Get a demo Do I subscribe? News sign-up
Print

Premiumisation gathers pace in India

News, 22 September 2016

NEW DELHI: India is witnessing a growing trend for consumers to trade-up and to choose local brands, partly because of rising incomes and partly because of increased internet penetration – and online price promotions – which is fuelling aspirations amongst rural consumers.

The number of people living in rural areas accessing the internet has almost doubled over the past year, while almost 69% of urban internet users go online every day – and this access both educates consumers and gives them access to a greater number of premium brands at affordable prices.

"Premiumisation is a growing trend affecting multiple categories including mobile phones, beauty parlours and services on public transport," noted BrandZ, as it launched its third annual BrandZ Top 50 Most Valuable Indian Brands ranking.

Dinesh Kapoor, Kantar Millward Brown's Managing Director, South Asia, observed that "Brands which have managed to sustain their ranking over the past two years have only been able to do so by increasing their brand value by over 35%".

The number of brands of Indian origin in the Top 50 has risen from 35 to 38 over the same period – proof, said BrandZ, that local brands are capable of creating high quality products and services that can compete with global brands.

Brands now need to consider multiple layers of segmentation beyond the traditional ones of rich, middle class and poor, according to Arvind Singhal, chairman and managing director of retail consultancy Technopak, as a process of incremental premiumisation takes place.

"People are increasingly looking for products that are slightly better (activated charcoal in toothpaste, minerals or dried fruits in breakfast cereal) and companies realise they're willing to pay a premium for them," he told the Economic Times.

Product benefits are only one aspect of the trend. "Premiumisation of your FMCG purchases is the best way to show you've moved up in life," said KK Chutani, executive director/consumer care at Dabur.

He added that it isn't an easy task to "premiumise" a brand. But "if a brand enjoys trust, then consumers buy into these changes".

Data sourced from BrandZ, Economic Times; additional content by Warc staff