NEW DELHI: The fast-moving consumer goods (FMCG) sector is witnessing a notable consumer shift towards newer and regional brands, as buyers increasingly seek value and favour localised offerings, said Honasa Consumer Chairman, CEO, and Co-founder Varun Alagh.
According to Alagh, regional brands are providing stiff competition to large, established players through aggressive pricing strategies and better margins for distributors, factors that are impacting the growth trajectory of traditional FMCG giants.
“Overall, there is a consumer shift happening towards newer and regional brands, as large FMCG companies are not growing as strongly,” Alagh told PTI.
He added that these emerging brands are younger, agile, and more aligned with consumer needs, particularly through vernacular and locally tailored strategies.
Following the June quarter results, several large FMCG firms including Britannia, Dabur, Marico, and Hindustan Unilever (HUL) acknowledged the growing competitive pressure from smaller regional players, especially within certain key product categories.
On the overall industry performance in the June quarter, Alagh described it as “subdued,” with limited volume gains. However, Honasa Consumer, which owns brands like Mamaearth and The Derma Co., bucked the trend.
“In our case, volume growth is ahead of value growth. It’s actually in double digits. So, all of our growth is driven by more consumers buying our products—a much healthier sign,” he said.
Looking ahead, Alagh remains optimistic about Honasa’s performance for the remainder of the financial year.
“We believe that the next three quarters will be better than the first quarter, and we should remain in the double-digit zone for volume growth,” he added.
Industry leaders from other major FMCG players have echoed concerns over increased competition from regional players.
Britannia Industries Vice Chairman and MD Varun Berry, during the company’s earnings call, acknowledged these challenges and said the firm has a “war chest” ready to “fight many battles in smaller territories.” The company is reportedly conducting targeted analyses of these local competitors.
HUL also flagged similar competitive pressure, particularly in its detergent bar segment, which is “well spread out with multiple players—global, local and regional,” said CFO Ritesh Tiwari.
Dabur too faced disruption in its iconic ‘Lal Tail’ baby oil business in regions like Uttar Pradesh and Bihar, where a local entrant eroded market share. “We will correct that situation... it’s a very localised problem, which has been identified,” said Dabur CEO Mohit Malhotra.
Marico reported challenges in its coconut oil brand Parachute and its value-added hair oils segment due to what it described as "unreasonable competition." However, MD & CEO Saugata Gupta remains optimistic: “As consumer pricing normalises, we expect Parachute to recover meaningfully in volume growth.”
Echoing broader sentiment, former Nestlé India Chairman and MD Suresh Narayanan had recently said that the rise of startups and regional players is ultimately beneficial. “They not only provide variety to consumers but also push established players to improve their product offerings,” he said.