FMCG Segment Seeing 'Consumer Shift' towards Newer, Regional Brands: Honasa CEO Varun Alagh

The FMCG segment is witnessing a significant 'consumer shift' towards newer and regional brands, as consumers are increasingly seeking value and opting for localized preferences, Honasa Consumer Chairman and CEO & Co-founder Varun Alagh has said.

Regional brands are giving tough competition to the large established players with their aggressive pricing and better margins for the distributors, impacting the growth of large brands in the industry.

"Overall, there is a consumer shift happening towards newer brands, regional brands... as large FMCG (companies) are not growing as strongly," Alagh told PTI.

The new FMCG brands are younger with new propositions and are working on strong vernacular strategies, he said.

After the latest June quarter results, large FMCG companies such as Britannia, Dabur, Marico, HUL, etc have acknowledged competition from small regional brands in their pockets of influence in some of their product categories.

When asked about the overall FMCG industry growth in the June quarter, Alagh said it has largely been "subdued" with no substantial volume gains.

"But at least still in our case, in fact, volume growth is ahead of value growth. So volume growth is actually double-digit in nature. So all of our growth is driven by more consumers buying our products, and hence volume growth, which is a healthier sign," said Alagh.

Moreover, Alagh also expects Honasa Consumer, which owns FMCG brands such as Mamaearth and The Derma Co., to have a double-digit volume growth in the remaining three quarters of FY'26.

"... We believe that the next three quarters will be better than what the first quarter has been, and we should be in the double-digit zone for the next three quarters," he said.

Recently, Britannia Industries has acknowledged competition from small players and its Vice Chairman & Managing Director Varun Berry in the latest earnings call, said that with a 'war chest' ready, it is ready to "fight many battles in smaller territories" against the regional players.

The leading food company, which owns household brands as MarieGold, Tiger, Nutrichoice, and Good Day, is doing a "specific analysis on each one of these competitors," said Berry.

The regional players are giving tough competition to the large established brands with their aggressive pricing and better margins for the distributors.

HUL also said it faces competition in the category as detergent bar, which is "well spread out with multiple players, global players, local players, regional players".

"So, it's a pretty spread out competition on the detergent bar," said HUL CFO Ritesh Tiwari in the June quarter earnings calls.

Similarly, a home-grown FMCG major also faced competition in segments such as its ‘Lal Tail’ business, which was impacted in UP and Bihar by a small player, which took away its market share.

"So, suddenly, a new player has come in, and we will correct that situation, which is a very localised problem, which has been identified, and we will correct it. So, there has been market share loss in our Lal Tail business, which we will correct going forward," said Dabur CEO Mohit Malhotra in the earnings call.

Marico also faced challenges with its coconut oil brand Parachute and unreasonable competition in value-added hair oils.

"As consumer pricing gradually normalises, we expect Parachute to chart meaningful recovery in volume growth given our competitive advantage under such conditions where the smaller players are out of the market," said its MD & CEO, Saugata Gupta.

Nestle India's former chairman and MD Suresh Narayanan had last month in an interview, told PTI that startups and regional brands are not only good for providing variety to consumers but also give established players the push to improve their product offerings.