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<div type="image" title="Indians are getting fancy, and they don&amp;#39;t mind paying a little extra if it means quality and luxury. Most consumer brands are witnessing an uptick in their premium product segment" msid="115018213" hostid="261" caption="&amp;lt;p&amp;gt;Indians are getting fancy, and they don&amp;#39;t mind paying a little extra if it means quality and luxury. Most consumer brands are witnessing an uptick in their premium product segment&amp;lt;/p&amp;gt;"></div> It's time to move over from plain, vanilla budget basics! Indians are no longer looking for “best purchases and value buys under Rs 1,000”—at least not as much as before. <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s getting fancy, and how! From gold-flaked chocolates to swanky SUVs that look like they’re wheeled straight out of a Bollywood blockbuster, Indian companies are rapidly jazzing up their product lines, even faster than you can say the word "premiumization." But what does this mean for Indian companies and consumers? What is this jazz about premiumization all about? Is it just urban India that’s riding this wave, or has rural India also joined the bandwagon? We decode for you. <h2>What's premium, really?</h2>Imagine you’re eating Pav Bhaji at a roadside thela. Later during the day, you decide to dine out at a fancy, upmarket cafe, only to find Pav Bhaji Fondue on the menu. Same same, but much more expensive—often 5 to 10 times higher—for a little more hygiene and some better ambience! Think of premium products as this fondue. They are a notch up your regular, daily-use products soaps or shampoos, and even cars, all packaged luxuriously, offering just about the right touch of quality. The main differentiator, though, would be the price range. <h2>Driving home premium wellness</h2>A recent report by Nielsen suggests that over 70% of urban Indians are okay with paying a premium for their products. And companies are cashing in on this sentiment like never before. This explains why 58% of new products launched so far this year have been in the premium+ segment, as opposed to just 38% of new launches in regular, traditional trade. Take cars, for instance. Indians are no longer vying for a good old <keyword id="19950117" type="General" weightage="20" keywordseo="maruti" source="keywords">Maruti</keyword> 800 or <keyword id="20400567" type="General" weightage="20" keywordseo="alto" source="keywords">Alto</keyword>, traditionally known for their healthy mileage, but are rather happy investing in more swanky features that come along with high-end cars. In October 2024, India’s largest car manufacturer, <keyword id="19909974" type="General" weightage="20" keywordseo="maruti-suzuki" source="keywords">Maruti Suzuki</keyword>, sold 65,948 units of its compact cars like Swift, WagonR, Dzire, and more. Compared to the year-ago period, which saw sales of 80,662 units, this was an 18% dip. But take a look at their SUV (sport utility vehicle) sales for the same period. Cars like Brezza, Ertiga, and Grand Vitara sold about 70,644 units, a 19% uptick from the sales made in October 2023, i.e. 59,147 units. Simply put, when it comes to cars, Indians are saying the bigger, the better! The same is true for India's second biggest automobile manufacturer, Hyundai. Its SUV lineup made up a staggering 68.2% of the firm's total sales made for October 2024. What's more, SUV demand remained largely consistent across urban and rural markets. <h2>Consumers are inching up</h2>FMCG (fast-moving consumer goods) are also riding the premiumization wave, with Indians prioritizing their health and wellness and not bothered about dishing out a few extra bucks for the same! You’ll find no dearth of words like organic, vegan, gluten-free, and sugar-free, peppered generously over every product you’ll see today, be it soaps, juices, or more. No wonder then, sales from premium segments in 2024 make up around 27% of all FMCG sales and even contribute a massive 42% to the sector’s value growth in India. Nielsen report further adds that luxury brands that position themselves at twice the price of their category’s average are even witnessing stellar growth. In fact, for most FMCG brands like Tata Consumer Products, <keyword id="20002610" type="General" weightage="20" keywordseo="hindustan-unilever" source="keywords">Hindustan Unilever</keyword> (HUL), Dabur, and Nestle, it is this premium segment that is growing much faster than their regular ones. And it's not just about daily-use products; Indians are also taking their celebrations a step over. Spirits manufacturer <keyword id="20125704" type="General" weightage="20" keywordseo="radico-khaitan" source="keywords">Radico Khaitan</keyword> highlighted that for the first half of 2024, their prestige &amp; above segment made for 88.4% of its net sales value. In the same period, the regular popular segment accounted for just 9.1% of their net sales. From Hindustan Unilever, which saw its premium products grow 30% over the last quarter, to <keyword id="20521971" type="General" weightage="20" keywordseo="kingfisher" source="keywords">Kingfisher</keyword> beer's parent company, <keyword id="20124009" type="General" weightage="20" keywordseo="united-breweries" source="keywords">United Breweries</keyword>, whose premium product sales volume jumped by 27% during the quarter as opposed to just a 5% rise in overall volumes, everyone is seemingly taking their lifestyle a notch above. Per the Nielsen report, in 2024, a typical global consumer spends about $13.7k per year. This is set to grow by around 2.4% to $14k as early as next year. Even a report by Goldman Sachs also highlighted a similar trend, noting that India’s affluent class, or those earning over $10,000 (Rs 8,42,694.97), is set to reach 100 million in the next 3 years. And where will this consumer spend? On premium products! <h2>Online shopping shifts from mass to class</h2>Amazon’s Great Indian Shopping Festival, which was live between September 27 and October 29 this year, saw 140 crore customers, more than 85% of whom came from non-metro Indian cities. On the site, there was a 400% spike in sales in premium sales across categories like watches, fragrances, handbags, jewelry, and more. Rival <keyword id="19896939" type="General" weightage="20" keywordseo="flipkart" source="keywords">Flipkart</keyword> noted a similar trend, recording 1.8x growth in premium beauty and personal care products during the first half of this year. <h2>Dialing in premiumness</h2>The Indian smartphone ecosystem has always been dominated by basic phones, or those entry- and mid-range phones that are priced between Rs 10,000 and Rs 6,000. But that has changed in recent times, with premium smartphones (i.e., those priced over Rs 60,000) registering 20%+ growth in 2024. During the first quarter of this year, sales of mass phones (priced between Rs 10,000 and 20,000) reached 44%, compared to 51% in the year-ago period. But it's all sunny and shiny in the mid-premium (priced between Rs 40,000 and Rs 60,000) and super-premium segments (priced above Rs 60,000). Sales growth has burgeoned by as much as 27% and 86% in these categories, respectively. As India continues its march toward becoming the world's third-largest economy by 2027, the premium party is just getting started. Industry experts predict that premium segments will grow faster than you can say "sustainable organic handcrafted artisanal batch of coffee." So the next time you see someone dropping serious rupees on a fancy bottle of black water that also somehow plays music and tracks their hydration (yes, that's a thing), remember: This is just the trailer. Picture abhi baaki hai, mere dost! Do you have a topic in mind you'd want a simpler explanation for, or insights or experiences to share on personal finance and more? Contact us at businessinsider@timesinternet.in.

Simply Put: From Dal to Dolce—India is loving its luxury life

<ul><li>FMCG giant HUL’s shares reported a decline of over 6% on Thursday.</li><li>This comes a day after the company reported a 2.33% decline in consolidated net profit in Q2.</li><li>The stock tanked 6.59% to ₹2,483.95 on the NSE.</li></ul>Shares of FMCG major <keyword id="20002610" type="General" weightage="20" keywordseo="Hindustan-Unilever" source="keywords">Hindustan Unilever</keyword> Ltd (HUL) on Thursday tumbled over 6% after the firm reported a 2.33% decline in consolidated net profit for the second quarter ended in September. The stock tanked 6.59% to ₹2,483.95 on the NSE. The stock emerged as the biggest laggard among the Sensex and Nifty firms during the morning trade. Hindustan Unilever Ltd on Wednesday reported a 2.33% decline in consolidated net profit at ₹2,595 crore for the second quarter ended in September 2024, impacted by moderation in demand from the urban market. The company had logged a net profit of ₹2,657 crore in the July-September quarter a year ago, HUL said in a regulatory filing. However, revenue from product sales was up 2.36% at ₹15,703 crore in the September quarter, from ₹15,340 crore in the year-ago period, HUL which owns power brands such as Surf, Rin, Lux, Pond's, Lifebuoy, Lakme, Brooke Bond, Lipton and Horlicks said. "In the September quarter, <keyword id="21419477" type="General" weightage="20" keywordseo="FMCG-demand" source="keywords">FMCG demand</keyword> witnessed moderating growth in urban markets, while rural continued to recover gradually. In this context, we delivered a competitive and profitable performance," HUL CEO and Managing Director Rohit Jawa said. HUL reported an underlying sales growth of 2% and underlying volume growth of 3%. Total expenses were at ₹12,581 crore in the September quarter, up 3.03% year-on-year. HUL's total income, which includes other income, was up 2.14% to ₹16,145 crore in the September quarter of FY25. Addressing an earnings call, HUL CFO Ritesh Tiwari said, "Two thirds of our business we do in urban areas, and one-third we do in rural areas … we are seeing growth in the urban market moderating. We are seeing rural growth recovery is gradual … it impacts all the categories that we have." On the outlook, he said, "In the near term, we expect demand trends to be stable with no further acceleration in pace of growth." In this context, Tiwari said, "Our focus remains on driving competitive volume-led growth, while continuing investments behind our brands and strategy priorities … If commodity prices remain where they are, we expect a low single digit price growth in the near-term." With inputs from PTI. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/webstories/afcons-infrastructure-ipo-gmp-risk-factors-and-all-you-need-to-know/slidelist/114490954.cms">Afcons Infrastructure IPO – GMP, risk factors and all you need to know</a> <a href="https://www.businessinsider.in/tech/news/upi-refund-scam-to-digital-arrest-scam-here-are-most-common-online-scams-in-india/articleshow/114428011.cms">UPI refund to digital arrest scam, here are some online scams you need to be aware of</a> <a href="https://www.businessinsider.in/stock-market/news/waaree-energies-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/114508632.cms">Waaree Energies IPO allotment – How to check allotment, IPO GMP, listing date and more</a>

Hindustan Unilever shares tumble over 6% post Q2 results

<ul><li>Top FMCG companies have cut prices of soap, detergents and hair oils.</li><li>Competition has gone up in the sector after many smaller, regional players making a comeback.</li><li>FMCG players said last quarter that they had to cede some of their market share to smaller players.</li><li>At the time, rise in agri commodity prices is making some of them hike prices of items like coffee and other beverages. </li></ul>After facing the onslaught of smaller and regional players in the last quarter, FMCG majors are on a path to cut prices to boost volumes as well sales. This pricing action is being seen mostly in categories that contribute large volumes and with a high share of unorganized players — like soaps, detergents, hair oils and edible oils. <keyword id="6365619" type="General" weightage="20" keywordseo="hindustan-unilever" source="Orion">Hindustan Unilever</keyword> has taken price cuts to the tune of 9-10% in soaps, <keyword id="6361491" type="General" weightage="20" keywordseo="procter-gamble" source="Orion">Procter &amp; Gamble</keyword> too cut <keyword id="443581" type="General" weightage="20" keywordseo="detergent-prices" source="Orion">detergent prices</keyword> by 11%. <keyword id="4283144" type="General" weightage="20" keywordseo="patajali" source="Orion">Patajali</keyword> slashed its soap as well as hair oil prices, as per a recent report by Kotak Institutional Equities. Top FMCG players said at the end of the April-June quarter that they had to cede some of their market share to smaller players. As per Nomura, their impact on market share on organized players is under control as of now, but needs to be watched closely. A lot of these players have shut up during the pandemic, but have ‘mushroomed’ back. “As the raw material prices have come down and have remained stable, there is increased competition from smaller players. Hence, most FMCG companies have undertaken price cuts to pass on the raw material benefits, and at the same time, they have increased ad spending to protect their market share,” Preeyam Tolia, senior research analyst of FMCG at Axis Securities told Business Insider India. Moreso, the volume growth trend has slowed down for most FMCG players due to slower-than-expected growth in the rural areas. Besides, the trend of downtrading had taken over during the era of high inflation last year, when players had to increase their prices. In Q1, even as volume growth remained tepid, the profitability of FMCG companies was high due to softening of prices of certain raw materials. Palm oil prices were down 2% month-on-month and by 26% year-on-year. Copra/coconut oil prices (updated until July 2023) remained in deflation, down 8% month-on-month and by 11% year on year. “Currently crude and palm oil used to make soaps and inputs such as soda ash used in detergents are showing a downward price trend, that is the reason many soap brands have reduced the prices to increase their volume and are passing on the margin benefits to consumers,” said Sraboni Haralalka, executive director at Wodehouse Capital Advisors. Can price cuts help? Most experts believe that the benefits of these price cuts on volume growth can be seen with a lag, in the second half of the current fiscal year. A few however believe volume growth itself might not be enough for companies that have been banking on pricing-led growth in the last few quarters. “Most other categories did not resort to any pricing action (apart from soaps, detergents, hair-oil, edible-oils), leading to anniversarying of pricing and lesser contribution to overall value growth. We expect no or negligible contribution from pricing in coming quarters; optically lowering overall value growth for the sector,” said Nomura. Added to that, the ability to take a next round of price cuts might also be lowered, experts believe as the prices of crude are inching up again. While crude oil prices were down by 14%, they have jumped 8% on a month-on-month basis – showing that the trend might see a back up. “We must look at the impact of the recent increase in crude oil prices. Any further increase in crude oil price would delay the price cuts and, hence, volume recovery,” says Tolia. Shampoo, coffee &amp; toothpastes get pricier While tea and biscuits prices have remained steady, the prices of coffee have inched up due to hardening agri commodity prices — especially in the case of cereals and milk in the last few months. “Prices remained stable in dairy except for Nestle, which increased the prices of its milk powder and curd by 2% and 5%, respectively. Nestle took another round of around 3-5% of price increases in its baby food portfolio, taking cumulative increases to 6-11% in the past six months,” said Kotak Institutional Equities. Health food drinks witnessed price rises of around 2-8% by Abbott, Danone and Mondelez. “Agri-commodities products have surged up. Food companies such as Nestle and Britannia may either increase product prices or take a hit on their margins and focus on volume growth,” said Haralalka. Products like confectionery, toothpastes and shampoos also saw price hikes from players like Vicco, HUL, Dabur and P&amp;G. Also price rises are seen in face and body washes, deodorants, air fresheners, men’s grooming and feminine hygiene – especially in areas where end consumer purchasing power is high. The margins in personal care products are higher and consumers don’t downgrade as easily as they do in the laundry or hair oil segments. The year of FY24 is expected to be a year of volume growth as FMCG companies are fighting to bring back their ‘small pack’ consumers. At the same time, inflation on the horizon is presenting a very cloudy picture for companies – making them re-think their pricing strategy in a way that ensures volume and margins hold steady.

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