Unbranded FMCG driving consumption in urban areas, says Kantar report

Improving economic indicators yet to impact consumption, says market researcher

Urban consumption of fast-moving consumer goods (FMCG) in FY25 was driven by unbranded products, with rising digital advertising shifting perceptions for urban consumers, market researcher Kantar said in its FMCG Pulse report.

 

Improving indicators of economic activity in the country, like slowing food inflation, GDP acceleration, and increasing consumer confidence index, are yet to fully have an impact on the consumer goods sector, especially on FMCG, the market researcher said. 

 

"Growth for the period of Moving Annual Total March 2025 (FY25) slowed down to 4.2 per cent from 6.6 per cent in FY24," the report said. 

 

Additionally, FMCG purchased in the first quarter of 2025, for in-home consumption grew at 3.5 per cent, the slowest since the final quarter of CY22. 

 

“The 3.5 per cent growth for the quarter is split into 4.4 per cent in urban India and 2.7 per cent in rural India. This is the third straight quarter that urban India has grown faster than the rural. Even at the annual level, urban growth of 4.4 per cent is slightly higher than rural growth of 4 per cent,” it said.

 

This is also visible in the FY25 quarterly results of listed consumer companies like Nestle India and Hindustan Unilever, who have pointed out a continued slowdown in urban consumption during the year.

 

According to the 22 listed companies that Kantar tracks, urban volumes grew at 2.1 per cent, annually. 

 

“The rest of the branded market is doing better at 3.8 per cent, but unbranded products have seen a massive growth of 8.4 per cent in the year,” it said. 

 

Kantar attributed this to shifting perceptions of packaging, pricing, and branding among urban shoppers, leading them to become more brand-agnostic. 

 

"Value, perceived in terms of quality, aesthetics, and story is becoming a weightier consideration for the shopper than price. Which is why, between the first quarter of 2024 and 2025 the price paid per kilogram of FMCG has gone up by ₹8, despite them buying more unbranded and smaller brand products," the report added.

 

Kantar tracks branded and unbranded products, while NIQ tracks only branded products.

 

Meanwhile, the rural growth story was reversed with listed brands growing at a strong 5.1 per cent, the rest of the branded market growing at 4 per cent and the unbranded part of it growing at just 2.3 per cent.  

 

“This is not happening in a vacuum. The listed manufacturers, whose brands are often high-penetrated giants, have developed a strong rural strategy, consumer loyalty, and distribution network. Therefore, the rural shopper, who is generally becoming more aspirational, and mimicking the urban shopper is gravitating towards these brands,” it said.

 

Kantar said washing liquids emerged as the fastest-growing category of FY25 in terms of volume, growing 2.7 times and adding close to 24 million households since FY23. 

 

Other than washing liquids, ready-to-cook mixes is the only category to double its volume in the last two years, adding as many as 18 million new households in the time, while shoppers have also doubled their annual trips to purchase the category, the report pointed out.

 

“Both these categories have a massive headroom for growth,” it said.

 

Going forward, with premiumisation continuing along with moderate consumption growth, urban FMCG is expected to witness moderate-to-strong growth in the next quarters.

 

“If the macroeconomic factors remain favourable, we should also see rural recovering as we head into the second half of the year,” the report added.