According to BNP Paribas research, India's affluent consumption story remains intact but is experiencing a slower pace of expansion as premium demand moderates. As reported by CNBC TV18, the brokerage's Head of India Equity Research Kunal Vora noted that the premium consumption cycle that gathered pace after the pandemic was supported by a strong job market, easy credit availability and rising equity markets. However, hiring in IT and BFSI sectors has now slowed, government recruitment remains muted and credit growth has also eased.
Despite these challenges, Vora does not expect the premium consumption story to reverse, citing several supporting factors. According to the report, these include income tax relief, RBI rate cuts, continued investment in global capability centres (GCCs), AI infrastructure and India's startup ecosystem as potential demand drivers. The brokerage believes that affluent consumers will continue to outpace the mass market, but the gap between the two segments is likely to narrow due to slower job creation reducing new affluent household formation.
As reported by BNP Paribas, mass consumption is receiving support from lower inflation, GST rate cuts, gold loans and growth in the gig economy. Vora believes that discretionary consumption will continue to grow faster than staples over the long term, even though consumer staples have recently reported stronger growth. He noted that part of the improvement in staples is temporary and linked to GST rate cuts, with growth likely to settle above historical levels rather than remain in double digits.
According to the analysis, premiumisation alone is unlikely to sustain growth for consumer staples companies, as they face increasing competition from direct-to-consumer brands, quick commerce and e-commerce platforms. However, consumers are spending more on newer product categories, creating opportunities for discretionary businesses despite the moderation in affluent consumption. This shift in consumption patterns is expected to continue supporting the overall premium consumption ecosystem despite the slowdown in traditional affluent segments.
