Rural India sees surge in affordable premium FMCG purchases, outpacing urban markets

More Indian rural consumers are purchasing affordable premium products than ever before, underscoring a shift in the hinterland, long viewed as the bastion of massmarket, low-cost goods. For the first time, villages outpaced cities in consumption of affordable premium fast-moving consumer goods (FMCG) with a 51% volume share, rising from 45% in 2021, shows a new report by market researcher Numerator, formerly Kantar, with ET.

Rural India also contributed 42% of total super premium FMCG volumes, sharply rising from 30% five years ago, data showed. “This is due to a host of reasons, including low-unit packs and variants of premium brands, and rising aspiration of rural consumers, given they have more time to consume content, including social media,” said Mayank Shah, vice-president at India’s biggest food company Parle Products.

“Urban per capita consumption of premium products may still be higher but the sheer size of the rural market that accounts for two-thirds of the population will mean gradual increase in share across price points,” he said.

Affordable premium products are priced 20-50% higher than the average for the category while super-premium products are priced over 50%. This includes brands such as Dove, Tata rock salt, L’Oreal, Sensodyne, Hide and Seek, and Brooke Bond Taj Mahal, which have historically relied on urban middle- and upper-class consumers.

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“Low penetrated variants of premium brands are also driving consumption through small affordable packs that drive trail and increase accessibility,” said K Ramakrishnan, managing director, South Asia, Worldpanel by Numerator, adding that brands are offering access and aspiration to rural buyers without pricing out their products.“There is also a shift in purchase behaviour and evolving priorities in affluent urban consumers, who are seen reducing their wallet share on essentials such as groceries and dairy and increasing on rent and travel for leisure,” he said.Rural volume growth for premium products reached 9% this year, outpacing urban’s 6%. Also, the average spend on premium FMCG in rural India has grown at 11% compounded annually over five years, compared to 7% in urban areas. Premium brands currently make up Rs 98,000 crore or 15% of the overall FMCG market.Add as a Reliable and Trusted News SourceDabur, which gets more than half of its revenue from rural India, has widened its premium offerings in smaller pack sizes to make it more affordable for buyers in villages.



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