Share of premium consumer products rises to 28% in India’s FMCG market: Nielsen Report

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August 1, 2014: In a recent report brought out by Nielsen, the share of premium consumer products has risen to 28%, or nearly Rs 60,000 crore, in the country’s fast-moving consumer goods ( FMCG) market. The FMCG market in India was valued at Rs 2.2 lakh crore. The share of premium consumer products have taken a quantum jump over the years when it was only in single digits just a few years ago. The contribution of premium products according to certain analysts was around 7-9 per cent eight years ago.

According to Nielsen, the growth has been phenomenon though these categories have been hit the most in the financial year 2014. Nielsen in its report has divided the category into two segments — premium, or 20-70 % higher than the average, and super-premium, costlier by twice or more. The report adds that about 90% of premium and 78% of super-premium products are sold at local grocers, chemists and even paan shops. Nielsen says, a large chunk of new-age product categories such as breakfast cereals, sanitary napkins and liquid toilet soaps are sold through modern trade than the general stores unlike the earlier days.

In the words of Dolly Jha, executive director at Nielsen India, “If a product is premium, it needs to exceed consumers’ expectations. For long-term endurance in the marketplace, premium products need to deliver — if not exceed — consumer expectations at the concept level.” She adds, “It is six times more important for premium products to deliver on the expectations than it is for mass products.”

This report comes as a surprise especially when the Indian economy is not doing well and consumer goods firms are finding it hard to sell to the budget conscious buyers. Though the tide is very much against FMCG goods but the story is different for premium products. More and more buyers including buyers from rural households are moving up the price scale and buying premium consumer products.

In fact premium consumer products are now becoming mass products and super premium is the new premium for Indian buyers. This is being mainly attributed to increase in disposable among Indian households and mass consumers are increasingly looking for higher benefits and more value for money. In the words of Vivek Gambhir, Managing Director at Godrej Consumer which has shown a growth of 8 per cent in the last three years, “As disposable incomes increase, mass consumers will be increasingly looking for higher order benefits.”

The premium brands in the portfolio of Godrej showed a growth of 33 per cent and the company is looking to increase it to 45 per cent in the next few years and this inspite of the fact that the overall market has declined 2 per cent in volume in the April-June quarter.

As the share of premium consumer products rises, more and more companies in this space are rolling out new brands or categories in teh premium space. Recently Godrej launched brands like Hit Anti Roach and the Protekt range and HUL lanched brands like Magnum and TIGI.

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