Can India’s FMCG Giants Capitalise on Gen-Z Riot in the Global Consumer Economy?

Ask any middle-class Indian and they will agree on one thing. The grocery bag that came home in the first week of every month always had the same stuff: be it a certain brand of toothpaste or cooking oil. It perhaps wasn’t so much loyalty to a product, as it was a utilitarian view of consumption. If something worked, it didn’t need fixing.

Gen Z, however, is flipping the script. They don’t want to remain affixed to Colgate or Parle G all their lives. For them, daily consumption is all about trying out different experiences, signalling aspirations and expressing their individuality.

This has consequences for the consumer economy. As 377mn Gen Zs already command over 43% of India’s consumption spends, it means that fast-moving consumer goods (FMCG) giants of yore can’t rest easy.

Many ‘insurgent’ brands are knocking at their doors. These D2C upstarts have fresh and quirky takes on everything from millets and makhana to soaps and shaving gels. These brands are quick to innovate and go to market through quick commerce and social-media platforms, and often find deep-pocketed backers in the venture-capital ecosystem. When a Virat Kohli or a Ranveer Singh comes on board to exchange their celebrity appeal for equity, it becomes a coup d'état.

FMCG majors like Hindustan Unilever, ITC and Marico have understood that it is not enough to incubate new products in-house to take on these sprightly challengers. So, they are writing large cheques to acquire upcoming brands—with the intent of scaling them through their entrenched distribution networks. However, the truth remains that there’s never enough money to throw at problems. The age of disruption won’t be wished away easily.

The Tatas, one of India’s pre-eminent conglomerates, caught on to the coming chaos in the consumer economy at the turn of the decade. And decided that the time was ripe to throw their hat in the ring and revive its FMCG aspirations.

Our cover story this month talks about how the Tatas have moved with an uncharacteristic nimbleness to create one of the country’s fastest-growing consumer majors in quick time.

While a host of legacy conglomerates and start-ups battle it out to capture the imagination of India’s youth, they must also recognise the global opportunity that has arisen. Gen Zs are estimated to account for about $13trn of consumption globally by 2030. It is the most connected generation humanity has ever seen in its shared cultural mores. While capital is busy chasing frontier tech like artificial intelligence and chips in the US and China, can India double down on creating global consumer brands?

For one, this area doesn’t demand deep-tech inn-ovation and India's relatively lower cost of labour can be a big advantage. More importantly, the unfolding disruption in our home market means that anyone who wins locally will develop abilities that are way ahead of many global peers in terms of innovation and cost structures. After all, this is the same reason China is pulling ahead of rivals in high-tech manufacturing.

It’s critical that Indian conglomerates, emerging D2C brands, investors and policymakers take this sliver of opportunity seriously. We can’t put all our eggs in the basket of creating the next Google or Nvidia. It might just be faster and easier to hatch the next P&G or Reckitt in our backyard.