Marketers of consumer goods should focus on volumes over margins

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₹27.5 lakh annually) by 2030. This has meant a growing emphasis on growth driven by premiumization. However, there is also significant potential to enhance market penetration overall by prioritizing product affordability to expand both the scale and quality of consumption.

Rising aspirations across middle India should help this process along. Small towns, comprising 61% of the population but only 30% of FMCG consumption, have experienced growth rates 1.5 times those in metro cities over the past five years. These markets represent a substantial consumer base, with growing aspirations for affordable, value-added products.

Aligning strategies to cater to evolving consumer preferences here not only presents substantial long-term growth opportunities, but is also crucial as a hedge against market disruptions. Fortunately, there is a noticeable shift underway as more companies direct efforts at addressing supply chain and distribution challenges in small towns and rural markets. Even companies traditionally focused on urban areas, such as Nestle, are planning substantial distribution expansion in rural markets.

As gross margin benefits accrue from reduced raw material costs, we anticipate that a portion of these benefits will be reinvested in brand development. Undoubtedly, the volume-versus-margin debate in the FMCG space is complex and warrants a nuanced approach in optimizing pricing strategies and distribution channels across segments. The three segments of HPC (home and personal care), F&B (food and beverages) and healthcare each present unique challenges and opportunities.