Chips or chocolates, India's brands want you to pay more for a fitter you

A packet of chips fortified with millets, a protein-rich chocolate bar, or a skincare product promising science-backed benefits, India's FMCG companies are increasingly betting that consumers will pay more for products positioned as healthier, smarter and better suited to modern lifestyles.

In the process, the companies are rethinking a growth model that, for decades, ran almost entirely on volume. The goal is to nudge consumers toward higher-value purchases.

The strategy is rooted in a simple proposition: convince consumers that a familiar product now offers something extra, whether through ingredients, nutrition or perceived health benefits and position with a premium tag. "The producer claims that the superior product has better ingredients and some amount of nutritional value making it a healthier and more nutritious product. Naturally such a product will be at a premium pricing," said Arun Kejriwal, Founder at Kejriwal Research.


However, all premium products are not necessarily healthier prouducts.

The premiumisation trend is showing up in market data as well. According to NielsenIQ, premium-plus FMCG categories (Relative Price Index —(The Relative Price Index (RPI) tracks the price of a specific good, service, or retail basket compared to a reference benchmark) — above 120) grew 9.9% year-on-year in the 12 months ended March 2026, slightly ahead of overall FMCG growth of 9.2%. Within that, the luxury segment (RPI above 200) expanded 13.6%, making it the fastest-growing tier in the market.

The data also suggest that premiumisation remains structural rather than explosive. While premium categories are growing broadly in line with the FMCG market, the sharpest acceleration is concentrated in luxury and niche premium innovations rather than across the entire premium stack. The challenge for companies now isn't dreaming up something new, but making what already exists feel like an upgrade.

Why companies are upgrading existing brands

For most FMCG companies, stretching an existing brand into premium territory is the safer bet compared to launching something brand new. Established brands already have consumer trust, distribution networks and recall.

"Because trial is genuinely risky, and FMCG's own track record proves it. Many new FMCG product launches fail in their first year, and never even reach 10,000 unit sales. Faced with those odds, paying more for a familiar brand's 'matic' or 'liquid' variant is the rational move," said Ronak Shah, Lead Analyst – FMCG, Equirus Securities.

According to Shah, consumers are often more willing to upgrade within a brand they already know than experiment with an unfamiliar name.

"The brand-extension literature backs this trust-arbitrage explicitly: in a UK study, line extensions cleared a 2% share/£1 million sales success bar 15% of the time, versus just 6% for entirely new brands. So when a consumer upgrades within Surf Excel or Dove rather than switching to an unknown name, they're outsourcing risk-assessment to a brand they've already trusted for years," he said.

The same principle holds true for companies. Building on an existing brand allows firms to leverage established equity while avoiding the high costs and uncertainty associated with creating a new brand from scratch.

"From a capital efficiency standpoint, leveraging existing brands is cheaper, faster, and significantly less risky than building a new one from scratch," said Anuj Sethi, Senior Director, Crisil Ratings.

Also, premium variants deliver higher gross margins due to better pricing, while incremental marketing spends remain lower relative to new brand builds. As a result, companies are prioritising premiumisation within their portfolio, added Sethi.

From mass consumption to premium portfolios

The shift in consumer preferences is also reshaping company strategies.

Marico, which owns brands such as Parachute and Livon, said in its Q3 FY26 earnings update that its premium personal-care portfolio, spanning premium hair nourishment, male grooming and skincare, was on track to exit FY26 with an annual recurring revenue (ARR) of over Rs 350 crore. Its digital-first portfolio was expected to cross Rs 1,000 crore ARR, highlighting the company’s push towards higher-value segments.

Reuters reported that Hindustan Unilever Ltd. plans to put up to Rs 20 billion into expanding manufacturing capacity for its fastest-growing premium categories over the next two years, a sign of where the industry is betting its money.

Premium products are also accounting for a larger share of industry sales. According to NielsenIQ, premium-plus offerings now contribute about 25-26% of total FMCG sales value. The luxury segment's share has risen from about 6.6% in the year ended March 2024 to around 7.1% in the year ended March 2026, while the mass segment's share has edged lower. The data points to a gradual but sustained shift in spending towards higher-value products.

Overall snacking volumes fell 0.2% in the year ending March 2026, while luxury-snack volumes grew 7.3%. The contrast suggests that consumers are increasingly opting for premium products, helping companies drive growth through higher-value purchases even as overall demand remains subdued.

Why are consumers willing to pay more?

There's no single reason consumers are willing to pay more for everyday products. Better ingredients, added nutrition, cleaner labels, convenience and brand trust are all influencing purchase decisions, prompting FMCG companies to reposition familiar products as premium offerings.

For many consumers, the premium proposition increasingly centres on health and nutrition. "The two important elements that consumers look for in a premium FMCG product is health and nutrition. So if a product claims to have a healthier version and having more nutritious value, people would pay the differentiate pricing. Target audience is children and GenZ," said Kejriwal.

“Premium today isn't one lever (ingredients, or nutrition, or branding) it's the multiplier effect when several fire together,” said Ronak Shah, Lead Analyst – FMCG, Equirus Securities.

The trend is particularly evident in snacking categories. According to NielsenIQ, while biscuits, salty snacks and chocolates collectively grew 5% in the year ended March 2026, luxury snacks grew 11.4%. Chocolates recorded premium-led growth of around 10.3%, while premium salty snacks grew about 5.6%, reflecting rising demand for gourmet flavours and indulgence-oriented products.

Kejriwal said premium positioning typically combines multiple elements, ranging from superior ingredients and nutritional claims to packaging and branding. Ingredients such as nuts, seeds and fortified nutrients can help create a premium perception, while consumers are often willing to pay a 25-30% premium over standard variants.

Premiumisation moves beyond metros

Premiumisation is no longer confined to affluent urban consumers. According to NielsenIQ, premiumisation growth in rural markets is 13.6%, compared to 4.9% in metros, and even higher in smaller towns, indicating that adoption is accelerating beyond affluent urban centres. This is supported by distribution and pack innovations (e.g., smaller “affordable premium” packs) enabling access in lower-income markets.

At the same time, experts caution that health-led premiumisation is often driven as much by perception as by measurable nutritional benefits.

“You have to package it as a healthier food. In reality, whether it is or not, only God knows,” Kejriwal said, highlighting the role marketing plays in shaping consumer choices.

The challenge of keeping premiumisation aspirational

While consumers are upgrading, companies must maintain a balance between aspiration and affordability. A higher price tag on its own is not enough, brands need to give consumers an actual reason to pay more.

Pricing, however, cannot run too far ahead of perceived value. "Pricing of conventional and premium products will depend on market competition and also actual ingredients that the product is talking about. It is therefore fair to assume that while the product is premium it is not a super premium product and still consumed in the FMCG sector," said Kejriwal.

As a result, the premiumisation sweet spot for many categories may be relatively modest. "It would be therefore fair to assume that higher pricing of between 10-20% over the standard product would be normal," Kejriwal added.

As Ronak Shah noted, excessive premiumisation can affect market share if products become inaccessible. The next phase of FMCG growth in India will likely come down to getting that balance right between better value, and not losing mass appeal.

Premiumisation is no longer just a pricing strategy. It has become a way to differentiate products, improve margins and respond to a consumer who increasingly wants better choices, not just cheaper ones.