The urban middle class, the backbone of consumer goods market growth, has now become its smallest cohort, according to Kantar’s India at Crossroads report released on Thursday. The report looks at the future of marketing in India in 2025.
“Effectively, the recovery post-Covid is K-shaped, squeezing the middle class,” Soumya Mohanty, managing director and chief client officer, Kantar South Asia, said. “In 2024, people felt poorer across the board. This is leading to stagnating consumer confidence,” she said.
Worse, the report says, demand is likely to remain subdued next year too, as high inflation hurts real incomes.
After the Covid pandemic, economic shifts and stagnating real incomes have put significant pressure on urban consumption, causing it to slow more sharply compared to rural areas, the report says. It highlights that while urban consumer confidence has waned, rural regions are witnessing a surge in spending — particularly in small indulgences like soft drinks and convenience products — driven by favourable monsoons, diversified income sources, and increased digital adoption.
According to Kantar’s Rural Barometer 2024, digital payments have grown from 38% in December 2022 to 43% in July 2024, e-commerce delivery from 14% to 23% and gaming platforms from 4% to 12%.
The Kantar report outlines key socio-economic and consumer trends that will shape marketing strategies in India by 2025.
“The future of marketing lies in embracing complexity and making strategic trade-offs. Creating unique data and insights will be critical for gaining a competitive edge,” says Mohanty.
According to Kantar’s Rural Barometer 2024, digital payment usage has risen from 38% in December 2022 to 43% by July 2024, with e-commerce delivery and gaming platform adoption also showing substantial growth (from 14% to 23% and 4% to 12%, respectively).
That apart, there is a move towards premiumisation driven by smaller families, evolving gender roles, and a growing Gen Z demographic. Brands perceived as “different” hold a competitive edge, and the report encourages marketers to redefine the entry points of aspirational consumption.
The report cautions against generalising the Gen Z demographic, and says doing so fails to capture their complex identities and motivations. Marketers must craft tailored strategies that resonate with their nuanced preferences, it adds.
Kantar also advised brands to focus on cultural and identity-based storytelling, dynamic media planning, and avoiding demographic oversimplifications. Integrating influencer marketing with traditional campaigns and leveraging digital platforms can help brands connect with diverse consumer segments, it says.