Alcohol to automobiles, Indians' demand for premium products rises

Firms are now adopting strategies of premiumisation to satiate growing consumer demand for luxury goods across all categories.

Indian consumers are now spending more than ever on premium and expensive products, ranging from varieties of high-end liquor to automobiles. A report from the Economic Times sheds light on the strategies of premiumisation that firms are now adopting to satiate the growing consumer demand for the same.

Consider alcohol - the publication reports that in 2022, Indians cumulatively consumed over 75 lakh 'cases' of Scotch whisky, including premium brands such as Johnnie Walker, Glenfiddich and Dewar's, almost doubling the consumption recorded in 2020 — 39 lakh cases. In the same duration, the consumption of Irish whiskey multiplied by five times, Japanese whisky six times and American whiskey three times.

Diageo, the British beverage conglomerate that owns trademark brands like Johnnie Walker, Baileys, Smirnoff and Guinness, has "nearly exited the mass segment in India", making 80 per cent of its sales from the premium segment, double what it was five years ago.

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“We have reshaped our portfolio with a focus on accelerating premiumisation-led growth with new innovations such as Godawan, our artisanal single malt made in Alwar,” Shweta Jain, chief business development officer (premium, luxury, reserve, craft), India & South Asia, Diageo, told the publication.

Then there are automobiles. And the new premium launches therein. Maruti Suzuki India has launched the seven-seater Multi-Purpose Vehicle, Invicto, costing Rs 25 lakh. Hero MotoCorp launched the X440, which it co-developed with Harley Davidson, starting at Rs 2.29 lakh and going up to Rs 2.69 lakh. Bajaj Auto and UK’s Triumph Motorcycles Ltd launched a 400cc motorcycle, the Triumph Speed 400, starting at Rs 2.33 lakh. These launches point to the growing trend of companies - that originally captured a large market share using competitive, affordable pricing - now changing tacks by trying to capture the emerging premium segment.

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Shashank Srivastav, Senior Executive Director, Maruti Suzuki, attested to this trend by telling the publication, “The consumer preference is shifting to SUVs/MPVs, which are more expensive. There is a clear shift to higher variants with more features, tech and connectedness”. Tarun Garg, COO, Hyundai Motor India, added, “Customers are willing to pay a premium for advanced and hi-tech features”.

The same "go-premium" trend is true of TV screens as well. In the first five months of 2023, sales of TVs that are 65 inches and bigger grew by 37 per cent, the publication noted. According to GfK India, large television screens now account for 12 per cent of the total TV market in the country, growing from under 5 per cent before the pandemic, with the 65-inch-plus segment being the fastest growing, even as the share of smaller television screens declines.

The hospitality sector, which took a beating during the pandemic, is looking to come back stronger on the back of this premiumisation. Oyo, the budget hotel startup, has branched out to a premium brand offering - Palette. ICRA estimates India's premium hotel occupancy to reach a decade high in FY2024 with the average room costing over Rs 6,000.

Patu Keswani, of Lemon Tree Premier Hotels, told the publication "A shift in consumption is taking place. With the earning capacity going up, the Indian middle class is getting very aspirational and doesn’t mind spending a little more".