The segment’s inclination for trying new products and better choices are nudging companies to innovate, creating room for premiumisation.”A lot of the products that Daburs and Nestles of the world sell are mass products. The middle class segment is one which can afford as well as aspires to go premium and is a consumer for premiumisation at scale. If companies want to drive consumption at scale for the high margin categories, middle class becomes key,” said Akshay D’souza, chief of growth and insights at retail intelligence platform Bizom which works with several FMCG companies.
Firms are upgrading the proposition of their existing brands and rejigging the way they market them, keeping in line with the evolving consumer trends. Hindustan Unilever (HUL), for instance, relaunched its core brands Vim and Ponds during the June quarter. “We dialled up levers of consumer preference that we think will strengthen brand relevance. The new India consumers are spearheaded by aspiration, seek higher order benefits and are increasingly embracing digital interventions at an accelerating rate,” Ritesh Tiwari, CFO at HUL, said at the company’s recent earnings call. The middle class mindset has shifted from saving to spending. The share of their expenditure has gone up and that is what FMCG players are eyeing, said Madhulika Tiwari, partner, retail and consumer goods at Technopak. “The idea is while you save some, you also spend and spend not just on need-based categories but also discretionary items, both merchandise and services,” Tiwari said.
With the middle class becoming more discerning, thanks to rising disposable incomes, the demand for a variety of products- ranging from healthy food to organic products -is rising, helping brands premiumise and widening the opportunity for them. Parle Product’s strategy is to push low unit packs of premium products into the market. “Such low unit packs give consumers a scope to try products which they otherwise may not choose to buy. It is also a way to get more people within the fold of premium products,” said the firm’s vice president Mayank Shah. India’s middle class is expected to grow from about 30% of the population to 50% by 2030; this translates into 300 million new people entering the consuming class which N. Chandrasekaran, chairman, t Tata Consumer Products, said is a “huge opportunity.”
Growing participation of women in the workforce is augmenting household incomes, fuelling middle class consumption. Besides, e-commerce expansion has also enabled better discovery of brands by consumers, broadening their shift to branded products. Adani Wilmar is focusing on regionalistaion in its attempt to cater to localised preferences. For instance, it has launched a variant of pickle oils in regions like Bihar and is pushing premium product variants in select markets.
“The story of middle class consumption growth is here to stay,” said MD & CEO Angshu Mallick. Brands can be expected to widen their product portfolios. Also, products that don’t work will be withdrawn leading to compressed life cycles, said Anand Ramanathan, partner and consumer products and retail sector leader at Deloitte India.
“The middle class looks for a balance between quality and affordability, appreciate new and innovative brands, and are influenced by online research and digital marketing. We are addressing this trend by expanding our product range to meet the specific needs of the middle class,” said Rajeev John, senior vice-president, marketing at Dabur India.