting nearly 40% of the overall FMCG market in rural India. Cities, with more resilient urban incomes linked to organized sectors, continue to lead overall consumption demand. Experts suggest that the impact on the consuming class, mainly the upper and middle class, is less significant compared to the lower-income segment, which faces greater pressure on their wallets.
Despite consumer companies having budget-friendly options in their portfolios, lower incomes, especially in rural areas, seem to have affected purchasing power at the budget end of the market. In fact, the lower end of prestige and popular categories is facing challenges due to economic pressures on lower-income segments.