Premiumization: Indian Consumers Move Upmarket

Despite its historical image as a price-sensitive market, India is undergoing significant premiumization. Consumers are increasingly willing to pay for quality, convenience, and brand cachet. In 2024, even as economic growth moderated, a paradox emerged: demand for high-end goods surged while mass-market segments plateaued. Many Indians, especially in urban areas, “traded up” to premium options in categories from electronics to personal care. Fast-moving consumer goods (FMCG) companies report that premium product lines are driving growth, even amid inflation. According to the latest GDP data, growth in private final consumption expenditure fell to 6% in Q3 2024 (from 7.4% in the previous quarter), yet appetite for expensive, high-quality products remained undeterred.

This trend was so pronounced that global luxury brands have zeroed in on India as the next big market, partly as China’s luxury demand softened. Brands like Louis Vuitton, Gucci, Panerai, and Bulgari are expanding their India presence and using online channels to penetrate beyond metros. Notably, 55% of Tata CLiQ Luxury’s revenue now comes from smaller towns – evidence that affluent consumers in Tier-II/III markets are buying luxury goods when access is provided. During the 2024 festive season, platforms reported brisk sales of high-end items like iPhones, gold coins, and designer handbags even in non-metro towns.

Convenience and Quick-Commerce are Accelerating Trade-Up Behavior

Several factors explain this premiumization wave. Rising disposable incomes and exposure to global trends via the internet have cultivated new aspirations. According to McKinsey, Indian consumers lead the Asia-Pacific region in discretionary spending sentiment – surveys in 2025 show India ranking highest in intent to “splurge” on categories like dining out, travel, electronics, and jewelry.

Convenience is also a catalyst: the rise of quick delivery apps and D2C brands means premium products are just a click away, often delivered within hours. This has habituated consumers to paying a premium for better service and quality. For example, food and grocery delivery platforms have made upscale groceries and gourmet products more accessible, even helping niche premium FMCG brands gain traction.

Quick-commerce is now central to this consumption shift. According to the Economic Times, platforms like Blinkit, Zepto, and Swiggy Instamart are not just fulfilling urgent grocery needs. They are now delivery vehicles for iPhones, artisanal snacks, and even gold coins during festive periods. This has redefined what convenience means, especially for younger, affluent consumers in urban and rising rural markets. In fact, retail analysts now consider instant delivery to be a driver of premium sales rather than just a utility. This behavioral shift, from need-based consumption to convenience-driven indulgence, is helping premium brands scale faster than ever before.

From an investment perspective, premiumization signifies expanding profit pools. Companies that cater to the upper end, be it premium personal care (e.g. toxin-free beauty products) or luxury retail (Tata CLiQ Luxury, Reliance’s luxe store formats), are seeing faster growth.

Venture Capital is Betting Big on Aspiration

Bain’s India Venture Capital Report 2025 noted that consumer tech was the top-funded sector in India last year, with funding rising 2.3x from 2023 to $5.4 billion. Overall, India’s total VC funding reached $13.7 billion in 2024, up 40% from 2023, driven in large part by shifting consumer sentiment and rising demand for aspirational brands.

The same Bain report highlighted that the top 10 most funded companies in 2024 accounted for ~25% of total VC investments in India, with 9 out of 10 focused on consumer businesses. This underscores the centrality of consumer-facing companies in driving the next phase of venture capital momentum.

Building on this, Bain notes that consumer demand shifts, particularly the rise of premiumization, have become a defining investment thesis in the consumer and retail sectors. In practice, this has meant backing brands that offer higher-quality or aspirational products tailored to India’s growing base of millennials and Gen Z consumers. Private equity funds, too, are leaning into this trend, carving out positions in premium segments such as high-end apparel, organic foods, and craft beverages, betting that today’s niche preferences will evolve into tomorrow’s mass-market habits as affluence deepens.

Rural Consumers are Not Far Behind

Meanwhile, the rural consumer is also showing signs of premium behavior. While traditionally seen as a value-driven cohort, data shows that the rural share of electronics and automobile sales has grown meaningfully over the past five years.

Interestingly, this rural appetite intersects with digital access. As online platforms and financial services reach deeper into Bharat, consumers are leapfrogging into premium segments. Whether it’s a curated luxury experience via a D2C brand or access to aspirational fashion through fast shipping, technology is flattening the premium access gap between metros and smaller towns.

Omnichannel Habits Are Reinforcing Premium Discovery

A vast majority of Indian consumers are now shopping both online and offline, a trend that continues to gain momentum. This omnichannel behavior is accelerating premiumization by making it easier for consumers to discover, evaluate, and access higher-end products. With seamless digital experiences, consumers are no longer limited to local retail. They can explore premium offerings across geographies, compare features and pricing in real time, and receive curated delivery at home. As a result, experimentation is rising across categories, from skincare to electronics.

At the same time, brand loyalty is softening. Consumers are increasingly willing to switch, especially when a premium brand promises better design, quality, health benefits, or a more personalized experience. For aspiring middle-class buyers and affluent millennials alike, omnichannel platforms are enablers of aspiration.

Premium is Gaining Traction in India

In this context, premiumization isn’t just about luxury labels or indulgent buys. It reflects a deeper shift in what Indian consumers value. Whether it’s toxin-free skincare, artisanal food, boutique fitness, or personalized home décor, more people are choosing to spend on “better” instead of just “more.” It’s a sign of evolving taste, rising confidence, and easier access. As incomes grow, global influences deepen, and digital platforms remove barriers, aspiration is turning into action. Slowly but surely, premium is becoming part of the everyday Indian consumer story.

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