Rural India Embraces Brand Shopping While Urban Consumers Seek Beyond Labels

Urban and rural shoppers in India are experiencing a notable shift in their grocery preferences, with urban consumers increasingly opting for unbranded products and new-age brands. In contrast, rural shoppers are leaning towards established FMCG brands. This divergence highlights the evolving landscape of consumer behavior, influenced by factors such as inflation and the rise of online shopping. Recent data reveals that while unbranded goods are gaining traction in urban areas, traditional brands continue to dominate rural markets, showcasing a complex interplay between consumer choices and market dynamics.

Urban Shoppers Embrace Unbranded Products

Recent trends indicate that urban consumers in India are gravitating towards unbranded products, particularly in categories like flour, rice, spices, and edible oils. A report from Kantar revealed that unbranded goods achieved an impressive 8.4% volume growth in urban areas during the fiscal year 2025. This growth contrasts sharply with the 2.3% increase seen in rural regions. The shift towards unbranded items is partly attributed to high inflation, which has prompted urban shoppers to seek more affordable options. Interestingly, while unbranded products are often perceived as cheaper, some consumers choose them for their superior taste and quality, particularly in categories like coffee. According to Manoj Menon, director at Kantar Worldpanel, unbranded products now account for approximately 26% of FMCG volumes in urban India.

Rural Markets Favor Established Brands

In contrast to urban trends, rural India has shown consistent growth, outpacing urban markets for five consecutive quarters. Data from NielsenIQ indicates that rural consumers are increasingly favoring established FMCG brands like Nestle, Dabur, and Hindustan Unilever (HUL). These companies are expanding their distribution networks to capture a larger share of the rural market. Factors such as favorable monsoon seasons and government policies supporting rural incomes have contributed to this growth. While urban shoppers are cutting back on discretionary spending due to inflation, rural consumers are exhibiting a willingness to invest in premium products, even at higher price points. This trend underscores the resilience of rural markets and their distinct consumer behavior.

The Rise of Digital-First Brands

The emergence of digital-first brands is reshaping the FMCG landscape, particularly in urban areas. Traditional FMCG companies face the dual challenge of encouraging consumers to transition from unbranded to branded products while competing with agile new-age brands. Companies like Slurrp Farm, which focuses on millet-based products, have successfully tapped into niche markets that larger players have overlooked. The rise of online shopping has facilitated product discovery, allowing consumers to explore a wider range of options. As urban shoppers become more brand agnostic, traditional companies must adapt quickly to changing consumer preferences and innovate to remain relevant in a competitive market.

Strategic Responses from FMCG Companies

In response to these evolving consumer dynamics, FMCG companies are adopting tailored strategies for urban and rural markets. For instance, Britannia is launching digital-first products in urban areas to cater to premium consumers, while simultaneously expanding its distribution in rural regions. ITC is focusing on quick commerce in urban settings, while innovating product formats for rural consumers. Dabur is also adapting its offerings by introducing affordable, rural-specific packs. As rural consumers increasingly seek high-quality products backed by strong brand values, companies are recognizing the need to innovate and diversify their product lines to meet these demands. The ongoing competition between traditional brands and new-age players will likely shape the future of the FMCG sector in India.

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