The fast-moving consumer goods sector is often seen as a litmus test of a country’s economic sentiment. When households feel secure, they spend more on daily-use products — and when they’re squeezed, they cut corners where they can. In India, this equation is getting increasingly complex. The FMCG consumption pattern emerging in 2025 is not just a tale of inflation or aspiration. It is a mosaic of value-seeking urbanites, brand-loyal rural buyers, and a market that is tilting — not collapsing — under the weight of shifting expectations.
India’s urban shoppers, once courted aggressively by major brands, are now sending a clear message: they are less swayed by logos and more by utility, quality, and emotional storytelling. According to Kantar’s FMCG Pulse report, unbranded products in urban areas posted a staggering 8.4% volume growth in FY25 — far ahead of the 3.8% growth for smaller branded goods and a modest 2.1% for listed companies.
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Behind the FMCG trend
What’s happening here? The price of a kilogram of FMCG goods went up by Rs 8 year-on-year, despite the fact that consumers are buying less-branded or unbranded items. This is not mere downtrading. It is an indication that brand loyalty is being replaced by a new kind of value consciousness — one that includes aesthetics, product narrative, and perceived freshness.
This shift is being driven by the digital deluge. Social media and mobile-first marketing have made it easier for lesser-known brands to punch above their weight. In effect, the consumer is no longer choosing between premium and economy — they’re choosing relevance over reputation.
Loyalty and aspiration amid caution
If urban India is redefining the idea of value, rural India is doubling down on trust. In a reversal of earlier trends, rural FMCG growth lagged behind urban for the third straight quarter — 2.7% versus 4.4% in Q1 FY25. Yet, unlike urban shoppers, rural consumers are leaning toward established, listed brands, which posted 5.1% volume growth, as opposed to 2.3% for unbranded goods.
This brand preference isn’t accidental. Big FMCG companies have honed rural strategies that hinge on dependable supply chains and deep penetration. For a consumer who may be aspirational but still cautious — especially in the face of stagnant rural incomes and patchy inflation relief — a known brand offers assurance.
Ironically, while rural households aspire to mirror urban consumption, the urban consumer is growing indifferent to the traditional brand hierarchy. The FMCG market now reflects a paradox: the more aspirational the consumer, the more conservative their choices.
Premiumisation — but only in pockets
Much has been made about India’s premiumisation wave — the idea that as incomes rise, people spend more on better-quality products. The truth is more nuanced. According to Kantar, premiumisation is real, but concentrated. It exists not across metros but within select micro-clusters.
Take south-west Bengaluru: Areas like RR Nagar and Kengeri reported an average spend of Rs 227 per kilogram — higher than even the city average of Rs 211. West Delhi, meanwhile, emerged as the highest spender in household terms. These numbers suggest that premium consumption isn’t sweeping the board, but is alive and well in carefully defined bubbles.
FMCG companies betting on premium products would do well to temper their optimism with ground-level granularity. Selling Rs 300-per-kg shampoo in an Indiranagar or Bandra West is a different ball game than pushing it in suburban Pune or tier-3 Haryana.
Category winners: Speed, freshness, and cleanliness
The FMCG slowdown isn’t uniform across categories. Two segments — washing liquids and ready-to-cook mixes — are defying the broader narrative of restraint. Washing liquids, which grew 2.7x over two years and added 24 million households, represent a shift from soap bars to cleaner, less messy solutions. Similarly, ready-to-cook mixes have added 18 million households, led by fresh batters and quick meal bases.
Consumers want convenience, but not at the expense of control or freshness. Interestingly, ready-to-eat meals — once seen as the future of urban kitchens — have lost half their volumes, highlighting a preference for semi-prepared over fully processed foods.
What does this signal? That the Indian consumer is modernising, not surrendering. They’re willing to pay for time, but not to give up quality or agency over their meals.
Slowing growth, stable behaviour
Despite encouraging pockets, overall FMCG growth in FY25 slowed to 4.2%, down from 6.6% the previous year. The January–March 2025 quarter saw a mere 3.5% rise — the slowest since late 2022. This sluggishness can’t be explained away by inflation alone. It reflects deep-rooted behavioural change.
And yet, the number of shopping trips — 156 per year per household — held steady. Shoppers may be more selective, but they’re not shopping less. Pack sizes grew by 15 grams on average, and 26 more units were bought per household — a shift toward bulk buying and possibly long-term planning.
This is not a market in retreat. It is a market recalibrating.
FMCG outlook: Recovery or reinvention
Kantar expects a status quo for Q2 FY25, but believes the second half of FY26 could bring stronger growth, aided by easing commodity prices, rate cuts, and a good monsoon. This could revive rural demand and reinforce urban consumption.
But even if macro indicators improve, the structural shifts in consumer behaviour are here to stay. Premiumisation will remain a micro-cluster strategy, unbranded players will continue to gain traction in urban India, and rural shoppers will not abandon brand loyalty in a hurry.
The lesson for FMCG firms is clear: the consumer base is fragmenting, and one-size-fits-all strategies won’t work. The winners will be those who can marry the personal with the scalable — those who understand that India’s consumption story is not about more, but about more meaning.