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The Premiumisation Paradigm: How Quality Could Become the New Currency

India experiences a notable premiumisation trend, driven by the expanding middle class and smaller towns, reminiscent of America's 1950s consumerism era.

The Premiumisation Paradigm: How Quality Could Become the New Currency

Outlook Start-Up Desk

POSTED ON March 01, 2024 12:13 PM

Lately, there's been significant buzz about the upsurge in premiumization across India, and I find its evolution quite intriguing.

What's particularly fascinating is that it's not confined to the affluent; rather, it's being driven by the evolving middle class and smaller towns. It takes me back to America in the 1950’s. With a youthful populace, increasing wages, and the onset of consumerism the famous one-liner "The American Way of Life" was born

Goldman Sachs has put out a report on the growing affluence among Indian consumers in various product categories.

Their argument is based on the last three years' analysis of premium businesses.

1. Premium players in the same category growing faster :

FMCG - Nestlé India higher than HUL.

Fashion - Trent ahead of V Mart

Footwear - Metro faster than Bata

Passenger cars - Growing share of SUVs

Two Wheelers - Enfield ahead of Industry.

2. Companies catering to premium customers seeing stronger growth.

Health care - Apollo hospitals

Travel - Make my trip

Jewellery - Titan

Beauty - Nyka

Retail - Phoenix

And while they are reporting a trend, let’s dig for the consumer insight that could be defining this trend.

As an advocate of "premiumization," I've long championed the notion that true value transcends mere consumption—it's about curated indulgence. Premiumization isn't about pursuing the most expensive items; it's a philosophy rooted in recognizing the worth of quality and the unparalleled experiences it brings. Each acquisition I make isn't merely a transaction but a deliberate choice.

And I've witnessed firsthand how my choices spark exploration and emulation among my circle of friends. Whether it's embracing a transformative health program or investing in an innovative expensive oral hygiene product, when I share the joy of discovery, the allure of premiumization is undeniable.

But why is this mass scale shift now, especially after the long spell of COVID-induced consumption drought? Isn’t it counter-intuitive? No, let me explain why.

What is intriguing to note is that individuals, once financially cautious, are now gravitating towards premium products across all categories. Whether it's indulgences like clothing, personal care, and watches, or essentials like milk and groceries, there's a palpable inclination towards elevating their choices.

It seems a tripartite influence of Quality Quest, Access Evolution, and Digital Expansion is coming together to fuel premiumization. Let me explain how.

Firstly, premiumization is no longer confined to urban areas; it's gaining traction in small towns as well. From fleeting trends to mediocre mass production, consumers are often faced with decision-making and consumption exhaustion. Residents in these towns are now increasingly inclined to elevate their choices beyond mass-produced options.

Another contributing factor to the growing demand is improved technology and digital connectivity, better infrastructure, and increased access. This has enabled companies to adapt and cater to evolving consumer preferences. Not only are consumers more exposed to higher-quality products, but companies can also reach lower-town classes with ease. I would like to add that the growing affinity towards "Made in India" products and services, now known for their high-quality, could be yet another aspect that makes the transition towards premiumization easier.

At its core, I also see premiumization as a journey of self-discovery—a quest to refine tastes, expand horizons, and elevate standards. It's about embracing abundance and every purchase is an investment in a well-lived life.

I believe the ever-evolving landscape of Indian consumer culture is finally embracing the virtues of premiumization, where it isn't just a trend but a way of life. After all, the age-old saying that Indians always believed in "Simple-Living, High-Thinking" may be coming to life finally!

Authored by Shan Jain, Brand and Marketing Consultant, Mentor to Start-ups, Independent Director.

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