November 26, 2022

The last four years have been excellent for consumer growth in India, but the next five to ten years will be even more interesting. In this phase, a series of insurgents (now referred to as “challenger brands”) will force larger incumbents to adapt.

rise and growth

The rise in consumer growth history is supported by millions of first time consumers in the country and led by the fourth industrial revolution. With increasing data penetration, a rise in per capita e-commerce spending, millennials willing to consume more and the rise of inclusive insurgent brands, the consumer landscape in India will continue to evolve.

A decade ago, insurgent brands weren’t on your weekly or monthly shopping list. But today, those same brands have been able to revolutionize industries traditionally dominated by their larger counterparts.

They’ve done this by capturing a disproportionate share of growth, delivering value by redefining cost benchmarks for their category, and in some cases disrupting the profit pool.

Established brands (a term derived from politics) are established players in their category. This includes both large multinationals and Indian corporations that have dominated the domestic consumer landscape for the past 30 years or more (e.g. Dabur, ITC, HUL, P&G, Coca Cola, Pepsi, etc.).

The aggressive pace of growth among the insurgent brands leads us to believe these are nothing less than Davids to the reigning Goliaths. Furthermore, it is the strategy of nichefication (detecting unserved gaps) of categories and delighting customers that helps these insurgents.

The Indian insurgent brands have two things in common. First, not only are they embedded in their DNA with millennial culture, but they are also driven by their consumption needs. They understand the needs, desires and problems of India’s emerging middle class.

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Second, they can stimulate consumer advocacy by delivering a competitive consumer proposition with eye-catching consumer-focused marketing campaigns that increase brand recognition. Their goal is to get consumers to relate to their brand while targeting a product category.

The growth of insurgent brands has been made possible by a variety of factors:

Confidence in make-to-order and the effective use of digital technology to micro-target consumers. The improved accessibility of venture capital.

These factors have helped break down the barriers to entry and opened up opportunities for young brands.

The continued rise of the insurgents will be based on five key growth drivers:

India’s emerging young middle class gives these brands a large, adventurous and adventurous consumer base. The growth of digital natives with increasing data consumption and the e-commerce revolution enable brands to expand without having to rely on large, expensive over-the-line marketing campaigns. The behavioral implications of living with a smartphone. The third digital revolution will mostly focus on rural India. The evolution of consumer attitudes as purchasing power parity and aspirations strike an equilibrium.

Redefining the way Indians consume

Although the rise of insurgent brands will redefine the way Indians consume, they could also be a catalyst in solving India’s unemployment problem. Insurgent venture-funded brands tend to attract an experienced talent pool to fight the incumbents.

Insurgent brands are also paving the way for growth, creating blue-collar jobs and laying the groundwork for the development of the gig economy as Indian brands redefine how they do business and achieve greatness.

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Sales, warehousing, packaging, customer relationship management, and support functions will employ a large portion of the workforce who have not had access to these jobs in the past.

That being said, the established brands are here to stay and create value for their shareholders. But they have to understand and accept changes in the consumer. Being open to digital media, focusing on e-commerce, breaking away from traditional marketing and embracing a localized taste is crucial.

Additionally, as insurgent brands emerge and engage consumers with the incumbent brands, the latter could use merger and acquisition (M&M&A) activity to gain a foothold in a segment where an insurgent might have carved out a niche.

The synergies between incumbents and insurgents could be huge, as leveraging a larger player’s sales and marketing expertise could greatly benefit the insurgents.

However, the crucial question remains: Will David Goliath be able to put up a tough fight in the coming decade? And will the incumbent brands be able to adapt to consumer tastes to retain the market share that the insurgent brands had destroyed?

The entry of Coca-Cola into Jal Jeera, Danone’s third visit to India with the investment in Epigamia and the relaunch of HUL’s Ayurvedic brand Ayush to counter Patanjali’s growth, and the acquisition of hair care brand Indulekha show us how insurgents and incumbents are working innovatively to increase their market share.

The next few years will be an extremely exciting time for the consumer goods sector in India. Entrepreneurs, investors, consumers, insurgents and established businesses must adapt and evolve rapidly to capitalize on the tremendous opportunities in rural and urban India.

This article first appeared in Hindustan Times.

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How insurgent brands are redefining India’s consumer growth story first appeared on e27.