CEOs of top FMCG companies have stated that the rise of nuclear families will drive demand for products and increase sales of premium categories like liquid detergents.
Multiple studies have demonstrated that urbanization will accelerate, leading to increased demand for consumer goods. A report by Deloitte further reveals that this trend will also stimulate growth in the retail sector. By 2030, India is expected to add 110 million middle-income households (presently 190 million) and 14 million high-income households (currently 15 million). Middle-income households are defined as those earning between Rs 3-30 lakh per annum, while the high-income category consists of those earning over Rs 30 lakh per year.
In a recent interview with TOI, Nitin Paranjpe, chairman of Hindustan Unilever (HUL), emphasized that urbanization is a significant trend that can drive consumption. He stated, “When somebody transitions from a joint family to a nuclear family, the consumption of that household increases by 20%.” Premiumization is a key growth strategy for HUL.
Amit Adarkar, CEO of Ipsos India, stated, “In 2011, 31.3% of Indians resided in urban areas. By 2021, this figure increased to 35.4%, and it is expected to rise to 43% by 2035. This urbanization shift, along with increased affluence, will contribute to the growth of consumer goods.”
As more individuals move into urban households, there will be a greater need for cleaning homes and surfaces. L V Vaidyanathan, CEO & MD of Procter & Gamble India, explained in an interview with TOI that consumer needs undergo significant changes with urbanization, the rise of nuclear families, and women entering the workforce. Vaidyanathan pointed to the surge in sales of automatic washing machines, which has spurred demand for liquid detergents.
India’s demographics are shifting, driven by a rise in the urban young population, primarily millennials and Gen Zs. As income levels increase, millennials and Gen Zs in India seek convenience, value-added services, and are willing to pay a premium, as outlined in the Deloitte report.
The growth of high and middle-income households, increasing participation in the organized labor market, and demographic shifts towards a younger population make India’s cities highly attractive markets for FMCG companies worldwide, according to Anand Ramanathan, partner and consumer industry leader (consulting) at Deloitte India. He stated, “Convenience, variety-seeking consumer behavior, heightened awareness from travel, quick commerce, and growth in modern trade are among the key drivers of increasing sales of discretionary FMCG products in urban India.”