Posted on 3rd Mar 2025
by e4m
Earlier this year, Emami Ltd surprised many by reimagining its popular "Fair and Handsome" brand into "Smart and Handsome," expanding into premium male grooming. This shift marked a move from “mass to masstige” positioning.
Parle Products, India’s largest biscuit maker, also embraced this shift, with 60-65% of new launches now in the premium segment, up from 40% five years ago. Hindustan Unilever is not far behind. It launched two-thirds of its new products in the premium segment over the past two years. Further reinforcing its strategy, HUL also acquired high-end skincare brand Minimalist last month.
Despite inflation and sluggish demand, leading FMCG and personal care brands are doubling down on premiumization, now a key growth driver. Reason: the premium segment now accounts for 27% of FMCG sales and 42% of sector value growth, according to NielsenIQ.
And this momentum is expected to accelerate, with a Deloitte report projecting that India’s luxury goods market will grow at 20% annually, reaching $200 billion by 2030.
Brands should accelerate premiumisation
“Accelerating premiumisation will be crucial for brands, especially in dynamic markets such as India, where rising disposable incomes, changing consumer preferences and a growing middle class are reshaping the landscape,” says the report prepared in collaboration with Retailers Association of India and titled “India's Changing Discretionary Spending-Key Insights For Brands”.
Over 50 per cent of e-commerce sales come from the premium segment, says the Deloitte report, referring to a study.
More than 40 per cent of urban Indian consumers are willing to pay more for the products that simplify their lives. This trend is evident across various sectors ranging from FMCG to automobiles, where premium products outperform mass-market counterparts in growth. Per another research, the Premium Beauty and Personal Care (BPC) segment is growing nearly twice as fast as the overall BPC segment in India, the study noted.
Rising aspirations
As consumers become more discerning, they increasingly seek products offering better quality, exclusivity and superior experiences, signalling a shift from mass market to premium consumption, industry experts say.
“The faster growth of premium range suggests a fundamental change, where more digitally connected consumers are increasingly prioritising quality and aspirational purchases over lower-cost options,” said an ad executive.
Notably, HUL’s recent presentation to stock exchanges has highlighted that, by 2030, more households are expected to enter the $8,500–$40,000 annual income bracket, while those earning less than $4,000 annually are projected to decline.
“As disposable incomes rise and aspirations evolve, particularly among the urban middle class and affluent segments, there's an increasing willingness to pay premium prices for aspirational products,” said an expert.
‘As Indian players lagged, international brands gained’
In India, major FMCG companies have faced challenges by prioritising affordability while overlooking the growing demand for premium products. Although mass-market offerings remained central to their strategies, they struggled to engage aspirational consumers willing to pay more for products that matched their evolving preferences and values, the report said.
“As a result, premium-focused competitors, such as artisanal brands or international players offering higher-end variants, gained significant traction, eroding market share from brands that were slow to innovate in this direction,” the Deloitte report shares.
Similarly, a major fast food chain failed to adapt to Indian breakfast preferences and premium positioning, leading to the closure of over half its stores by 2018. These examples underscore the importance for brands to understand and tap into the premiumisation trend to stay relevant and competitive in the evolving Indian consumer market, the report noted.
Ecomms’ luxury sections
Many legacy companies now eye to acquire homegrown startups to use their extensive offline distribution network, making the brand's products more widely accessible across India and facilitating future international growth.
Similarly, major Indian e-commerce platforms have launched specialised luxury sections to provide consumers with access to premium, authentic luxury brands across the apparel, accessories, and lifestyle categories. These platforms adopt a "slow commerce" model, focusing on curated selections and storytelling and creating an enhanced online shopping experience.
These e-commerce giants are positioning themselves to meet the rising demand for high-end brands and shopping experiences. Using their robust digital infrastructure and offering personalised services, they are catering to younger, affluent consumers who value convenience and exclusivity, thus capitalising on the trend towards online luxury shopping.
‘10 things brands should do’
Brands that embrace premiumisation can cater to this emerging demand and differentiate themselves in a crowded marketplace. However, those who overlook this trend risk stagnation or decline, says the Deloitte report. It lists out several suggestions for brands:
Focus on offering higher-quality products with superior performance, innovative design and enhanced functionality.
Create a comprehensive premium experience that goes beyond just the product itself, encompassing personalised service, convenient access and a sense of exclusivity.
Product innovation plays a crucial role in setting a brand apart from the competition. Introduce cutting-edge features, unique designs or advanced technology tailored to the specific needs and preferences of the Indian consumer. For instance, brands in industries such as electronics, automobiles or fashion can innovate by integrating AI, sustainable materials, or local craftsmanship into their offerings, thus providing added value that justifies a premium price point.
Understand that premium is not just about a higher price point; it is a promise of quality and exceptional service. By delivering on this promise consistently, brands can cultivate a loyal customer base.
Define your brand goals and target audience, remembering that a small percentage of consumers often drives a significant portion of premium consumption.
Consider educating consumers about the value of premium offerings and provide tiered product ranges to balance exclusivity with broader appeal. This approach allows brands to innovate, engage with discerning consumers and build lasting relationships with those who prioritise quality and meaningful benefits.
Exclusivity is another tool in the premiumisation strategy. By offering limited edition products, special collaborations, or VIP access to new releases, brands can create a sense of rarity and desirability. In India, where status and social image are significant drivers of consumer behaviour, exclusivity taps into the aspiration of owning something unique or scarce.
Use selective distribution channels or offer personalized experiences that make consumers feel they are part of an elite group, further enhancing the brand's premium appeal.
Combine these elements with compelling storytelling and high-quality service can significantly elevate a brand's positioning in India’s competitive market.
Successful premiumisation requires balancing exclusivity (limited editions, VIP experiences) with accessibility through digital platforms that enable premium discovery in smaller cities.