Photo Credit: Reuters/Niharika Kulkarni
India is now the focal point for growth for major companies like PepsiCo, Unilever, and other packaged goods leaders, seeking to capitalize on the stagnation in China. As India’s economy outpaces other major emerging markets, businesses are diversifying their offerings to cater to its broad and varied consumer base, targeting both urban and rural markets with new products and packaging innovations.
“The focus over the past decade was on China, but the next decade is clearly about India,” noted Brian Jacobsen, Chief Economist at Annex Wealth Management. “You need to leverage the demographic and economic advantages that are now driving growth.”
In anticipation of higher government spending, an improved monsoon season, and a resurgence in private consumption, major consumer goods companies are optimistic about a recovery in consumer spending in India. As a result, the market share of the top five multinational firms—Coca-Cola, P&G, PepsiCo, Unilever, and Reckitt— is projected to rise to 20.53% in 2023 from 19.27% in 2022. This increase is primarily seen in baby care, consumer health, cosmetics, beverages, and household categories, according to GlobalData. In contrast, their market share in China is expected to decrease slightly to 4.30% from 4.37% during the same period.
China’s extended COVID-19 lockdowns and subsequent sluggish recovery have led to weak growth. Meanwhile, India’s growth rate, around 4%, represents a more robust opportunity for fast-moving consumer goods, according to K. Ramakrishnan, Managing Director of South Asia at Kantar’s Worldpanel Division. Both urban and rural segments in India are growing, with rural areas showing slightly better performance.
Consumer goods companies are investing heavily in India, with new product launches such as PepsiCo’s Kurkure Chaat Fills, Coca-Cola’s upgraded packaging, and Nestlé’s upcoming Nespresso introduction. These efforts have led to notable increases in household penetration for these brands: Coca-Cola by 24%, PepsiCo by 12.7%, Nestlé by 6.7%, and Reckitt by 3.8%, according to Kantar. Mondelez International is also expanding, with new Oreo pack sizes and partnerships like the Lotus Biscoff cookie brand.
Coca-Cola reported double-digit volume growth in India, while Unilever saw sequential improvements. PepsiCo’s Africa, Middle East, and South Asia region also noted a rise, with India expected to be a major growth area. These positive results stand in stark contrast to last year’s muted volume growth in the region and the ongoing weak demand in China.
Nestlé, known for its KitKat brand, experienced a decline in sales in Greater China and acknowledged weaker-than-expected economic and consumer sentiment there. “China was once the go-to market for growth investors, but its allure has dimmed,” commented Don Nesbitt, Senior Portfolio Manager at F/m Investments.
