India is a nation of paradoxes, with a vast canvas of 496 million addressable consumers for the FMCG sector, 35% residing in bustling cities, and the remaining 65% living in villages. The Indian FMCG sector, a mirror to this vibrant diversity, has been undergoing a significant transformation. A dynamic and discerning consumer base, a blend of traditional values and modern aspirations, is reshaping consumption patterns of India.
The Powers Shaping Consumption
India’s diverse population is spread across five distinct generations. This pyramid is undergoing shifts, where each generation brings its unique preferences, values and spending power, and often the influence of a legacy brand weaves the generations together.
India is blessed with a rich demographic dividend; it is home to the largest youth population in the world. GenZ is the largest generation in India followed closely by Millennials. Reports by Snap Inc. and Boston Consulting Group underscore that the Indian GenZ population, estimated at 377 million, has a purchasing power of $860 billion. These digital natives cherish experiences, and believe in the philosophy of, ‘Kal ho na ho’ and ‘YOLO’, which means you only live once, so you might as well enjoy it!
Besides, senior citizens comprise over 10% of India’s population.
By 2050, the UN Population Fund indicates that one in five individuals in India will be elderly. This silver generation, especially in urban markets, is an important consumer cohort, defying antiquated stereotypes. They want to feel good and look good! And refuse to be overlooked. Their choices are inadvertently a result of their wisdom and experience.
The rapid transformation of the consumer landscape offers a diverse, aspirational consumer base in urban and rural India, combined with GenZ and an ageing population, who are keen to invest in their personal wellbeing to live better.
Cautious Consumer and a Resurgent Force
Stagnating income growth, coupled with elevated food inflation, has forced consumers to tighten their wallets. Rising interest rates have further dampened urban consumer sentiment, particularly for discretionary purchases, with consumption being the weakest in September, since last two years.
In contrast, rural India has demonstrated remarkable resilience. After a period of subdued growth post-pandemic, government initiatives, improved agricultural productivity, and rising disposable incomes have fuelled a resurgence in rural consumption.
This growing purchasing power, paired with increasing exposure to digital technologies, has created a significant opportunity for businesses.
While short-term challenges persist, India’s long-term growth story remains intact. As the economy continues to evolve, a balanced approach that caters to both urban and rural consumers will be crucial for businesses to thrive in the Indian market.
Conscious Consumption
Kantar’s latest report, “India at Crossroads,” highlights the key trends shaping the future of the Indian consumer landscape: premiumisation, digital transformation, health consciousness, and value-conscious spending. These trends are converging to create a new consumer base.
The Covid-19 pandemic has undeniably reshaped consumer attitudes towards food safety and quality. Consumers have become far more vigilant about the products they consume and are placing greater trust in established brands with strong reputation for food safety.
People today want quality. They don’t just eat anything that you put on the table. During my market travel, a retailer told me that our brand stands out because of high quality. Consumers say, I can pay more, but I know I get unimpeachable quality and refuse to be bamboozled into anything short of that!
Brands are increasingly adopting premiumisation and value-up opportunities, attaching high perceived value to their products to attract discerning consumers.
There is a growing emphasis on purchasing products with enhanced nutritional profiles, millet-based innovations and fortified products. Brands would need to expand the nutritional profile of their portfolio.
Sustainability has emerged as a key driver of consumer choice. Consumers are increasingly seeking companies committed to environmental and social responsibility.
The Power of ‘Now’
Quick commerce has taken the Indian grocery market by storm, with a significant portion of urban consumers now relying on it for their primary shopping needs. This surge in quick commerce adoption highlights the growing demand for convenience and speed among Indian consumers.
According to a recent NIQ shopper trends report, a staggering 31% of urban Indians now use quick commerce platforms for their primary grocery shopping, while another 39% use them for top-up purchases.
Integration of AI will continue to redefine consumer engagement, by accelerating innovation and launching new products at a higher speed. However, I would urge careful consideration in the deployment of AI for predictive analysis, strategic planning mechanism, and information dissemination. AI should be used to enhance human capabilities and serve humanity rather than allowing them to dictate its course.
I believe relying on facts and evidence takes precedence, simply stating something isn’t enough. Use of data and analytics tools, such as Nestlé’s MIDAS and NesMitra, when combined with insights of local shopkeepers, distributors and consumers, is a powerful tool to serve consumers.
Therefore, there is a need to combine AI with real intelligence and work on the ground, through activation, sampling, getting people to try more products and this should be an intrinsic part of the journey. 
Views are personal. The author is Suresh Narayanan, CMD, Nestlé India.
