Small brands thrive in India’s FMCG market growth

In India, small and regional brands are seeing rapid growth in the fast-moving consumer goods (FMCG) market. This trend is causing major companies like Hindustan Unilever and Nestle to lose market share. Market research shows that while larger companies saw sales growth of only 2-3% over the past year, smaller brands grew by 5-7%. One significant factor driving this change is downtrading, where consumers choose cheaper products due to high inflation and rising living costs. Many people are now unable to afford more expensive items, leading them to switch to lower-priced options. This situation has been tough on big brands that usually dominate the market. Smaller brands are benefiting from their informal distribution networks, which allow them to keep costs low and stay competitive. As big companies recognize the pressure from regional brands, they are adapting their strategies. Companies like ITC and Nestle have acknowledged the changing landscape and the competitive intensity from local players. It’s not just inflation that helps small brands thrive; low inflation can also reduce production costs, making it easier for these companies to enter the market. Additionally, consumers are becoming more open to trying new and unbranded products, according to recent surveys. Almost 60% of consumers are willing to buy unbranded items if they feel it offers good value. The shift toward online shopping is also aiding the rise of small brands. Many consumers are buying more products online, with local food and beverage brands increasingly joining quick delivery platforms. This trend is reflected in various product categories, including electronics and beauty items, where the number of small brands has surged. Overall, the rise of small consumer brands in India seems to be more than just a temporary trend. As consumers continue to accept and seek out these alternatives, larger companies may need to rethink their strategies to remain competitive. This could lead to significant changes in the FMCG landscape in the years to come.