India holds a dominant position in the Asia-Pacific region’s modern trade sector, with the premium-plus pricing segment accounting for nearly 40% of FMCG sales and 30% of tech durables sales, according to a report by data analytics firm NielsenIQ. The report highlights that India is the only country in the Asia-Pacific where FMCG and tech durable sales from modern trade channels consistently achieve double-digit growth, driven by premiumization and festive sales.
The report, titled “Full View of Modern Trade Retail Trends,” emphasizes that India’s modern trade channels continue to deliver robust growth despite inflationary pressures, with double-digit volume increases sustained even amid price fluctuations. The growing preference for premium-plus products is particularly notable, contributing significantly to overall sales.
While online channels are rapidly expanding in India, modern trade remains a preferred shopping avenue, involving sales through large, organized stores such as supermarkets, hypermarkets, department stores, and mini-markets. The latest data shows a 2% growth in FMCG sales and a 4% growth in tech durables through modern trade channels on a moving annual total (MAT) basis as of March 2024.
Festive seasons and peak shopping periods are key drivers of growth in both the FMCG and tech durables sectors. During these periods, FMCG sales see a 20% increase, while tech durables experience a 60% boost. Notably, non-food categories grew 1.8 times faster than food categories during these peak times, driven by deep discounts and consumer demand for non-essential items.
The report also points to challenges faced by large companies from the rise of small manufacturers and private labels, which are gaining popularity among consumers. Private labels are growing at 1.5 times the rate of large manufacturers, particularly within the mainstream pricing segment. Small players, on the other hand, are driving 70% of new launches in modern trade, focusing on products with natural ingredients and luxury pricing, which exceeds 200 times the average category price.
Additionally, the report notes a shift towards smaller pack sizes in modern trade channels. While large packs have traditionally dominated, smaller pack sizes are now growing at twice the rate of larger ones, reflecting changing consumer preferences.
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