Rise of small brands in India: Just downtrading or something more?

Hindustan Unilever, Nestle and many home-grown giants. These small and regional players are growing faster than the biggies and even nibbling at their market shares.

Latest data from market tracker Kantar shows that big companies, which control 34% of the market, saw sales volume increase 2-3% in urban areas over the past four quarters compared with year earlier periods, ET has reported. At the same time, smaller brands that account for the remaining almost two-thirds of the market for fast-moving consumer goods (FMCG) grew 5-7%, said the research firm owned by British communications firm WPP.

Kantar, which monitors both branded and unorganised products, including unpackaged voluminous commodities, defines big companies as those reaching more than a third of India’s 250 million households. Smaller companies with lower reach, some restricted to just a state, include new-age brands as well as local or regional ones.

Why are small players growing faster than the bigger ones with deep pockets as well large pan-India networks? It's mainly downtrading — consumers preferring to buy cheaper goods — but other factors too could be at play…

What fuels the rise of small brands

High inflation and cost of living pose a challenge for big FMCG companies as consumers can't afford pricier items. The phenomenon of downtrading, in which consumers switch from purchasing pricier or larger product sizes to cheaper or smaller ones due to financial difficulties or rising prices, has been intensifying in the FMCG sector.

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