Think about how shopping has changed in just the last few years. The basic purchases remain the same – families still buy toothpaste, cooking oil and vehicles. But the choices around these purchases are evolving. They may prefer a trusted brand, compare features online, pay digitally and expect delivery at the doorstep.
This is the new face of India’s consumption story. People are not only consuming more, they are also seeking better quality, healthier alternatives, more options and products and services that make life easier.
These changes are not limited to one product or sector. They can be seen across consumer goods, automobiles, retail, food services, healthcare, telecom and digital platforms. Together, they point to a broader shift in how India consumes and may create opportunities across several parts of the economy.
The Bajaj Finserv Consumption Fund seeks to identify businesses that may benefit from these long-term changes in consumer behaviour. Its megatrends strategy looks beyond what people are buying right now and focuses on bigger, long-term changes in income, lifestyle, technology and access that can shape how people spend, what they choose and how they shop in the years ahead.
Consuming more: From occasional use to regular demand
Consuming more does not always mean adding something new to the shopping list. Often, it simply means buying familiar products more often, using them more regularly or moving from loose and unbranded options to trusted brands.
This shift is being supported by rising household incomes, a growing middle class, and stronger demand from rural areas. As families have more money to spend, products that were once bought occasionally can slowly become part of everyday life.
Toothpaste is a simple example. CLSA data shows that per-capita toothpaste usage is lower in rural areas than in urban centres. This suggests that growth may come not only from reaching new users, but also from encouraging more frequent use among existing consumers.
Together, higher incomes, wider product availability and growing rural demand may support consumption across personal care, packaged goods and other everyday categories.
Sources: CLSA; PRICE projections based on ICE 360° Surveys; PHD Research Bureau; World Bank.
Read also: What are consumption funds and who should invest in them?
Consuming better: Quality matters
As purchasing power improves, price is no longer the only factor behind every purchase.
Increasingly, consumers are also looking at quality, design, durability, features and brand value, in a shift that is called premiumisation. In other words, consumers are not just buying more, they are also choosing better versions of what they already buy.
This can play out in everyday decisions as well as big purchases. Someone may choose a better-quality skincare product, a branded appliance, clothing made with sustainable materials or a feature-rich car. For businesses, growth may therefore come not only from selling more units, but also from meeting these changing expectations.
Consuming well: From treatment to everyday wellbeing
Health is becoming a more active part of everyday consumption as consumers become more mindful about eating well, staying active and supporting their overall wellbeing.
This is showing up in the growing interest in nutritious foods, fitness, preventive care and products made for specific lifestyle needs. According to CLSA and Euromonitor data for 2024, sports nutrition recorded a 10-year CAGR of about 16%, while weight management and wellbeing grew by around 12%.
The Covid-19 pandemic has further encouraged this shift, with increasing awareness and emphasis on health and immunity. Digital health tools have made information and services easier to access. Consumers are also looking for more personalised options that match specific health needs, age groups, diets or lifestyles, such as fortified foods, immunity-supporting products and targeted nutrition.
Sources: CLSA and Euromonitor
Read also: The Healthier Plate: How Nutrition and Wellness Are Shaping India’s Next Consumption Megatrend
Consuming easier: From effort to ease
Buying everyday products has become faster and more convenient than before. A purchase that once meant visiting multiple stores can now be completed in a few taps. Whether it is ordering groceries, paying bills or booking a service, digital technology is making everyday consumption simpler.
With e-commerce, quick commerce, digital payments and easier access to credit, consumers can now look up products online, compare prices and features, pay instantly through UPI or mobile wallets, and have everyday items delivered within hours, sometimes even minutes.
According to IBEF and Redseer, urban consumers are increasingly valuing speed, fresh products and the freedom to make last-minute purchases as incomes rise and daily routines become busier.
These changes suggest that convenience is becoming an important part of the buying decision. As products and services become easier to discover, buy and receive, businesses that can meet these changing expectations may be well placed to benefit.
Sources: IBEF, Redseer
Read also: Time: The New Currency – Why Convenience Is Driving the Next Wave of Consumption
What’s behind the change?
India’s consumption story is changing because everyday life is changing. People have more choices, better access and, in many cases, more money to spend. Here are some of the megatrends driving this evolution:
- Rising incomes: India’s per capita income is projected to rise from about $2,615 in 2023 to nearly $21,400 by 2047. As incomes rise, families can spend on more than just the basics – better products, added comfort and convenience can gradually become part of everyday life.
- A growing middle class: India’s middle class could make up around 40% of the population by 2030. As more families move into higher income groups, spending on travel, vehicles, appliances, personal care and other lifestyle needs can rise.
- A shift towards premium products: Consumers are no longer looking only for the cheapest option. Many are willing to pay more for better quality, useful features or a better overall experience. Premium products are projected to grow at a 10%–12% CAGR.
- Wider use of everyday products: Packaged foods, beverages and personal care products are reaching more households. These categories are projected to reach around 85% penetration by 2030, which means they could become part of daily life for a much larger share of consumers.
- A stronger focus on wellness: People are paying more attention to what they eat, how they stay fit and how they can take better care of their health. The health and wellness market is projected to grow at a 15%–20% CAGR.
- A faster digital shift: Shopping is becoming quicker and easier. Quick commerce’s share of online grocery purchases is projected to rise from 10% to 45%, driven by urban consumers who increasingly value speed and convenience.
Sources: PHD Research Bureau; projections for 2023, 2040 and 2047 by PHDCCI; BCG; NITI Aayog; Euromonitor; McKinsey; Nielsen; CRISIL; FICCI; Deloitte and IBEF.
Read also: How Rising Household Incomes Are Powering India’s Consumption Wave
How Bajaj Finserv Consumption Fund approaches this opportunity
Bajaj Finserv Consumption Fund, an equity, thematic fund that invests in sectors linked to consumption, uses a megatrends-based approach to identify businesses that may benefit from long-term changes in how people consume. Megatrends are long-term structural changes in society, the economy or technology that can shape how people live and spend. Such transformations can create long-lasting growth opportunities for businesses positioned to potentially benefit as consumer needs, spending patterns and industries evolve.
The fund is not restricted to traditional consumer-goods companies. It includes businesses across automobiles, retail, telecom, entertainment, healthcare, real estate and other areas. It can also invest across large cap, mid cap and small cap companies, depending on the opportunities identified by the fund manager.
The fund seeks to identify potential growth stories and businesses that may form part of future profit pools. However, a thematic fund also carries concentration risk because its performance depends more heavily on developments within a particular theme. Investors should consider their risk appetite, investment horizon and overall portfolio before making an investment decision.
To read more about the fund, see the Riskometer and other scheme-related information, and to invest, visit the Bajaj Finserv Consumption Fund scheme page.
Note: The data and information in this article are relevant as of the date of publication and may change subsequently. Please refer to the latest available information before making any financial or investment-related decision
FAQs
What is the consumption sector?
The consumption sector includes businesses that provide goods and services purchased by individuals and households. It covers areas such as FMCG, automobiles, retail, healthcare, consumer durables, financial services, travel and digital commerce.
What is a consumption fund?
A consumption fund is a thematic equity mutual fund that invests mainly in companies benefiting directly or indirectly from consumer spending. It may invest across several industries linked to changing incomes, lifestyles and purchasing habits.
What are consumption stocks?
Consumption stocks are shares of companies whose revenues are linked to consumer demand. These may include businesses operating in food, personal care, automobiles, retail, entertainment, healthcare, finance, travel and other consumer-facing industries.
Is it good to invest in a consumption fund?
A consumption fund may be suitable for investors seeking long-term exposure to India’s consumption theme. However, its focused portfolio may carry greater concentration and volatility risks than a diversified equity fund.
How does Bajaj Finserv Consumption Fund identify investment opportunities?
The fund studies long-term megatrends changing how Indians consume and seeks companies that may benefit from these shifts. It may also identify emerging or undervalued opportunities where the long-term potential is not fully reflected in valuations.
Which sectors does Bajaj Finserv Consumption Fund invest in?
The fund may invest across consumption-linked industries, including retail, consumer finance, e-commerce and other businesses benefiting directly or indirectly from domestic consumer demand. The portfolio and sector allocations may change over time.
Who may consider investing in Bajaj Finserv Consumption Fund?
The fund may suit investors seeking long-term wealth creation through equity exposure to India’s evolving consumption theme. Investors should have a suitable risk appetite and be prepared for market volatility and thematic concentration risk.
Please note that the reference to any industry/sector/stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.
