Urban consumers ditch labels, rural shoppers stick to big FMCG brands

Urban India is embracing unbranded and digital-first products, while rural consumers continue to prefer trusted FMCG brands as companies tweak strategies to serve both markets

India’s FMCG market is witnessing a clear divergence in consumer preferences between urban and rural areas. In cities, shoppers are increasingly experimenting with unbranded products and new-age digital-first brands. Meanwhile, rural consumers are showing greater loyalty to established names such as Nestle, Dabur, and Hindustan Unilever (HUL), Times of India reported.

 

Though unbranded goods have traditionally had a large presence in rural markets, the tide appears to be turning. Thanks to their vast distribution networks and deep rural push, legacy brands are gradually capturing a bigger share of the market in villages. Digital-first brands, on the other hand, may take several years (or even decades) to match this scale, the news report said.

   

Unbranded products see urban boost

 

Urban households, influenced by inflationary pressures and a growing trend of online product discovery, are leaning more towards unbranded goods. A recent Kantar report revealed that in FY25, unbranded products recorded 8.4 per cent volume growth in cities, compared to just 2.3 per cent in rural India.   

 

  Interestingly, when it comes to the overall volume growth of listed FMCG firms, rural areas outperformed urban. According to the same report, rural markets saw a 5.1 per cent increase in volume for listed FMCG brands, while urban growth was only 2.1 per cent.

 

Rural growth backed by policy, monsoon

 

For five straight quarters, rural India has outpaced urban FMCG growth, according to NielsenIQ data for the March quarter. Analysts attribute this to a combination of factors — strong monsoon last year, supportive government policies, and better rural incomes.

 

Urban demand had slowed due to inflation, leading consumers to shift to smaller packs and cheaper options. However, FMCG companies indicate early signs of a rebound in urban consumption in the June quarter.

 

Digital-first brands gain in cities

 

Urban consumers are also driving the rise of digital-first brands. These new-age players, such as Slurrp Farm, have built niche offerings and found traction through e-commerce and quick commerce platforms.

 

The report quoted Mayank Rastogi of EY India as saying, “More prominently in urban India, consumers are trading up across categories and moving away from legacy FMCG brands." He added that new product discovery is mostly happening online, where many legacy brands have limited presence.   

 

  These digital brands are more agile in adapting to changing trends. “D2C brands have a fail-fast mindset and are quick to tweak product formulations or packaging,” Rastogi explained. Mobile advertising and online availability are shaping a new breed of brand-agnostic consumers.

 

Companies shift strategies

 

Traditional FMCG companies are now tailoring strategies to cater separately to rural and urban markets. Britannia, for instance, is launching digital-first products for metro buyers while deepening rural distribution. Similarly, ITC is using quick commerce to drive urban growth and innovating on formats and pricing in rural areas.

 

Dabur, too, is focusing on rural markets with specific packs aimed at affordability.