The report notes that growing aspirations are leading consumers to choose products that offer superior experiences or elevate their status
With high value and branded products growing at a faster pace than those in the unbranded and budget categories, India Inc has been experiencing a strong shift towards premiumisation, as per a report by ratings agency Icra.
The report notes that over the past couple of years, the overall urban demand growth has been tepid. However, a changing product mix, with early indication of premiumisation across some categories, is supporting headline revenue growth at a time when volume growth has been soft.
“India’s rising per capital income, rapid urbanisation, improved access to premium global brands and more convenient financing options are all driving the premiumisation trend. Growing aspirations are leading consumers to choose products that offer superior experiences or elevate their status,” the report pointed out.
Icra emphasised that several key sectors are experiencing the premiumisation trend, including the automotive sector marked by higher sales of utility vehicles and premium motorcycles, the hotel industry evidenced by rising occupancy rates, revenue per available room in upscale hotels and higher room inventory addition in the upscale segment. This also includes fast-moving consumer goods (FMCG) and retail, alcoholic beverages as marked by the growing revenue share from premium liquor.
Icra also noted that brands that offer premium features while offering a strong value proposition to consumers are positioned to drive India’s medium term consumption growth. With consumers’ rising aspirations and changing lifestyles, this is expected to drive India’s growth story.
