Q-comm rising and consumers leaning towards premium, sustainable products: Deloitte-FICCI report
India’s FMCG, e-commerce and retail sectors are increasingly relying on strategic M&As to drive long-term growth and competitiveness.
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The quick commerce market is expected to increase significantly, driven by urbanisation and rising customer expectations, reveals a Deloitte-FICCI report. As per the report, quick commerce will focus on localised e-commerce methods and speedier deliveries, particularly in non-metropolitan areas. The consumer survey indicates that 37 per cent of consumers prefer quick commerce for food and beverages over traditional e-commerce since these items are frequently driven by impulse purchases or urgent requirements. However, e-commerce is the favored platform for home, beauty and personal care products.
Deloitte has unveiled the “SPURring growth in FMCG, retail and e-commerce sectors in India” report in collaboration with FICCI, that highlights the role of India’s consumer Industry in boosting the overall economy.
Notedly, the Indian economy demonstrated a remarkable growth as its real GDP expanded by 6.7 per cent in Q1 FY25 despite global economic crises. In fact, IMF too raised its prediction for India's GDP growth in FY25 to 7 per cent, citing the country's economic outlook. Strong domestic demand, increasing rural consumption and a booming services sector are the main drivers of this expansion.
Talking about the report, Anand Ramanathan, Partner, Consumer Products and Retail Sector Leader, Deloitte India, said, “The consumer industry is a driving force behind India’s economic resilience, with the FMCG, retail and ecommerce sectors serving as its pillars. However, to maintain this trajectory, a strategic partnership between the government and the private sector is essential. We need reforms that directly address inflation control, credit access, and the ease of doing business."
He added, "Policies that incentivise R&D, promote health and enhance rural infrastructure will be game changers. With the right policy framework in place, India is well on its way to becoming the world’s third-largest consumer market by 2030, transforming the economy and livelihoods of millions of people. Steps such as establishing a dedicated consumer sector council to focus on innovation, digital transformation and supply chain efficiency could propel us towards achieving the US$2 trillion consumer market milestone and ensure that we become the third-largest consumer market by 2030. The government’s role in shaping the future of this industry through enabling fiscal and monetary policies to support private investment and consumption will be crucial for achieving these objectives.”
Shift in Consumer Behaviour
The report further highlighted that there is a noticeable shift in consumer behaviour between affluent and unaffluent segments, indicating a trend emerging across multiple consumer goods sectors. For instance, in the FMCG sector, affluent consumers increasingly opt for larger pack sizes, indicating an uptick in spending capacity, while unaffluent consumers are downtrading. This trend of upgrading is visible in affluent markets, where consumers' preferences for high-end, more valuable products are fueled by larger disposable incomes. Unaffluent households, on the other hand, are cutting back on spending and opting for less expensive or non-branded goods.
Furthermore, India’s FMCG, e-commerce and retail sectors are increasingly relying on strategic M&As to drive long-term growth and competitiveness. The report reveals that consumers are shifting towards premium, sustainable and personalised products, prompting companies to innovate and upgrade their portfolios to meet these evolving needs. This surge in consumer demand, combined with a growing focus on sustainability, health and digital adoption, has created fertile ground for increased M&A activity. In addition to this, consumers are looking for foods with added health benefits, such as fortified cereals, probiotics and protein-rich snacks. The report reveals that about 78 per cent of consumers are willing to pay a premium for healthy food and beverages.
Interestingly, the packaged food industry is beginning to represent the range of ethnic cuisines found throughout India. Nationwide in popularity are Bengali sweets, South Indian spice blends and Gujarati munchies. This change reflects a growing trend among consumers to return to their roots and favor local production. It also shows a growing interest in real, region-specific flavors, which is fueling demand for packaged goods that offer a taste of local cuisines.
Demand for Clean-label products
The report claims that consumers are requesting products with fewer and recognisable ingredients. The clean label movement is pressuring manufacturers to restructure their goods to exclude synthetic preservatives and additives. For example, 51 per cent of consumers are willing to spend more for natural ingredients in cosmetics and personal care products. The market for clean-label components is anticipated to develop, with a compound annual growth rate (CAGR) of 20.7 per cent between 2018 and 2022. In 2023, 5,000 clean-label products were introduced in India, making up 13 per cent of all product releases worldwide due to the country's increasing demand.
Moreover, Indian retailers are increasingly launching their own private label products, typically priced 25–40 per cent lower than comparable branded items. This shift is driven by the desire to offer cost-effective alternatives that appeal to price-sensitive consumers. In India, private labels represent 4 per cent of total retail sales, of which 70 per cent are of food categories.
“The Indian consumer sector is poised for transformative growth, fuelled by rapid innovation, digital adoption and shifting consumer preferences. This promising trajectory offers immense opportunities for the FMCG and retail sectors to expand and evolve. To harness this potential, collaboration between the government and businesses will play a pivotal role. By aligning policies with emerging market trends and nurturing an ecosystem of innovation and sustainability, the Indian consumer sector can serve as a vital partner in driving India’s economic prosperity and shaping a bright future for all stakeholders,” Harsha V Agarwal, Senior Vice President, FICCI; Vice Chairman and Managing Director, Emami Limited, added.
