PepsiCo, Unilever, and other multinational packaged goods companies are shifting their focus from China to India as a key growth market. This strategic move is fueled by China’s uneven recovery and India’s robust economic growth, making it the fastest-growing major emerging market. These companies are adapting to the diverse tastes of India’s vast population by introducing new flavors and size variants, particularly targeting the untapped potential of the rural market.
Brian Jacobsen, chief economist at Annex Wealth Management, highlights the demographic and economic advantages of India. “The last decade was about selling into China, but the next decade is about selling into India,” he told Reuters. “You have to go where the demographic and economic tailwinds are at your back.”
Major consumer goods companies operating in India are optimistic about future consumer spending. They anticipate growth driven by increased government spending, a favorable monsoon season, and a rebound in private consumption. Research firm GlobalData forecasts that the combined market share of the top five multinational companies – Coca-Cola, P&G, PepsiCo, Unilever, and Reckitt – will increase to 20.53% in 2023 from 19.27% in 2022, primarily in categories like baby care, consumer health, cosmetics, beverages, and household goods. In contrast, their combined market share in China is projected to shrink to 4.30% in 2023 from 4.37% in 2022.
“China went through an 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% seems like a healthy growth for total fast-moving consumer goods,” K Ramakrishnan, Managing Director, South Asia, at Kantar’s Worldpanel Division told Reuters.
India’s growth is being witnessed across both urban and rural segments, with rural areas showing slightly better performance. Consumer goods companies are investing heavily in India. For instance, PepsiCo launched Kurkure Chaat Fills, Coca-Cola upgraded its packaging to enhance product shelf life, and Nestle plans to introduce its premium coffee brand Nespresso at the end of the year.
Kantar data reveals that Coca-Cola’s household penetration in India increased by 24%, PepsiCo’s by 12.7%, Nestle’s by 6.7%, and Reckitt’s by 3.8% in the 12 months ending June. Mondelez International is partnering with the Lotus Biscoff cookie brand and launching new Oreo pack sizes this month. The company reported mid-single-digit growth in India’s chocolate category during the second quarter.
Coca-Cola also experienced double-digit volume growth in India, while Unilever recorded sequential improvement. PepsiCo’s Africa, Middle East, and South Asia region saw growth, with the company anticipating India to be its “big growth space.” These results are in contrast to the muted volume growth experienced by most of these companies in the region last year.
In contrast to India’s growth, China is experiencing weak demand. KitKat maker Nestle reported a decline in total sales in the Greater China region during the latest quarter, citing weaker-than-expected economic and consumer sentiment.
