FMCG companies step up focus on premium offerings

FMCG companies are sharpening their premiumisation play with Indian consumers willing to spend more on value-added propositions. Players said the trend is becoming more visible in recent times, especially in the top 100 cities, due to higher disposable incomes.

Companies have stepped up on launches of premium products while continuing to straddle popular price points for higher household penetration.

• Also read: FMCG players hopeful of gradual recovery in rural demand

In a recent interaction, Suresh Narayanan, Chairman and Managing Director, Nestle India said, “ The underlying philosophy of the company continues to be penetration-led volume growth. What has been encouraging is the uptrading that is visible in the market and premiumisation across categories is improving and so the value-added part of our portfolio has been growing quite handsomely. “

“We are refocusing on the premium opportunities and also getting a little bit bolder. In the new India, if a consumer sees value in a proposition they are willing to spend more. This is evident from the ordering patterns in categories such as coffee and chocolates. For instance: Nescafe Gold and Kitkat Dessert Delight are doing very well. So wherever, we will see premiumisation opportunities and we will aggressively go for it,” Narayanan said.

• Also read: FMCG industry clocks 12.2% value growth in June quarter

Focus area

Earlier this week, Ahmed ElSheikh, President, PepsiCo India said, “To win the top 100 cities, companies will need to focus on premium offerings. This is being driven by the new generation of consumers, with higher incomes and who want to try new things. We are therefore focusing on offering innovations at the top-end and it is working well. The premiumisation trends have been evolving very strongly.” The company for instance has introduced Lay’s Gourmet late last year in the kettle chip segment with more refined flavours.

• Also read: FMCG companies see strong growth in digital revenues in Q1

Piyush Jain, Sales Director, Mars Wrigley India too said the company’s premium portfolio is witnessing strong growth. He added that the company has been focusing on growth both through increase in household penetration as well as by driving more consumption per household. 

“We are also witnessing trends where shoppers are making more trips and spending more per trip. This consumer behaviour bodes well for premium segments and price points. While trials are the key driver for penetration, heavy users are adding premium offerings with higher price points to their current repertoire. As a result of these key trends, we are witnessing strong double digit transaction growth for our premium portfolio,” Jain added. 

COMMENT NOW