NEW DELHI: A number of "megatrends" will drive a surge in demand for consumer goods in India, according to a study from Booz & Co.
The consultancy argued the country's FMCG sector should enjoy growth of at least 12% per year during the next decade, taking it to value of 4tr rupees ($88.1bn; €64.5bn; £55.2bn).
This would match the rate of expansion over the last ten years, when the category tripled in size.
A more optimistic scenario - based on factors like favourable government policy - pegged the annual acceleration at 17%, under which prognosis totals hit 6.2bn rupees by 2020.
One contributing "megatrend" is "increasing premiumisation", as shoppers' heightened desire to spend combines with a preference for trading up, buying items boasting either "real or perceived" benefits.
Similarly, customer behaviour will move from "need to want" as affluence grows, boosting interest in beauty products, health and wellness and equivalent ranges.
"We have the world's largest chunk of population in the youth segment - earning and with a propensity to spend as well as experiment," said Anand Kripalu, managing director, Cadbury India.
Indeed, a majority of India's citizens, especially in rural regions, were predicted to exit "survival mode" for the first time.
"This segment will require tailored product at highly affordable prices which will come with the potential of very large volumes," Booz & Co said.
While the industry as a whole stands to gain ground, specific areas could witness increases above the norm, like processed food growing at a faster speed than basic staples.
Elsewhere, advertising expenditure levels among FMCG brand owners were forecast to rise 30% per year going forward, having climbed 57% annually between 2006 and 2009.
Modern retail is also anticipated to enhance its market share, accounting for nearly 30% of sales by 2020.
"This channel will … offer both a distribution channel through its cash & carry model as well as more avenues to interact with the consumer," Booz & Co said.
However, the traditional trade sector, currently containing 8m stores, is equally due to expand further.
Given India's linguistic, cultural and geographical diversity, operating standardised business models and branding is not an option, as bespoke solutions will be essential.
Global issues are likely to wield a parallel influence, particularly regarding sustainability, as several key groups - including shoppers - place stronger emphasis on this matter.
Additionally, greater numbers of "Tier 2 and 3" multinational companies will enter the country, forming a second wave after leading global players such as PepsiCo and General Electric.
New technologies should also exert a substantial impact, both "re-inventing marketing for 'i-consumers'" and reshaping approaches to sales and supply chain management.
"Many Indian customer segments are reaching the tipping point at which consumption becomes broad based and takes off following the traditional 'S shaped' curve seen across many markets," said Abhishek Malhotra, a Booz & Co partner.
"By the year 2020, the FMCG industry is expected to be larger, more responsible and more tuned to its customers."
Data sourced from Business Wire; additional content by Warc staff