Juice over tea – India's spending pattern is taking a premium drift

• Indians are spending more on ‘prosperity-driven categories’ like OTTs, gadgets, says a Redseer report.
  
• Spending towards personal care, education, food and clothing has a moderate growth in the last five years but has good long-term growth ahead.
  
• The areas that grew slowly and will continue to see slow growth are house expenses and the consumption of tea.
  

In the last five years, Indians have been gulping soft drinks, buying insurance products, spending on recreation with OTT subscriptions, audio and video gadgets; and are keeping pets at an accelerated pace.

The wanderlust bug has also truly bitten too as spending on travel has accelerated and this is expected to skyrocket further in the next five years, says a report by Redseer. All these spending in ‘prosperity-driven categories’ indicate growing affluence, says Mrigank Gutgutia, partner at Redseer Consulting.

“Indians are getting richer and their capacity and ability to buy such products is going up, thanks to rising disposable income. When the sales of these products start to happen at a size and scale, it indicates maturity of consumption patterns,” Gutgutia tells Business Insider India.

Basic spend towards personal care, education, food and clothing has a moderate growth in the last five years but has good long-term growth ahead. The ‘others’ category is the most interesting which has been slow and will continue to see slow growth — are house expenses and the consumption of tea, Redseer adds.

Going premium & digital

There are consumption themes arising across products and services, Redseer says — like premiumization in personal vehicles, electrification of two-wheelers and travellers preferring ‘organized’ players.

Added to that, digital entertainment, fashion going into tier-2 cities —- are all indications of how patterns of consumption are changing, says Redseer.

In the short term however, macroeconomic conditions have been bleak that has affected the personal consumption of Indians which has dipped to $2.2 trillion in FY23. However it’s on its way up and expected to touch over $2.4 trillion in FY24.

Product-oriented consumer internet sectors have faced recent growth headwinds, but they are likely to revive steadily, the report says.

“Indicators across emerging sectors, such as credit card spends, air travel, and sales of vehicles, show signs of recovery in Q1 FY24,” says Redseer. Most services except travel can see normalized growth expectations ahead.

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