Nestlé India announced on Tuesday that premiumization presents a ₹7,500 crore opportunity for the company, allowing for expansion in its coffee, chocolate, and pet care sectors across both rural and urban markets. This trend has been noted by various consumer companies as they adapt to evolving consumer preferences and aspirations. For example, Nestlé plans to launch its first upscale Nespresso coffee store in Delhi in the coming months, and its pet care segment experienced double-digit growth in the December quarter.
Suresh Narayanan, chairman and managing director of Nestlé India, stated during an analyst and institutional investors meeting in Gurugram that the overall premiumization opportunity in their categories is approximately ₹7,500 crore, with this portfolio growing at a compound annual growth rate (CAGR) of about 16% since 2015. He emphasized that premium products are outpacing overall category growth, a trend echoed by many companies.
Narayanan noted that the premiumization trend is prevalent in both urban and rural markets, indicating that consumers in rural India are also seeking premium products. As companies pursue growth by appealing to aspirational consumers, they are introducing global brands and expanding into premium categories such as body wash, sunscreens, serums, muesli, and energy drinks.
Last year, Hindustan Unilever Ltd (HUL) outlined its strategy for the next few years, reflecting a significant shift in Indian consumer preferences. The company identified premium face care, hair care, body wash, home care liquids, condiments, and mini meals as long-term investment areas.
While companies continue to offer mass-market products like ₹10 noodles and shampoo sachets to cater to rural consumers and budget-conscious households, they are also venturing into new categories. Nestlé’s portfolio now includes cereals, flavored yogurts, cat food, and high-end coffees, showcasing this diversification.
For the 15 months ending March 31, 2024, Nestlé reported sales of ₹24,275 crore and a profit of ₹3,932.8 crore. Narayanan highlighted that “premium coffee” enhances the coffee experience and presents significant growth potential. He also mentioned that while confectionery remains a smaller part of their portfolio, it is growing rapidly and will contribute to future growth and profitability. Pet care, although a relatively small category, is also expected to see growth.
