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Companies in categories which largely address top income consumption like jewellery (Titan), travel (Makemytrip, Indian Hotels), premium retail (Phoenix Mills), premium online beauty (Nykaa) and premium healthcare (Apollo Hospitals) have seen strong growth, according to the report(Pic: istock/ET Now News)
A Goldman Sachs report titled the ‘The Rise of Affluent India’ – defines affluence as income of over $10,000 per annum, Rs 8.3 lakh in current exchange rates. The analysts predict that while this class is nearly 60 million strong in India at present it will grow by a huge 67 per cent to 100 million by 2027.
The report by Goldman Sachs stated that in the past three years India has seen a large divergence in growth rates of consumer companies and categories in India. Here are some key trends:
Faster growth in premium brands
The report said that in most industries, companies which address relatively more affluent consumers have been growing faster than companies which address broad based consumption by making affordable products. Sectors that are witnessing this trend include FMCG (Nestle India growing faster than Hindustan Unilever), footwear (Metro growing faster than Bata), fashion (Trent growing faster than V-Mart), passenger vehicles (SUVs growing faster than entry level cars) and 2-wheelers (Eicher growing faster than the industry).
Faster growth in premium products
If a company makes both mass based and premium category products,the premium portfolio is witnessing relatively faster growth. HUL’s premium portfolio has grown twice compared to the company’s overall revenue growth, the report said.
Exclusively premium
Companies in categories which largely address top income consumption like jewellery (Titan), travel (Makemytrip, Indian Hotels), premium retail (Phoenix Mills), premium online beauty (Nykaa) and premium healthcare (Apollo Hospitals) have seen strong growth, according to the report.
Doubling of credit card spending
Credit cards tend to be largely used by upper income consumers. There are slightly more than 90 million credit cards in India (having grown from slightly below 50mn in FY19). Many consumers have more than one credit card. Thus, most credit cards are likely to be owned by our definition of ‘Affluent India’, which compares to ~60 million consumers. The total spend on credit cards has increased 2.5x if we take the trailing 12 months vs FY19.
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Source: etnownews.com
