- India's consumption is shifting from buying more to buying better, boosting premium and luxury sectors
- Premium FMCG brands grow twice as fast as mass-market, now 27% of FMCG sales by value
- Premium apparel is projected to grow over 45% CAGR, outpacing overall retail growth of 10%
India's consumption story is shifting from buying more to buying better, creating a new investment theme across food, financial services, luxury, real estate and other discretionary categories. While mass-market volumes have flattened or declined in parts of urban India, premium and luxury segments are gaining share, giving companies with strong brands, distribution and exposure to affluent consumers a larger opportunity.
The shift is visible across food, FMCG, apparel, personal care, automobiles, hospitality and financial products. Premium FMCG brands are growing at nearly twice the pace of mass-market brands and now account for 27% of FMCG sales while contributing 42% of the sector's value growth, according to NielsenIQ data.
For investors, the change matters because premiumisation can support both volume growth and higher-value product mixes. Mihir Vora, chief investment officer at Trust Mutual Fund, described premiumisation as one of India's key structural growth themes, driven by rising incomes, aspirations, formalisation and increasing affluence.
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Premium Leads
The premium segment is becoming an increasingly important part of India's consumption growth as consumers move towards higher-priced products and services.
India's private consumption is projected to expand to $5.7 trillion by 2030. Industry estimates suggest almost $2 trillion of that increase could come from consumers trading up rather than simply increasing the quantity of goods they buy.
The trend is particularly visible in personal care and beauty, where premium products are expected to capture most of the incremental spending. Food is seeing a similar shift, with a meaningful share of new spending moving towards higher-priced categories.
"Premiumisation is a powerful and underappreciated trend in India today. It is one of India's key structural growth themes," Vora said. "As incomes rise, consumers are not only buying more, they also buying better. This shift is visible across categories, and is likely to persist for many years because it is driven by rising incomes, aspirations, formalization, and increasing affluence."
Consumer discretionary is at the forefront of the shift. Vora identified apparel, lifestyle products, travel, hospitality, jewellery, premium liquor, premium automobiles and two-wheelers as categories where brands can command pricing power.
"These businesses benefit not only from volume growth but also from favorable product mix," Vora said.
Automobile sales data reflects the change in consumer mix, while apparel is showing a similar trend.
Deloitte India's 2026 report on Indian fashion projects premium apparel to grow at more than 45% CAGR, the highest rate among the segments it tracks. The overall retail sector is expected to grow at roughly 10%.
The mid-premium segment, priced between Rs 3,500 and Rs 7,000, is growing at close to 25%, while branded apparel is forecast to account for more than half of total apparel spending by 2030, according to OC&C estimates.
Deloitte also found that close to 40% of Indian consumers tried a new fashion brand in the past year. That suggests premiumisation is taking place alongside changing brand preferences.
Luxury Expands
Real estate is also reflecting the move towards higher-value consumption.
Anand Pandit, founder, chairman and managing director of Sri Lotus Developers, said customers are increasingly seeking an experience rather than simply an asset.
"Within residential and commercial real estate, customers are demanding an experience, not just another asset," Pandit said.
Consultants including Cushman & Wakefield expect premium and luxury housing to remain the main drivers of residential demand through the rest of 2026. Affluent domestic buyers and the growing presence of Global Capability Centres in cities such as Bengaluru and Hyderabad are supporting the trend.
Knight Frank data shows that homes priced above Rs 1 crore accounted for 54% of sales across India's eight major cities in the first half of 2026.
In India's top seven cities, homes priced at Rs 1 crore and above accounted for 71% of total sales in the first quarter of 2026, compared with 59% a year earlier. Sales of homes priced below Rs 1 crore fell by roughly a quarter over the same period.
At the top end of the market, more than 800 ultra-luxury homes priced above Rs 10 crore were sold across Hyderabad, Bengaluru and Chennai in FY26, with a combined value of more than Rs 11,000 crore.
Vora said the premiumisation trend in real estate was particularly visible in the premium and luxury segments, with the demand mix moving towards better-quality housing, stronger developers and aspirational living.
Hospitality and food and beverage are also moving towards experience-led consumption.
"Today's consumers are digitally informed and expressive about identity. In F&B, people want to feel part of a moment," a senior executive at a large hospitality firm said.
The executive said premium dining experiences were widening their customer base while strengthening loyalty among existing customers.
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Financial Shift
Premiumisation extends beyond physical goods. Rising household wealth and increasing financialisation are driving demand for wealth management, asset management, insurance and other financial products.
"Premiumization is not limited to consumption of goods; it is also visible in financial products. Rising household wealth and financialization are driving demand for wealth management, asset management, insurance and other financial products," Vora said. "We also see financialization as one of the most important long-term themes in India."
The mutual fund industry illustrates the scale of the change. India's mutual fund assets under management have grown nearly sixfold over the past decade and tripled in the past five years, according to AMFI data.
Mutual funds accounted for about 11% of household financial assets by FY24, compared with 3% a decade earlier, according to RBI figures.
Demand for wealth management is also expected to expand. Deloitte estimates that wealth management assets under management could almost double from about $1.1 trillion in FY24 to $2.3 trillion by FY29.
An estimated $0.4 trillion of affluent household wealth remains informally managed or self-managed, pointing to potential demand for professional wealth services.
India's HNI population is projected to grow between 12% and 16% annually. The wealth management industry is also moving beyond traditional mutual fund distribution towards portfolio management services, alternative investment funds and family-office-style advisory as wealth passes to digitally native heirs.
New-Age Winners
Technology-enabled consumer businesses are another part of the premiumisation story.
Vora pointed to new-age businesses that are using technology to create differentiated products and experiences for affluent consumers. He said such companies can capture a larger share of rising discretionary spending.
Company filings show premium categories such as smartphones and hearables growing between roughly 5% and 50% even as overall unit volumes remain flat.
Spending on gaming, fantasy sports and subscriptions is also increasing. Overseas travel forms another part of the same consumption shift, with India's foreign travel spending reported at around Rs 1.45 lakh crore a year.
The move towards experiences is changing the way consumers allocate discretionary income. Food, travel, hospitality and entertainment increasingly compete for the same pool of spending that once went primarily towards physical goods.
The shift does not mean the mass market has disappeared. Legacy consumer companies are expected to protect volumes through entry-level pricing, while regional and challenger brands move into higher-priced segments.
But the gap between premium and mass consumption has become more visible through 2025 and 2026. Same-store sales growth in discretionary retail has occasionally turned negative, while affordable housing supply has come under pressure as developers focus on higher-priced projects.
For investors, the opportunity therefore lies not simply in companies exposed to rising consumption, but in businesses positioned to benefit from the change in what consumers buy.
"From an investment perspective, the most attractive opportunities are typically companies that combine premiumization with strong brands, distribution advantages and a long runway for growth," Vora said.
"Premiumization is not just a cyclical theme, it is a structural shift in consumer behaviour, and we believe it will continue to create long-term winners across multiple sectors."
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article
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