Urban middle-class demand under stress, consumption story intact

Nestle India's Manish Tiwary said inflation and muted wage growth are weighing on urban discretionary spending, though premium and rural demand remain resilient

India’s consumption growth remains intact even as urban middle-class demand faces pressure from inflation and wage growth has not seen a significant pick-up, Manish Tiwary, chairman and managing director of Nestlé India, said at a session titled ‘Perspectives From the Boardroom’ at the Citi India Conference 2026 on Wednesday.

 

Tiwary explained the pain points in urban middle-class demand, saying, “That's where we see a little bit of wait-and-watch, where consumers push out discretionary expenditure.” He, however, said that for Nestlé India, the story is a little different as it used to be largely an urban company, and hence its growth continues to be healthy.

   

On rural demand, he said that, as per NielsenIQ data, it has always been growing faster than urban demand, with a secular trend over the last three years. He also said that demand remains intact at the top end of the market. “The top end of the market is extremely resilient,” he said.

 

He added that Nestlé India is very clear that India's growth story remains intact and that it has also been increasing its capacity expansion. In the last two years alone, the maker of KitKat has invested over ~2,000 crore each year. The company manufactures 98 per cent of its products in-house and is currently setting up its 10th factory in Odisha.

 

Marico Chairman Harsh Mariwala said regional insurgent brands are posing challenges to large domestic and multinational fast-moving consumer goods (FMCG) companies. “You cannot create a moat around investment and distribution. The moat now has to move to better digital marketing and better consumer insights,” he said. Marico has made around seven direct-to-consumer acquisitions in three years. Mariwala said innovation is key to creating an international brand.

 

On the sidelines, Mariwala said lower rainfall could hurt rural demand.