Jewellery, Premium Alcobevs, Luxury Hotels Lead India's Consumption Upswing, Says BofA — Check Stock Picks

Bank of America says two big consumption themes will define the next leg of India’s consumer story: premiumisation and a wallet shift towards discretionary spending.

Even amid volatility and patchy demand, several premium consumer categories have outperformed in recent years, with the brokerage highlighting the likes of jewellery, premium alcoholic beverages, and luxury hotels.

Companies that channel their strategies toward these segments, BofA argues, will be better positioned for long-term growth. Even the biggest staples companies are sharpening their focus on the top one-third of Indian households.

Jewellery remains a standout in the premium consumption basket. Leading jewellers have delivered a median revenue CAGR of 24% over the past six years, based on aggregate data for 60 companies.

A BofA consumer survey conducted earlier this year found that a majority of respondents planned to use tax-cut or subsidy savings to purchase jewellery — ranking it among their top two spending priorities.

Premium alcoholic beverages have also held up well despite operating and regulatory headwinds. Consumption patterns are evolving: new-age drinkers may be drinking less frequently, but they are seeking variety and better brands. Innovation and renovation by leading alcobev companies are reinforcing the trend. BofA maintains a Buy rating on United Spirits, noting its strong positioning despite the broader challenges.

India’s growing appetite for experiences is translating into higher spending on travel, tourism, concerts and live events. According to the BofA survey, travel and tourism features among the top three categories where consumers intend to spend more. This trend directly benefits the luxury hospitality segment, which is set to see robust demand growth of around 11% CAGR between FY24 and FY28. BofA sees The Leela (rated Buy) as a key beneficiary of this tightening demand-supply gap.

Within staples, BofA expects a sequential recovery in several categories due to a low base and macro bottoming out, though the pace will likely be gradual. The brokerage remains selective in the sector, preferring names such as Godrej Consumer Products and Marico, which are diversifying portfolios into higher-growth demand spaces.

BofA believes premiumisation is a secular trend driven by rising incomes, evolving aspirations and the democratisation of the internet. The shift is structural: upper-income households are expected to make up half of all Indian households by 2030, compared to one-fourth in 2018.

At the same time, consumer wallets are tilting towards discretionary goods and services — from experiences and tourism to special-occasion spending, including weddings.