FMCG Industry Pins Hope In Quick Commerce, Premiumisation For Revival In 2025

The fast moving consumer goods industry, which faced a challenging 2024 with rising input costs and food inflation, is pinning its hopes on these twin growth drivers for 2025: premiumisation and the rapid rise of quick commerce. Industry leaders believe these factors will help boost consumption, despite continued pressure in urban markets offsetting the rise in rural consumption.

Premiumisation, or consumers’ growing willingness to pay a premium for high-quality products with enhanced features, is expected to remain a critical factor in FMCG growth.

As inflation continues to disrupt consumer spending, particularly in the mass-segment, FMCG companies are focusing on delivering better-quality products to attract the urban consumer, especially in premium categories.

"Premiumisation is expected to continue, and this will help improve value growth in 2025. Consumers are willing to pay a premium for products that offer better quality, unique features, or enhanced experiences," Dabur India Chief Executive Officer Mohit Malhotra told PTI. 

This trend is gaining traction, with FMCG players looking to offer differentiated products to cater to this demand, despite a challenging economic backdrop, he added.

Alongside premiumisation, the growth of quick commerce has been a significant trend reshaping the FMCG landscape. Quick commerce platforms, such as Blinkit, Zepto, and Swiggy Instamart, have transformed the way consumers access daily essentials, providing faster delivery and convenience. FMCG brands are adapting their distribution strategies to tap into this rapidly expanding sector, aligning with top quick commerce platforms to meet evolving consumer needs.

"Quick commerce has seen exponential growth, but physical distribution continues to stay extremely relevant at the same time," PTI quoted Sunil D'Souza, managing director and CEO of Tata Consumer Products, as saying.

This hybrid approach, combining the convenience of digital-first platforms with the reliability of traditional retail, is seen as key for growth momentum in 2025.

Emami Vice Chairman and MD Harsha V Agarwal noted that while consumption among lower-middle and middle-class segments has remained subdued, signs of recovery are emerging as food inflation begins to ease. "Positive signs are emerging on the consumption front, and we expect consumption to recover with a good crop and government spending on rural schemes," he told PTI.

Dabur’s Malhotra echoed a similar sentiment, saying, "Rural demand has been growing quarter-on-quarter, and we expect urban demand to recover as the new year progresses. Innovation, affordability, and availability will be key drivers of growth going forward."

Tata Consumer's Sunil D'Souza spoke about the role of evolving consumer trends, including health and wellness, convenience, and premiumisation, in shaping future growth. "Consumer trends such as premiumisation, health & wellness, and convenience are expected to gather pace, with quick commerce and traditional retail both playing key roles in driving growth," D'Souza said.

Marico MD & CEO Saugata Gupta pointed to the resilience of digital-first brands and the continued importance of innovation in driving growth. "Innovation, affordability, and availability will be critical for driving growth in 2025. The direct-to-consumer ecosystem continues to thrive, with digital-first and premium brands demonstrating resilience," Gupta was quoted as saying by PTI.

Despite the challenges, FMCG companies are cautiously optimistic about the future. Godrej Consumer Products Ltd.'s Chief Financial Officer Aasif Malbari highlighted that an improving economic outlook, along with strategic investments in market development, will support long-term growth. "We are cautiously optimistic about 2025, supported by an improving economic outlook and our focus on market development," Malbari stated.

FMCG leaders are also looking at the upcoming Union Budget for support, with hopes that the government will introduce measures to stimulate consumption. Increased government spending on infrastructure projects, rural development, and social welfare schemes could provide the necessary boost to the economy and help revive demand.

Malbari added, "The upcoming budget should consider proactive measures aimed at stimulating consumption in the larger economy. A consumption boost will lead to a cycle of sustained economic growth in the long run."

(With inputs from PTI)