"Re-Imagining FMCG in India", a joint report by industry chamber CII and Boston Consulting Group (BCG), said growth in disposable income, increased urbanization, and the increase in the number of nuclear households are driving growth of the Indian branded FMCG sector estimated to be currently worth around $65 billion (roughly Rs. 4,30,914 crores). The growth opportunity is massive, yet, the shape of this opportunity would be very different in the future. Greater premiumization and tier 2-4 towns will be the drivers of growth.
The report said that households with more than Rs.10 lakh annual income would account for 50% of the spending in the category. This would lead to premiumization across categories - from unbranded to branded - and 'luxuriating' of products. The report also said companies will need to focus on tier 2 and 3 cities and rural regions, as their contribution will be an important source of demand for the sector as more and more consumers move from the non-branded to the branded segment.
Separately companies would need to build capabilities in digital marketing and would also need to push for greater clarity on the role of new emerging channels like e-commerce would play for them and how should they engage with these new channels without conflicting their brick and mortar partners. It estimates that by 2020, more that 150 million consumers would be digitally influenced in FMCG.