Page 112 - Nuvama | IC Report 2023

• MANUFACTURING • NEW ENERGY • URBANISATION • CONSUMPTION PREMIUMISATION • EQUITY SAVINGS CULT

Long runway for premiumisation in India

Not only are the key levers for consumption premiumisation structurally embedded in India, there is
a huge runway – given low penetration – for this theme to play out. Low penetration and the drivers
(incomes, urbanisation, demography, etc) are set to go hand in hand in supporting premiumisation.
Although low penetration of consumption in India is clichéd and overstated, we argue it is quite
underappreciated.
To put this in sharper perspective, the under-penetration story is both absolute and relative: absolute
in terms of penetration by category and relative with respect to global peers. It is the latter whose
potential is clearly underappreciated. Even with respect to a much smaller EM peer such as Indonesia,
India’s consumption has much to catch up. The consumption comparison with China is even starker
(refer to chart below).
Low penetration
Exhibit 9:
India’s
premiumisation Hand Wash 35
should improve as
incomes rise MFD
Instant Coffee
Face Wash
Body Lotion
Washing Liquids
Dishwash Liquid
Soup
Hair Conditioner
Body Wash

Low consumption Low premiumisation
Indian FMCG Market Price Segmentation 2019**

29%
India X
Premium

Indonesia 2X
42%
Mid
China 4X
29%

FMCG per capita consumption Mass

Source: HUL Investor Presentation, 2021

110