India Emerges as Key Growth Market for CPG Giants, as China Lags

By IndraStra Global News Team

Cover Image Attribute: A file photo of India's D-Mart Point of Sale

India has emerged as the next significant opportunity for PepsiCo, Unilever, and other major packaged goods companies as they seek to compensate for the inconsistent recovery in China. With India’s economy growing at the quickest rate among major emerging markets, these companies are introducing new flavors and packaging sizes tailored to appeal to the country's large and diverse population, including its untapped rural markets.
"The previous decade saw companies concentrating on the Chinese market, but the upcoming decade will be all about tapping into India," said Brian Jacobsen, chief economist at Annex Wealth Management. "You need to position yourself where demographic and economic trends are in your favor."
Leading consumer goods companies in India, now the world's most populous nation, are anticipating increased government spending, favorable monsoon conditions, and a revival in private consumption to drive consumer spending growth in the coming quarters.
According to research by GlobalData, the combined market share of the top five multinational companies—Coca-Cola, P&G, PepsiCo, Unilever, and Reckitt—is expected to rise to 20.53% in 2023, up from 19.27% in 2022, primarily in the baby care, consumer health, cosmetics, beverage, and household categories. In contrast, their total market share in China is projected to decline slightly from 4.37% in 2022 to 4.30% in 2023.
"China experienced a prolonged COVID period, which included a brief phase of negative growth, followed by a sluggish recovery. In contrast, India's growth rate of around 4% appears robust for the overall fast-moving consumer goods sector," said K Ramakrishnan, Managing Director for South Asia at Kantar's Worldpanel Division. He added that while both urban and rural segments in India have shown growth, the rural sector has performed slightly better.
Consumer goods companies are heavily investing in India with new product launches, such as PepsiCo's Kurkure Chaat Fills, Coca-Cola's packaging upgrades to extend product shelf-life, and Nestle's plans to introduce its premium coffee brand, Nespresso, by the end of the year. These efforts have paid off, as Kantar data shows significant increases in household penetration in India: Coca-Cola by 24%, PepsiCo by 12.7%, Nestle by 6.7%, and Reckitt by 3.8%.
Mondelez International is also expanding its presence in India, partnering with the Lotus Biscoff cookie brand and launching new Oreo pack sizes this month. The company reported mid-single-digit growth in the chocolate category in India during the second quarter. Coca-Cola saw double-digit volume growth in the country, while Unilever recorded sequential improvement. PepsiCo’s Africa, Middle East, and South Asia region also reported a rise, with India identified as a key growth market.
In contrast, China is experiencing weak demand. Nestle, the maker of KitKat, reported a decline in total sales in the Greater China region in the latest quarter, citing weaker-than-expected economic conditions and consumer sentiment. Don Nesbitt, senior portfolio manager at F/m Investments, noted that while China was once considered a prime growth market for investors, its appeal has diminished recently.
With reporting by Reuters

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