As India’s FMCG landscape undergoes rapid transformation, quick commerce, premiumisation, private labels and health-focused consumption are reshaping how companies think about growth and consumer behaviour. At the same time, evolving geopolitical tensions and changing urban demand patterns are forcing companies to rethink supply chains and distribution strategies. In an interaction with BW Businessworld, Ajit Krishnakumar, COO and Executive Director, Tata Consumer Products, spoke about the rise of quick commerce, India’s premiumisation story, the threat of private labels, growing demand for healthier products, the impact of geopolitical disruptions and whether concerns around an urban consumption slowdown are overstated.
Is quick commerce becoming more important than traditional retail for FMCG brands?
Quick commerce has grown dramatically over the last three years. It didn’t exist three years ago. Today, it does. E-commerce and quick commerce together accounted for 19 per cent of our India business in FY26, growing 62 per cent over FY25. But I think the question has two pieces. One is that there is no uniform India. The “many Indias” point is very true. Not every channel will be suited to every part of India. So, for the conceivable future, you are going to have a situation where you have both traditional trade and quick commerce. Traditional trade meaning kiranas and quick commerce exist. They are not perfect substitutes. It will not work in both places.
From Tata Consumer’s perspective, we have built infrastructure to support both. We have added infrastructure to support quick commerce in the last couple of years, particularly given the growth. I think we are over-indexing quick commerce and it has certainly contributed to our growth. But we haven’t changed anything in terms of what we have built to support kiranas as well, the traditional trade. We have infrastructure servicing both and they are both going to remain important for some point of time. Traditional trade for us is roughly 60 per cent of the India consumer business. So, it is still very significant and will remain significant for quite some time.
Is premiumisation real in India, or are consumers still highly price-sensitive?
India is a very value-conscious economy, but consumers are also looking to premiumise. We’re seeing premiumisation becoming a larger and larger part of our portfolio, and that’s going to continue for some time. But if you look at premium products in isolation, the targeted market, as a proportion of the total market, is not that significant, depending on how you define premium and what the product is. So, you’re going to have to accommodate things across the chain. Even if you look at a base commodity product for us like salt, I think there are seven or eight varieties of salt. You’re going to have products at every point. You have Tata Salt, which is the base, you have the orange bag, which is the largest, and you have black salt, sendha, rock salt—you have products across the board.
From an FMCG perspective, the critical piece is you have to do both, and therefore you have to do all of these things. We have the same thing in water, for example. This is Himalayan, this is the top-end water, but we have four or five brands between this and I think our cheapest brand is Tata Copper Plus. So, you’re going to have to do it all. It’s not “I will only do premiumisation”—too small. “I will only do value-conscious”—that won’t work because the market is premiumising. Which makes it more and more interesting for us as FMCG companies.
Are private labels becoming a serious threat to FMCG companies?
If you look at the significant number of categories that we operate in today—tea, salt, Sampann, etc.—and go back 15–20 years, which isn’t that long ago, these were all highly commoditised markets. Private labels have existed for a really long time. The growth of this company, in both the case of salt and tea, led the movement from private label or loose into more branded products. So, I don’t see the dynamic as having really changed. You are still going to see conversion from unbranded and private to branded. We don’t see that changing dramatically. And remember, the market is very large. If you look at a category like pulses, for example, the target addressable market for pulses is around Rs 150,000 crore, of which only 1–2 per cent is branded. So, the space for brands and private label players to coexist is large. It’s a long runway before you are going to have direct conflicts.
I think my best example is Sampann, particularly when I’m talking about pulses and spices. You could argue that this is the sort of category most susceptible to private labels because of the nature of the product. In 2020, when this business was created—from carving out the Sampann and salt business from Tata Chemicals and creating Tata Consumer Products—In 2020, Tata Sampann was around Rs 292 crore.In the last quarter that we announced a week or two ago, FY26 revenue was around Rs 1,600 crore.—and profitable. I think the last quarter had 50-plus per cent volume and value growth. So, this is a market where you could say it is most susceptible to private labels, but this is the rate of growth we are seeing. Which goes to underscore the point that this is a large market and there is going to be space for multiple players. Brands are still going to matter, though it will vary by category. Depending on the defining characteristic of the category from a consumer perspective, the percentage of private label will vary quite a bit. But we don’t see a significant issue at this point in time from a private label perspective.
Is India moving towards healthier and less processed FMCG products?
I’ll go back to the point I made in the first question. I think it is very difficult to categorise India. We try all the time to create a limited number of cohorts to describe India, but the reality is that there are just so many different Indias. There is certainly a large and growing section where health is becoming more important. It is amplified by social media, awareness and what is happening globally, and that is becoming bigger and bigger. The number of conversations I have been in over the last few years involving the creation, improvement or making of products healthier is far greater than it was even five or six years ago when this company came into existence.
There is certainly a huge shift, but the one defining characteristic is that India will not compromise on taste. You can produce healthier, low-sodium, low-sugar or low-fat products, but the willingness to compromise on taste is very low. That is the red line more than anything else.Our innovation-to-sales ratio was 4.5 per cent in FY26, among the best in the industry, which is a healthy number for an FMCG company.About 55 per cent of our new product launches in FY26 were health and wellness focused, so it is clearly important.
How are geopolitical tensions, particularly the ongoing Middle East crisis, impacting FMCG supply chains and costs, and Tata Consumer in particular?
I think it is still quite early to figure out what the impact of the current Middle Eastern conflict is. It also depends on your total level of exposure to imported things. All of us are exposed in some way or the other to oil derivatives, whether in terms of fuel costs, trucking, logistics, manufacturing or packaging materials. For Tata Consumer, excluding that, the impact is not that significant because we do not import, for example, palm oil or other significant imported materials into India for India consumption, which is the bulk of our business.
So far, the impact has been primarily cost and not availability. Where there have been isolated areas with temporary shortages, we have been able to either procure what we need or find an acceptable substitute. In other words, it has really been a cost issue and not an availability issue or disruption. How long it lasts, what impact it has, and how high or low things go is difficult to forecast—you wake up every morning and check the news to understand the flavour of the day. But so far, there has been some cost impact, and our overall exposure has been tempered by the fact that outside of oil and oil derivative-related inputs, our exposure has been relatively limited. Shipping has seen some impact too, but it is not a significant cost item for us.
Have D2C brands changed the traditional FMCG business model permanently?
Unlike some other large markets, pure brand.com in India—where you go to a standalone website and buy directly—has not been that significant. The reason this question is being asked more and more is because of new insurgent brands and what the growing e-commerce and quick commerce channels mean for them.
Historically, even three or four years ago, if you look at how brands grew, institutional channels such as modern trade and e-commerce were not that large as a proportion of the total pie. Traditional trade overwhelmingly dominated and quick commerce did not exist in the way it does today. So, if you were a new insurgent brand, you usually started on a standalone basis and then moved to modern trade, big-box retail and e-commerce. But to grow beyond that, you needed significant infrastructure to service traditional trade and the kirana market, which is large, complex and expensive. What has changed is that quick commerce is now becoming a viable channel and taking a bigger share of the pie. It gives insurgent brands a platform to scale, but how much they will ultimately be able to leverage it remains an open question. For us, we will go wherever the consumer is, and quick commerce has helped us grow.
Is India’s urban consumption slowdown becoming a long-term concern for FMCG companies?
There has been a lot of discussion around urban slowdown, but I’m not sure that we agree with the premise of that question. If you isolate traditional urban markets, particularly kiranas, then yes, growth has been relatively muted. But if you look at urban consumption more broadly, there is clearly some level of channel substitution happening.
You should be accounting for quick commerce and other channels that service urban India. If you make that adjustment, urban consumption is still growing. It may not be as healthy as rural consumption, but it is still fairly decent. We have said this before as well—it is not growing as fast as rural India, but it is still growing. I think it is important, given how large quick commerce and similar channels have become within urban markets, to account for that shift. If you do, the idea of a generalised, large-scale urban slowdown does not hold as much water as is being made out today. |
