Rise in preference for premium products in FMCG, tech, and durables: NielsenIQ

New Delhi: NielsenIQ (NIQ) has published its latest report titled "Elevating Value – Navigating Premiumisation Trends in India." 

The study revealed significant shifts in consumer behaviour, particularly the growing preference for premium and luxury products across various sectors, including fast-moving consumer goods (FMCG) and tech and durables.

The report underscored that premium brands within the FMCG sector are witnessing growth rates that are approximately twice as fast as their non-premium counterparts. 

This trend is not just confined to metro cities but is increasingly evident in Tier 1 and Tier 2 cities, indicating a broad-based shift in consumer aspirations and purchasing power.

Key findings

Premiumisation on the rise: The study finds that premium products in FMCG are not only growing faster but are also seeing an organic increase in consumption rather than merely price-driven growth. This suggests that consumers are increasingly valuing quality over quantity.

Market dynamics: Smaller manufacturers and emerging brands are outpacing larger, established players in the premium segment. This shift points to a vibrant market where innovation and niche targeting are paying dividends.

Regional insights: The South Zone of India leads in the proportion of premium brand sales, whereas the Western and Eastern regions are catching up at a brisk pace. This regional disparity highlights the varying maturity of markets within the country.

Consumer preferences: There's a marked increase in consumer focus on health and wellness, particularly in the home and personal care sectors, driving demand for premium products that promise better quality, natural ingredients, or enhanced benefits.

Modern trade impact: Modern retail channels are growing at double the rate of traditional trade, significantly influencing the availability and accessibility of premium products to a broader consumer base.

Roosevelt Dsouza, Commercial Head for India at NielsenIQ, commented, "Our findings indicate a robust trend towards premiumisation fueled by an aspirational consumer base, urban expansion, and increased disposable income. Companies need to adapt their strategies to cater to this evolving consumer landscape."

The report also noted that with India's economy expanding, characterised by rising per capita income and widespread smartphone penetration, the focus on premiumisation is set to remain a key growth driver in the sector. This strategy aligns with consumer shifts towards valuing products that offer longevity, superior quality, and unique value propositions.