FMCG firms intensify focus on premium products

Interestingly,the fast moving consumer goods (FMCG) firms are no longer targeting the only urban markets for the premium products. The rural masses are equally potential consumers of such products as their incomes and spending power increase.

HUL, a heavyweight in the FMCG space that has been focussing on making products affordable and make money out of it, is taking the lead in tapping opportunities in the upper segment as the Indian market evolves.

"India is changing and the beauty of India is that the dichotomy and paradox of opportunities (it presents)...Now there is opportunity at the top end...premiumisation is important," Unilever Chief Operating Officer Harish Manwani had said.

In the personal space, HUL has been pushing sales of its premium products like Dove and Pond's Gold Radiance to counter P&G's 'Olay' range.

Similarly, homegrown major Emami is also gearing up to cash in on the opportunities at the upper end of the pyramid.

"We are looking at entering the premium category in personal and healthcare segment. Besides, we will also consider some kind of collaborations with UK-based companies," Emami Ltd Director Aditya Agrawal told PTI.

Analysts said the push for premiumisation has been intensifying over the past two-three years.

"There has been an increasing trend among consumer firms pushing their premium products. In the last two-three years, three-fourth of the advertising budget of most consumer firms are spent towards promoting premium products," IDFC SSKI Securities Managing Director Nikhil Vora said.

He said move to sell premium products is not restricted only in urban markets.
"As income level in the rural areas also increases, there is propensity to spend more. So most FMCG firms are trying to upgrade the choices of consumers in those markets," he added.

According to market research firm Nielsen, FMCG market in rural India is expected to grow more than tenfold to USD 100 billion in the next 15 years.

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