Small consumer goods companies in urban India have grown at twice the rate of their larger counterparts over the past year, capturing a greater share of the market amid a broader consumption slowdown, according to Kantar data.
While major FMCG firms, which control 34% of the market, posted a modest 2-3% sales volume growth in urban areas, smaller brands, which account for the remaining two-thirds of the market, expanded by 5-7%.
The stronger growth of smaller firms is attributed to inflation, sluggish wage increases, and rising housing costs, which have pressured urban purchasing power. As a result, many consumers have turned to lower-priced brands, favoring smaller players that often operate with lower distribution costs and pass savings on to customers.
Kantar defines big companies as those with access to over one-third of India’s 250 million households. These include most listed firms, which experienced limited revenue growth over the past year. Conversely, smaller firms include regional players and new-age brands with limited distribution footprints.
While the overall FMCG market slowed from 6.3% growth in 2023 to 4.8% in 2024, the impact was felt differently across company sizes. Larger firms’ growth slowed from 6.5% to 4.4%, while smaller brands saw their growth decline from 6.2% to 5%.
Urban markets were notably impacted, with big firms facing stiffer competition from smaller brands. Meanwhile, in rural India, growth for smaller firms halved to 3%, while large players maintained their 6% growth rate.
Industry leaders acknowledge this shift, with several major FMCG firms highlighting the impact of smaller regional brands on their sales. Categories such as noodles, snacks, biscuits, and soaps saw intensified competition from these nimble players.
Over the past decade, local brands have steadily gained market share from larger competitors, a trend that accelerated during the COVID-19 pandemic. In segments like salty snacks, tea, and spices, local brands now control over 40% of the market. Smaller firms are also expanding beyond their traditional territories, increasing their presence in nearby states.
With inflationary pressures persisting and global trade uncertainties continuing, smaller consumer goods companies are poised to remain growth drivers in urban markets, even as larger firms make efforts to regain momentum.