E-commerce led by quick-commerce has emerged as the fastest growth channel for FMCG companies in Q2FY25. Companies such as Parle Products, Nestle India, Adani Wilmar and Tata Consumer Products said they have been witnessing robust growth on the e-commerce channel. At the same time, digital platforms are fuelling premiumisation trends in the country and premium brands in the FMCG sector are consistently growing nearly twice as fast as their non-premium counterparts, as per latest estimates released by NielsenIQ.

Krishnarao Buddha, Senior Category Head, Parle Products, told businessline, “ In Q2 FY25, the FMCG industry witnessed strong double-digit growth on the online channel which is primarily being driven by quick commerce platforms albeit on a small base. General trade channel has witnessed subdued growth and even modern trade is witnessing some bit of slowdown. This is because the dependability of consumers on quick commerce in the top cities is rising. For us, the online channel contributes about 4-5 per cent, of which nearly 1.5-2 per cent is now comes from quick commerce platforms.”

In its Q2 FY25 investor presentation, Adani Wilmar said in Q2 revenue from “alternate” channels increased at a strong double-digit y-o-y, with revenue over the past 12 months exceeding ₹3,000 crore. “The e-commerce channel including quick commerce has seen even more rapid growth, with its revenue increasing by around four times in the last four years,” it added.

Earlier this week, Suresh Narayanan, Chairman & Managing Director, Nestle India, stated, “There is a bit of channnel shift that one is seeing in metros and mega cities towards quick-commerce. In Q2 FY25, e-commerce channel grew by 38 per cent (which was the highest in the last seven quarters) for us.. E-commerce channel’s share was at 8.3 per cent of domestic sales, of which nearly 50 per cent contribution came from quick-commerce channels.”

In an earnings call, Tata Consumer Products Ltd management also noted, “The softness in the last quarter was primarily in general trade. Modern trade continued to deliver at 17 per cent growth. E-commerce was 50 per cent growth. And in e-commerce, we saw quick commerce come in very, very strongly.”

Premium brands

Meanwhile, a report released by NielsenIQ noted premium brands in FMCG are consistently growing 2x as fast as their non-premium counterparts. Nearly 50 per cent of e-commerce sales stem from the premium segment, it added. Value contribution to FMCG sales of premium+ products was pegged at about 27 per cent (MAT April ‘24) but this segment’s contribution to total value growth of FMCG was higher at 42 per cent. Similar trends were also observed in the consumer durables space.

“We are observing an increasing convergence of aspirational consumer preferences with higher disposable incomes, as well as the presence and access to premium products. This shift is driven by digital platforms, contributing to nearly half of the sales. Market mix, channel diversity, and new entrants will further drive the adoption of premiumisation in the future,” said Roosevelt Dsouza, Commercial Head – India, NielsenIQ. 

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