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India is entering a new phase of consumption as rising incomes steadily expand the base of premium-ready consumers, according to a report by SOIC Research.
The report noted that incomes in the country have grown at a compound annual growth rate (CAGR) of around 7 per cent over the past decade. This steady rise in earnings is now fuelling a structural shift in consumer behaviour. It stated "Incomes growing at approx. 7 per cent CAGR over the past decade are expanding the premium-ready consumer base". The report said that India's per capita GDP, at about USD 2.7k in 2024, has entered the inflection range where discretionary spending historically accelerates. Economists identify this level as the "inflection point", the stage where households move beyond spending mostly on food and essentials. Instead, they begin to trade up, shifting towards branded detergents, premium skincare, better appliances, and discretionary services. The report highlighted that rising disposable incomes, changing aspirations, and wider access to premium products are unlocking long-term growth and margin expansion opportunities for brands. It also mentioned that Social media, modern retail, and e-commerce have also played a key role in bringing premium offerings to Tier 2 and Tier 3 cities. At the same time, urban lifestyles and global exposure are raising consumer expectations across categories. The report shared that the trend is clearly visible across multiple sectors. In automobiles, the share of SUVs is surging, with premium trims outselling entry-level models. In jewellery and watches, branded luxury lines are gaining market share. In beauty and personal care, premium products are growing two to three times faster than mass-market products. The travel and hospitality industry is also seeing growth, with luxury hotels, premium flights, and "YOLO" experiences becoming more popular. Beverages are witnessing a "drink better" trend, while Q-commerce and FMCG companies are reporting a shift towards higher-value baskets. Comfort and lifestyle products such as branded furniture and home upgrades are also benefiting from this consumption shift. The report further pointed out that this change is not unique to India. Historical patterns in China and Southeast Asia showed that once GDP crosses the USD 2,500 threshold, discretionary categories, from travel to durables, grow rapidly. India, now at that cusp, is already showing signs of such a transformation. (ANI)
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