OPINION I The Open Magazine

A ride along Delhi Metro’s tony neighbourhoods can be intuitively reflective. Zoomers in branded tees and hemp pants carry recyclable bags with bold messages while millennials pore over mobile content flitting through OTT feeds, reels, social media and the occasional news flash. A couple of Gen X’ers occupy one corner and are obviously less flashy, notwithstanding their smart watches and high-end shoes. Boomers are spread out in the coach, and one among them watches the action unfold with a casual yawn while browsing spiritual videos on YouTube. An elderly lady next to the man sports a bag that screams ‘It’s Mine’, suggesting a craving for personalisation even at 65 or 70. The journey, in a nutshell, encapsulates the way India consumes.

Demography, culture and income levels have a profound impact on consumption. Until recently, rich households —which constitute merely 5 per cent of total households—have driven nearly one-third of all discretionary spending in India, showing a strong inclination towards premium products and experiences. But with per capita income levels expected to grow by 10 per cent CAGR to about $5,200 in 2031 from $2,730 in 2024, this scenario is about to change drastically.

By 2031, India will add about 75 million middle-class (Rs 5-30 lakh annual household income at 2020-21 prices) and 25 million rich households (more than Rs 30 lakh) to the consumption pie. The total share of these segments will be 56 per cent, and higher per capita income levels will see these households command a higher share of discretionary spends. Middle-class households will drive 53 per cent ($2.7 trillion) of total consumption, and the rich households will drive another 26 per cent ($1.3 trillion), compared to 51 per cent and 21 per cent today, respectively.

Consumption is also moving beyond metro cities countrywide. Smaller cities like Surat, Hyderabad, Nagpur, Raipur, etc, are witnessing greater traction as consumption drivers. In small-town Haldwani, for instance, there are enough hip joints for young people today, claims Santosh Desai, CEO, Futurebrands. “The level of consumption may not match say Delhi, but the pattern of consumption mimics Delhi. So, the disparity among the same set of people is lower, but the disparity across different sets of people has grown. So, expect tattoo parlours in small towns of the country, well-equipped gyms in one-horse-towns,” he elaborates.

With more disposable income (thanks to a booming stock market and general enterprise) and global exposure thanks to technology that breaks barriers, discretionary spending has seen a spike. Yet, the Indian consumer is a varied lot and cannot be bundled in the same bracket. It necessitates a deep dive into consumer psyche to comprehend the level of changes that have taken root in society.

1. End of Homogenity

Consumers are not a homogenous bunch anymore. So, a one-size-fits-all marketing strategy is misleading. Marked regional differences, income levels, age groups and cultural influences create varying degrees of consumer patterns. Take the auto segment, for instance. In metros, people are switching from sub-Rs 10 lakh vehicles to those above Rs 10 lakh. It is a status symbol purchase. But the demand for sub-Rs 10 lakh cars still hold in smaller cities and towns. However, income levels of these two consuming classes, that is, those from the metros and non-metros, could be similar. But lifestyles may be way different. So, marketers need to have a localised approach and treat every market differently. They need to look at age group, gender and cultural differences, which will be the major drivers of consumption, irrespective of income, which may be homogenous. It explains the success of products like Maggi and mobile phones countrywide. While the makers of Maggi, Nestlé, have sliced and diced consumers and catered to their tastebuds with flavours and textures, mobile phone manufacturers have read the consumer psyche well and successfully targeted differentiated audiences. In a diverse market like India, a brand must adopt a hyper-targeted marketing strategy. They should offer personalised experiences for the consumer.

While India has a low GDP per capita, there are a significant number of people with high disposable income (over 45 million households with annual household income greater than Rs 10 lakh).

The fact that there is absolutely no homogeneity amongst wealthy Indians is a challenge for brands. Such consumers are spread across the length and breadth of the country and they differ widely in their choices. Other than their wealth, it will prove difficult to find common ground between a 30-year-old techie in Gurugram and a 30-year-old architect in Guntur. This makes scaling a challenge for premium brands—both from a distribution as well as product/brand positioning point of view.

“Brand homogenisation is a thing of the past. Today, people seek discriminants not only in what they buy but also how that brand is peer-perceived—you call it snob-buying or moving away from the Jones’ rather than keeping up with them,” says Suhel Seth, Managing Partner, Counselage India.

2. Premium Mantra

The absence of homogeneity among consumers is coupled with premium-seekers in the market. Premiumisation across categories is a given today. With rise in income, consumers are willing to pay for premium products provided they reflect quality, status and exclusivity. The demand for premiumness is evident and is taking place across sectors, such as automobile, liquor, communications, personal care, entertainment, etc. From an average of 20 per cent today, almost 80 per cent of these categories will be premiumised by 2031 (see table).

Several factors are contributing to the strong premiumisation trend, including higher disposable income and easy access to lending/EMIs. Also, taking on loans to buy durables or cars or mobile phones is no longer taboo.

The result is that whether it is fans, cars or two-wheelers, the growth of the premium segment is way higher than the growth of the entry-level segment, driving up the average selling price of the category.

After the Covid-19 pandemic, it is premiumisation that has been driving profitability across industries. As disposable incomes rise, more Indian families are transitioning into higher income brackets. We have also noticed secular shifts in attitudes towards saving and a shift in cultural attitude of having more willingness to spend. The traditional, conservative, savings-oriented consumer outlook has given way to consumers seeking better products, services and experiences. Such a shift is reshaping consumer behaviour, presenting a wealth of opportunities for marketers.

Again, take the automotive industry—60 per cent of car registrations in India in FY24 have been SUVs, highlighting a preference for higher-end vehicles offering status and comfort. In the two-wheeler segment, growth is driven by demand for power bikes Similarly, metropolitan real estate markets, particularly in Mumbai, Delhi NCR, Bengaluru, and Chennai show a rise in demand for luxury properties. India’s luxury housing market is thriving, as it recorded a 10 per cent year-on-year growth in sales during the first quarter of 2024.

The travel industry has adapted, with sustained demand for corporate and leisure travel prioritising superior experiences, evident in the expansion of the hospitality sector’s luxury services. The banking sector too follows suit, with unprecedented growth in high-end programmes in wealth management, driving profitability by courting high-net-worth individuals (HNI). Across industries, FY24 results show profitability growth outpacing revenue growth, driven by premiumisation.

Premiumisation is real. Santosh Desai of Futurebrands highlights the example of the Sarda Farms milk brand in Mumbai. “They deliver in a special bottle what they claim to be the most hygienic milk at three times the price of normal milk,” he says. According to him, even in the mass category, premiumisation is rampant. He gives the example of the movement from toilet soap to bodywash.

3. Rise of Value Seekers

Alongside, the Indian consumer is now increasingly seeking value rather than price. The consumer is focusing on long-term value and benefits. Focus on the total cost of ownership and durability has taken precedence. And such purchases are generally being driven by the youth who are buying for the long term. According to a new survey by People Research on India’s Consumer Economy (PRICE), more youngsters are pumping in money in mutual funds than middle-aged people. The youth are market-oriented and their savings portfolio is far more diversified than older people.

The value-seeking trend comes to the fore in the offtake for EVs. Say, an electric bike comes for Rs 1,20,000 and a petrol bike costs Rs 80,000. You will notice that the consumer will go in for electric bike owing to the value it will generate since the product offers long-term saving, just like energy-efficient appliances and tech gadgets with lower maintenance costs.

Show the consumer value, and he will shell out a premium.

The absolute difference in cost and total cost of ownership is increasingly being considered by consumers while making expensive purchases. No wonder auto brands are launching a clutch of electric vehicles to keep the buying experience alive. Both Maruti Suzuki and BMW happen to be clients of Sandeep Goyal, MD of Rediffusion. “Maruti is launching its first electric vehicle and BMW has more buyers for its Rs 2 crore electric car than its petrol car,” he says.

4. Design Driver

Value is enhanced through design as well. Increasingly, design-conscious consumers are driving growth, like say, in consumer electronics. Consider boAt, the headphone and earbuds company. Design sits as the main element in the brand and it has already cornered 40 per cent of the domestic headphone market. It is both sleek and affordable. Also, look at the omnichannel furniture and décor retailer Urban Ladder. They too have played on design and are quite successful. Of course, design remains a critical trend in the fashion industry and people are increasingly buying occasion-wear or clothes that are designed for occasions, such as work, party, festivals, etc. Consumers lap up good design but with a caveat—aesthetics have to match functionality.

Of course, Apple, the world’s largest electronics brands, is also a design pioneer and has woven in functionality with simplicity in all its offerings. Be it the revolution created after the launch of the iPhone or the first iPod, Apple has always placed higher importance on design. As senior industrial designer Thomas Meyerhoffer puts it, “We wanted to put design-forward as a competitive tool for Apple, but nobody understood what design could do. There was a great urge from us in the design group to say: Apple is different; Apple has always been different.”

Studies show that a significant percentage of consumers make impulse buys based on packaging alone. Effective packaging design captivates, informs, and persuades consumers in crucial junctures. By understanding consumer behaviour and market trends, design agencies today craft strategies that drive sales and maximise returns on investment for brands.

Today, design has become one of the most important vectors for buying, even for purely functional categories. Now the primary reason for buying a feature-loaded mixer grinder could well be its compact form factor and sleek design.

Gone are the days when brands with outdated designs could win. From bags to gas stoves to apps and luggage, meaningfully differentiated design is here to stay. The homegrown Mokobara luggage brand is a classic example— the company relies on design to create differentiation and the founders went to the London-based agency Morrama to design both their first product (a cabin bag) and the overall design language. The Swedish principle of Lagom (not too much, not too little) is the founding principle of the brand’s design philosophy and it is manifested through the product design and experience. 

5. The Omnichannel

The Indian consumer, however, is doing way too much before making a purchase. Welcome to the age of omnichannel consumers who browse online and then buy offline, or vice versa. The e-commerce platform in India has democratised the market allowing new and niche brands to thrive. E-commerce has penetrated across categories in India, from groceries, food, health, personal care, apparel, electronics, etc. Platforms where the product is identifiable and quality is assured will undoubtedly do well.

Take the case Jio Mart or Tanishq jewellery. In Jio Mart, you can actually place an order online and collect your order from the nearest retail outlet. Tanishq has combined online browsing with in-store appointment. Brands that increasingly investing in an omnichannel strategy combining digital and physical retail, thereby meeting consumer expectation for seamless shopping.

In every category where price discovery is possible, (electronics, durables, etc), consumers today come to stores with the Amazon listing open and try to negotiate a lower price compared to the online one. This also holds true for the reverse. People come, select a product and check the price online before making a purchase. They will walk out if they find a better deal online.

Evaluate online, buy offline. Evaluate offline, buy online. Both are happening at scale. Brands skewed towards only a single channel will struggle to grow. With reducing information asymmetry, the power has moved from the retailer to the consumer. Brands have no choice, but to maintain the same price across channels.

6. Quick Commerce

When it comes to online shopping, Q-commerce or quick commerce is the new mantra and has emerged as a big threat to e-commerce and semi-organised/organised offline retail, but not so much to the kiranas. Owing to their low cost of operations and adoption of the India tech stack (WhatsApp for orders, UPI for payments), kiranas will hold their ground.

From modern trade in the 2000s to e-commerce in the 2010s, whenever there is a new distribution channel, it leads to the emergence of new brands who piggyback on that channel. There will be many F&B brands who will piggyback on Q-commerce to reach significant scale.

Quick commerce has recently reshaped the e-commerce topography in the country. The concept of instant deliveries has expanded beyond traditional readymade meals to include various items like groceries, medicines, cosmetics, and electronics, combining the speed of instant market purchases with the convenience of home shopping. Key factors such as convenience, urbanisation, and busy lifestyles have influenced consumer behaviour, prompting companies to prioritise shorter delivery times. 

The quick commerce industry in India has experienced rapid growth since the pandemic. It is projected to touch $5.5 billion by 2025, according to a RedSeer report. Already, platforms such as Dunzo, Swiggy Instamart, and Blinkit have established 20-30 micro-fulfilment centres in major cities, facilitating 10-20 minute delivery services.

7. Digital Influencers

Alongside, the rise of digital influencers is evident. Uttar Pradesh Chief Minister Yogi Adityanath recently hired digital influencers to propagate his government’s achievements. The Uttar Pradesh Digital Media Policy, 2024, approved by the state cabinet, incentivises influencers. Influencers can earn up to Rs 8 lakh per month for promoting state schemes.

Brands, too, are making use of influencers. Take the case of Mamaearth, a beauty brand that offers natural products. It has targeted young people who do not want to use chemical-based products on their bodies. Mamaearth has partnered with numerous small bloggers and beauty enthusiasts who have a smaller but engaged following. The main goal is to promote the benefits of their product for daily usage.

Again, Nykaa, the online beauty retailer. is one of India’s most popular platforms to sell beauty and wellness products from top brands. Nykaa has used a unique influencer marketing approach partnering with various established Bollywood celebrities to promote their premium beauty products. It is also using small regional beauty influencers to reach diverse audiences in order to promote their products and location-based offers.

Then, food delivery platform Zomato capitalises on user experience and the latest social trends. Zomato has tied up with different food bloggers and reviewers to create content showcasing the variety of restaurants available on the platform. It also endorses local influencers to promote Zomato services in specific regions or for specific cuisines. What’s important is that these influencers have millions of followers which enhances the reach of the product.

8. Health & Wellness

While digital influencers are playing their part, the health and wellness quotient of consumers is rising too. As consumers embrace sport, health and wellness, they want to eat healthy, but without compromising on taste. They want toxin-free cosmetics, but not at the cost of glowing skin. They want their kids to play more and even consider a career in sport, but still want them to get good grades. Brands that solve these quandaries at the right price points will become big.

With the rise in chronic and lifestyle diseases, particularly after the Covid-19 pandemic, health awareness has increased. Take, for instance, the surging demand in organic food, or for that matter, fitness equipment and health supplements. Our research found that about one-fourth youth respondents opted for blood tests even without showing any signs of illness, highlighting a growing focus on preventive healthcare—a direct impact of the pandemic. This shift has led to the rise of brands like Patanjali and Organic India, which have become household names by offering organic and Ayurvedic products. Consumers are increasingly prioritizing holistic well-being, seeking products that promote long-term health rather than simply addressing immediate needs.

The health and wellness industry in India is undergoing significant growth and transformation, driven by changing consumer preferences, heightened awareness of health risks, and the adoption of healthier lifestyles. With more people focusing on preventive care, demand for natural, organic, and Ayurvedic products continues to rise. Consumers are not just looking for cures but are embracing lifestyle changes to improve overall wellness, reflecting a broader cultural shift towards sustainable health practices.

The health and wellness industry has a wide range of sub-sectors, including wellness tourism, spa services, healthy eating, fitness, Ayurveda, yoga, and preventive healthcare. The industry focuses on promoting physical and mental well-being, emphasising aspects like nutrition, weight management, heart and gut health, immunity, and overall personal health. 

The Indian health and wellness market is growing at a staggering pace and is set to cross $72 billion by 2025 from approximately $55 billion today. The market is presently growing at a CAGR of 28 per cent stemming from the growing demand for wellness, healing and long-term rejuvenation. According to Suhel Seth, “The health and wellness vertical is truly catching on and will continue to as people are now recalibrating their lives from plain longevity to the quality of life.” 

Think medical tourism and healing, medicines and pharmaceuticals, FMCG and nutrition, diagnostic and healthcare centres. The government, too, is extending support in the form of AYUSH (Ayurveda, Yoga, Unani, Siddha, Homoeopathy) ministry—an entire ministry set up for alternate healthcare.

9. Sustainability Rocks

If the health and wellness quotient of consumers delivers a sustainable model for marketers, what about sustainability itself? It is fast emerging as a consumption driver. Millennials and Gen Z’ers are becoming more eco-conscious. One gets to see sustainable practices, particularly in packaging and waste product reduction. For instance, Tata Tea introduced 100 per cent recyclable packaging back in 2022. It resonated with the environmentally conscious consumer. A brand that engages in sustainable packaging, ethical sourcing and waste reduction will win loyalty from the growing segment of socially conscious consumers.

Indians seem ready to pay more for planet-friendly consumer brands. A 2022 survey by Bain & Company said 52 per cent of consumers in urban India expected to increase spending on sustainable brands by 2025.

The consultancy, which surveyed consumers on their outlook toward sustainable brands and their buying habits, said over 60 per cent of consumers in India are willing to pay a premium for sustainable products. Personal impact owing to environmental issues, and influence of family and friends are the key triggers that are prompting the move.

Today, there are a bunch of ecologically conscious businesses that consumers care for. Sresta Natural Bioproducts, the parent company of the popular organic brand 24 Mantra, has built a robust supply chain that directly connects organic farmers with consumers, ensuring fair prices and high-quality products. Again, No Nasties, an Indian fashion brand, produces 100 per cent organic and fair-trade clothing. The brand has built a loyal customer base by focusing on transparency, ethical sourcing, and environmental sustainability.

10. Fragmented India

Finally, the trend most visible is a fragmented media landscape. There are no obvious avenues left to build high reach and brand salience quickly and efficiently among, say, the top 10 per cent households.

That’s primarily due to an overdose of content and changing device preferences. Years ago, a certain number of spots on high-impact properties like <Bigg Boss> or an exciting sport telecast would have ensured phenomenal reach. No more.

Today, there is infinite content on OTTs, YouTube, reels, Instagram, and what have you. Consumers though have limited time and attention. No wonder that the reach of relevant content has dropped.

Now, look at the emergence of connected smart TVs. India already has 40-50 million colour TVs. With affordable connected TVs and WiFi, the top 10 per cent population in metros is fast moving away from linear TV. In Tier 2 and 3 towns, linear TV persists since WiFi infrastructure and costs remain a barrier. So, viewership gets divided by devices. Therefore, being present on Star Sports or Hotstar/Jio Cinema alone will not deliver the desired reach even for marquee properties like IPL and World Cup.

With consumers spread across multiple platforms (traditional TV, social media, OTT, etc), it makes it that much difficult for brands to achieve optimum reach. Brands like Cred and Swiggy have used OTT, influencers, ads and multiple platforms to reach their audiences. To capture attention in a fragmented media environment, brands will need to rely on innovative digital marketing strategies, including regional content, social influencers, etc.

The jostle for media attention can be seen again on any Delhi Metro route as coaches don brand advertisements and chug along jauntily, while passengers seem spoilt for choice when it comes to social media feeds on their mobile phones. There are many Indias here and the marketer must embrace this complexity, craft personalized experiences, and engage with consumers in ways that resonate with their distinct lifestyles and aspirations. Success in India's consumer market will come to those who understand and respect the multitude of identities, preferences, and consumption behaviors that coexist within the country.

AUTHOR BIO: Rajesh Shukla is MD and CEO, People Research on India’s Consumer Economy (PRICE)

Table (Credit: People Research on India’s Consumer Economy (PRICE)): Share of premiumization to total incremental spend on select categories between 2021-31 (%)

Table (Credit: People Research on India’s Consumer Economy (PRICE)): Estimates of India's domestic consumption by income class