Last Friday, Dabur India, maker of Vatika shampoo and Real fruit juices, said it had set aside ₹500 crore to invest in new-age, direct-to-consumer brands through an investment platform steered by Abhinav Dhall, executive director and head of corporate strategy at the company. The money will back premium products in the wellness, beverages, foods, personal and health care space, it said.
Dabur’s ambition to back premium brands isn’t misplaced as that’s where higher growth for companies across product categories is coming from whether they sell fast-moving consumer goods, electronics and appliances, smartphones, beauty and personal care or apparel. With people picking up more aspirational products, companies are building their portfolios in the segment. Offline and online retail reported brisk sales of bigger TVs and refrigerators, high-priced smartphones and premium furniture during the recent festival season. Online channels claimed an uptick in sales of premium beauty brands.
At the time of the launch, Dabur said the investment platform fast-tracks the company’s shift toward premium offering and positions it at the forefront of emerging consumer trends shaping the industry’s future. “The premiumization trend in the FMCG space reflects a deeper structural shift in consumer behaviour that we believe is both stable and evolving and poised to sustain strong growth,” said Dabur’s Abhinav Dhall. The Gen Z and millennial consumers are driving the shift with their strong preference for premium products and Dabur will expand premium formats like serums, conditioners and masks in hair care and gummies in health care.
The premiumization trend reflects India’s rising affluence, growing aspirations, and evolving definitions of value, Dhall said, adding that “premium” was a multi-dimensional strategy and not just a pricing play.
WPP Media’s new handbook on the power of premiumization in India’s e-commerce boom backs Dhall’s argument. “Premium doesn’t just mean expensive. Consumers are seeking premium products that offer superior quality, experience, and exclusivity,” said Sairam Ranganathan, head of e-commerce at WPP Media.
WPP Media singled out premiumization in e-commerce because of the massive proliferation of digital-only brands. E-commerce has evolved from being a deals and discount shopping channel of the initial years to becoming an important distribution platform for premium brands, Ranganathan said. “Brands are using online platforms effectively for their premiumization strategies as the channel gives them data, consumer insights and allows for sharper targeting,” Ranganathan said.
On the one hand, e-commerce marketplaces like Amazon and Flipkart have given brands reach in tier 2 and tier 3 towns, on the other hand, quick commerce is fuelling sales of indulgence categories and premium brands in the metros. “Premiumization is not a fad. It is here to stay. Quick commerce has accelerated it as these platforms widened their assortments for 10-minute delivery from items of daily use to fashion, beauty and electronics,” Ranganathan said.
The levers driving premiumization are clearly identified by WPP Media as the rising class of consumers, that is the high earners who are not rich yet (HENRY), the digital natives and consumers in tier 2 towns who are seeking quality, distinction and identity in what they buy. They are trading up in beauty products and smartphones and choosing feature rich and aesthetically appealing appliances. Wider delivery networks, credit solutions and financing have also democratized access to premium brands.
“The marketing playbook says premiumization isn’t just for niche brands. It is a growth imperative for all brands serious about relevance,” Ranganathan said. It is critical as it helps expand margins. “Premium SKUs (Stock Keeping Units) deliver higher yields. Not just that. They ensure long term brand and business value. Premium lines build loyalty and are unlikely to suffer during a downturn,” Ranganathan said.
In e-commerce, premiumization is working well for all the stakeholders. “Platforms want to look beyond discounted pricing and increase their Average Order Value. Brands want to increase engagement, draw in new consumers and build profitability. Consumers are seeking quality and elevated experiences,” Ranganathan said, making premiumization a key growth driver for brands in every category.
The mass market brands are evolving too. “They have a large consumer base and they ensure that a company’s P&L stays in good shape. But even the value-focused companies are exploring premiumization though tiered portfolios and line extensions,” Ranganathan said. Brands that identify the right consumer for the right market with the right product will win, he added.