Agencies
New York
India has become the next big bet for PepsiCo, Unilever and other packaged goods giants looking to fill the growth vacuum left by an uneven recovery in China.
With India’s economy expanding at the fastest pace among major emerging markets, companies are trying to serve its diverse palate by launching new flavors and size variants aimed at attracting the country’s vast population and untapped rural market.
"While the last decade had companies focused on selling into China, the next decade is about selling into India,” said Brian Jacobsen, chief economist at Annex Wealth Management.
"You have to go where the demographic and economic tailwinds are at your back.”
Major consumer goods companies based in India, the world’s most populous country, are expecting higher government spending, a better monsoon season and a resurgence in private consumption to help consumer spending recover in the coming quarters.
That is expected to boost the combined market share of the top five multinational companies - Coca-Cola, P&G, PepsiCo, Unilever and Reckitt - to 20.53 percent in 2023 from 19.27 percent in 2022, mainly in the baby care, consumer health, cosmetics, beverage and household categories, according to research firm GlobalData.
Their total market share in China is forecast to shrink to 4.3 percent in 2023 from 4.37 percent in 2022, the data showed. "China went through a long and extended COVID ... they even went through a brief period of negative growth, and after this, growth has been very sluggish. In comparison to that, the growth rate in India hovering around 4 percent seems like a healthy growth for total fast-moving consumer goods,” said K Ramakrishnan, Managing Director, South Asia, at Kantar’s Worldpanel Division. Both the urban and rural segments in India have seen growth, but rural has fared a little better, he said.
Consumer goods companies have also been pumping money into India with launches like PepsiCo’s Kurkure Chaat Fills, Coca-Cola’s packaging upgrades to increase the shelf-life of its products and Nestle’s plans to introduce its premium coffee brand Nespresso atyear-end.