Rural India, once seen as a market for low-cost staples and sachets, is now emerging as a powerful growth engine for premium fast-moving consumer goods (FMCG). Consumers in smaller towns and villages are showing a clear appetite for quality and lifestyle-led products ranging from healthy snacks and nutrition supplements to natural personal care.
According to Worldpanel India, rural households now contribute more than 40 percent of premium FMCG volumes, up from 30 percent five years ago. The report notes: "Over the last five years, Rural’s volume contribution to Premium has grown significantly, indicating consumers are becoming far more aspirational."
Spending on affordable premium brands in villages has risen at an average of 11 percent annually over the past five years, outpacing urban growth. Even in super-premium categories, rural demand has been stronger at 7 percent compared with 4 percent in cities.
Categories such as biscuits, detergent bars, edible oils, toothpaste and basmati rice are seeing the sharpest rural-led premiumisation.
"Recent figures show that rural India now accounts for 51% of affordable premium FMCG volumes. This is up from 45 percent in 2021 and contributes over 42 percent of super-premium FMCG, up from 30 percent five years ago. Moreover, rural FMCG volume growth has outpaced urban for six consecutive quarters, clocking around 8.4 percent versus 4.6 percent. This reflects rising rural purchasing power and aspiration beyond just essentials," said an analyst at a domestic brokerage firm.
The momentum is evident across the sector. Reliance Retail’s Isha Ambani said in the company's 48th Annual General Meeting: "For the first time in India's history, rural markets, consisting of 900 million consumers, are driving 65 percent of the FMCG growth. They are adopting global-quality branded products faster than urban markets, with penetration growing at 35 percent annually."
Brands step up rural push
Companies are adjusting their strategies to ride this wave. ITC reported strong gains from its digital-first and organic portfolio, which includes Yoga Bar, Mother Sparsh, Prasuma and Meatigo. Together, these brands have crossed an annual revenue run rate of about Rs 1,000 crore. The company added that staples, biscuits, dairy, premium personal wash and home care were also key contributors, supported by its wide multi-channel distribution network with "channel-specific assortments" designed to improve rural reach.
Hindustan Unilever (HUL) is also seeing demand accelerate outside cities. Its health-focused brand OZiva has scaled sharply, with the company highlighting that rural demand continues to grow faster than urban, aided by sachet penetration and expanding wellbeing portfolios.
Tata Consumer Products has doubled its rural reach to 300,000 outlets. Its Sampann brand, which covers pulses, dry fruits and cold-pressed oils, grew 27 percent in the first quarter of FY26. CEO Sunil D’Souza said, "Sampann obviously continued its strong momentum. We've always said it will be close to 30 percent. It came in at 27 percent in quarter 1." He added that omnichannel sales, including e-commerce and quick commerce, rose 61 percent, while modern trade grew 21 percent.
The next leg of growth
The Worldpanel India study shows that rural contribution to premium FMCG is not only rising but also growing faster than urban in some segments. In 2021, rural households made up just 30 percent of premium volumes, by 2025 this had risen to 42 percent. For affordable premium products, rural share has already crossed 50 percent, overtaking urban markets.
"The number of towns with sizeable (40 percent) affluent population is likely grow from ten to >100 by 2030. This means a very significant demand of premium business is coming from small towns. FMCG companies need to have an e2e plan for capturing the affluent and premiumization opportunity - across portfolio and GTM," Namit Puri, Managing Director & Senior Partner, BCG said.
This shift suggests that while metros remain important, the next leg of growth for health-focused and quality-driven FMCG brands is increasingly being written in India’s villages.
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