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How Indian Consumer Brands Can Stay Ahead of the Curve Brands to Indian consumers are no longer about just affordability. Today brands which are able to engage with the community are able to attract more consumers

By Shahan Sud

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India is country of tastes. And these tastes are reflected in what people consume not just in their monthly grocery basket but also in the millions of the virtual stories that they swipe through on Instagram, WhatsApp, Facebook, Snapchat and TikTok. However, influencer marketing and social e-commerce along with the rise of privacy and health conscious young Indians are providing established players and insurgent brands with an interesting challenge. A challenge of how they can adapt their social experience story with that of the evolving consumer by constantly innovating to remain impactful while ensuring a healthy brand recall.

Brands to Indian consumers are no longer about just affordability. Today brands which are able to engage with the community are able to attract more consumers. Brands encapsulate a myriad of aspirations, expectations, relationships and moments with which Indians live their unique stories. Gone are the days when a brand would only be offline. In an age where we live in digital colonies, it is prudent for a brand to have a digital identity.

The affordability of data provided accessibility to Indians in Tier III and Tier IV cities to assets (such as smartphones)—that have revolutionized the way they consume. This technological permeability will over the next few quarters translate to an increase in aspirational spending, thereby empowering them and giving them an opportunity to consume a variety of products that they didn't have access to earlier. Consequently, we will also see the rise of smaller SKU's that will cater to this need, including companies that will offer chips, chocolates and spice mixes in INR 1 offerings.

These factors underline how the e-tailing opportunity in India is yet to reach its full potential. Furthermore, the shift towards pushing for sustainability-marketed products and increased investor confidence towards the healthy snacking category are two trends that I believe will continue to drive growth in 2020.

That being said, having a digital presence does not guarantee that online interactions will convert into prospective new customer for a brand. Behavioral patterns have guided millennials across the globe to reduce their affinity towards social media tools such as Facebook, Instagram and snapchat, a trend that will slowly enter the Indian landscape in 2020. However, it will only be restricted to the urban consumer base allowing potential social e-ecommerce players to benefit from penetration in rural India.

Given that India is the only large market to have seen growth in all forms of media—both traditional and digital—upwards of 30% CAGR, it is crucial for brands to understand the impact that these spends are having on their customers acquisition efforts. They need to strategically analyze are they targeting the right audiences and are they generating the desired traffic? These are questions that will help firms to assess how they can build cost-effective brands. Furthermore, having an omnichannel presence might excite a few founders but it does not come at a shoestring budget. With Nykaa and Flipkart (furniture) adding brick and mortar stores to their expansion strategy, this highlights how online-to-offline is a cultural opportunity that I believe Indian retail is heading towards.

Along with its massive consumer opportunity, India is also witnessing various shocks. With a declining savings rate, limited ability of banks to cut lending rates going forward and a FMCG slowdown led by rural sentiments are few guiding factors that have fatigued animal spirits of the Indian economy. Like the previous three economic slowdowns in India, this one too is fuelled by a larger accumulation of debt. However, innovation and adapting to trends early on can help brands overcome this slowdown and create value for all stakeholders.

I believe 2020 will see the expansion of new categories with plant-based meat leading the pack; the growth of non-alcoholic beverages and fruit-based drinks; the organized sexual wellness space that was earlier surrounded with cultural taboos will slowly find increased investor confidence as it is sunrise industry in India; Indian FMCG giants will strategically try to encapsulate the Moringa trend by including it in their brand portfolios; due to limited capacity of young Indian's to purchase goods, the renting economy will continue to grow, and the good Indian millet which was resurrected as a superfood will see increased adoption as Indian's become more conscious of what they consume.

Shahan Sud

Investment banking analyst at Anand Rathi Advisors

Shahan Sud is an investment banking analyst at Anand Rathi Advisors. A Christ University alumnus, Shahan is passionate about the Indian economy, public finance and policy solutions for a growing India. In 2018, he was amongst a select few to represent India at Harvard University, Cambridge and actively engaged in a slew of discussions about South Asia.

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