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Rural India is no longer just a value market. Villages and small towns now account for 42% of sales of premium FMCG products, up from 30% just four years ago, according to a new report by Worldpanel India (formerly Kantar). The survey shows how Indians everywhere, not just metro elites, are willing to spend extra for better quality, healthier, or more aspirational products.
Premium products, whether it’s tea, toothpaste, shampoos, biscuits, or skincare, today make up 15% of FMCG sales. Growth slowed a little last year, but the long-term trend is clear: more households are trading up from “basic” to “better” versions of everyday items.
Villages want more, cities want different
In metros, affluent households are spending less on basics like groceries and milk and instead diverting money into housing upgrades, travel, luxury cars, and smartphones. In contrast, rural families are stretching their budgets to try premium FMCG products, often through smaller, affordable packs. Shampoo sachets, mini toothpaste tubes, and bite-sized snack packs are helping premium brands reach deeper into small-town India.
Local brands and new shopping habits
The report also notes that homegrown brands are doing well by leaning on natural and traditional positioning. Examples include Burhani dishwash in Madhya Pradesh, AVT Gold Cup Tea in Tamil Nadu, and Meera Shikakai Shampoo in Karnataka and Odisha, all of which are gaining ground against multinational players.
Interestingly, while e-commerce and quick-commerce apps are booming, premium FMCG is still under-represented there. Categories like toothpaste, skincare, and packaged foods are seen as untapped opportunities for fast delivery.
“Premiumisation in India is no longer restricted to metros or high-income households. Rural consumers are becoming aspirational, local disruptors are redefining what ‘premium’ means, and even the most affluent households are rethinking priorities,” said K. Ramakrishnan, Managing Director – South Asia, Worldpanel by Numerator.
The trend goes beyond FMCG. Sales of luxury houses priced above Rs 3 crore rose 80% last year, premium smartphone volumes grew 8% this year, and luxury car sales crossed 50,000 units in 2024, all signs that Indians across income levels are seeking to “upgrade” their lifestyles.
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