Why big food like Mondelēz and Unilever are obsessed with India
Unilever, Mondelēz International, PepsiCo and Nestlé have much in common. Their largest similarity now, however, is an eagle-eye focus on the vast growth potential in the Indian market.
And that’s not to say it’s a new market to the big players. On the contrary, they each hold various interests in India and reap vast rewards from them already. What is noticeable, however, is the growing importance of India in companies’ financial forecasts.
“India is the single biggest opportunity to Unilever in years, it’s always been a stronghold but it’s been a sharper focus recently with big growth,” Unilever’s CEO Hein Schumacher said in November. This came after he announced plans to ditch €1bn of food brands and focus on a portfolio of ‘power brands’ as part of its Growth Action Plan 2030.
It’s a similar story for Mondelēz International, which identified India as one of several key growth markers, including China, Brazil and Mexico.
So, what’s behind the vast financial opportunities spotted by these canny food and drink giants? Who is the consumer they’re targeting? And what brands and NPD will do well?
“India’s demographic and economic landscape is incredibly compelling for global food and beverage companies,” says India-based Sameer Jindal, MD for investment bank Houlihan Lokey’s Corporate Finance business.
“With a population of over 1.4bn and a rapidly growing middle class, the country offers one of the largest consumer markets in the world,” he adds.
As disposable incomes in the country rise and consumption patterns shift – impacted more and more by Western brands and cultures – experts predict demand for packaged food, beverages and processed products will increase at an “unprecedented pace”.
How are Western FMCG giants investing in India?
The country is becoming more urban and businesses can therefore almost predict arising consumer needs, based on successes in other economies. ‘Westernised food habits’ fit well with a cash rich and time poor consumer.
And while the big Western food brands are operating in India, overall they’re only scratching the surface – even as a collective. “It’s a huge market in terms of size and participants,” explains Jindal. “But it remains relatively untapped, relative to Western economies.”
This is particularly compelling for multinational food and beverage companies struggling with low volume and value growth, as well as stagnant home market populations. Added to this, India’s economy has become easier to trade in as digital transformation allows businesses to more smoothly tap into the rising uptake of e-commerce and online food deliveries.
How tech is boosting Western FMCG’s grip on India
The rapid rise of e-commerce and smartphone adoption has made international brands more accessible, even in smaller cities and rural areas, where untapped potential is significant. Coupled with changing lifestyles and increasing demand for convenience, India offers a unique and high-growth opportunity for global players looking to expand their reach.
Sameer Jindal, MD for Houlihan Lokey’s corporate finance business
If that wasn’t enough, India’s government is making the market even more attractive. “Favourable government policies, including efforts to ease foreign investment restrictions and encourage foreign direct investment in the retail and food sectors, further enhances the appeal of the Indian market,” says Jindal.
As a result, many businesses are not only exporting product, but they’re setting up more manufacturing facilities and pledging additional investment. This is driven by a focus on “affordability and localisation of product development”, says Jindal.
PepsiCo is a key name here. In April 2024, it announced an INR 1,266 cr ($150m) investment in a flavour manufacturing facility in Ujjain, in the state of Madhya Pradesh.
Danone, too, is pumping funds into its manufacturing facilities near Chandigarh, as well as launching a three-year programme to work with farmers in Punjab, with a view to equipping more than 5,000 dairy farmers there with sustainable methods and knowledge.
“In addition, Mondelēz and Nestlé have both announced significant investments into expanding their existing manufacturing across India,” adds Jindal.
Snacking in particular is a big – if not the biggest – opportunity in India and it’s about to become even mightier. The country is already at the forefront of the ‘snackification’ revolution, with 18% of adults replacing meals with snacks in 2024. The country’s bakery and snacks markets are two of the fastest-growing, driven by evolving consumer tastes, robust economic growth, and a deep cultural love for snacking.
Makers are also conforming well to market demands. India’s rich culinary heritage has shaped strong consumer preferences for products like namkeen (savoury snacks) and meetha (sweets). Brands such as Haldiram’s and Britannia have successfully leveraged these cultural ties to build loyal customer bases.
PepsiCo holds a 24% share of the western snacks market, but has recognised the immense potential of the ethnic snacks sector and is pursuing a stake in Haldiram Snacks, alongside a renewed collaboration with Tata Consumer Products.
There is rapid transformation in the biscuit and breakfast segments, too. Mondelez – a long-time advocate of the Indian market – has partnered with Lotus Bakeries to develop premium biscuits tailored to local tastes, while fast-rising local brands – dubbed ‘biscuit billionaires’ – are disrupting the market with innovative strategies.
The future of Western FMCGs in India is vast
There is also opportunity in the growing health and sustainability snack segments too. Like in other markets, Indian consumers increasingly favour snacks aligned with their wellness goals.
Meanwhile India’s bakery market, valued at over $10bn, is also showing strong growth, with a projected CAGR of 9.5% to 2034, far exceeding the global market’s 6.7%. Such opportunity has drawn international players like Grupo Bimbo, Paul, Krispy Kreme, and Dunkin’ Donuts to the market. They are meeting rising demand for artisanal breads and gourmet baked goods, increasingly popular in urban and semi-urban markets.
Brands such as these can pump hefty resources into the market due to the vast pool of consumers available to them. “Indian consumers are incredibly attractive to global food and beverage companies due to their large, youthful population, rising disposable incomes and evolving preferences,” Jindal explains.
There is an increasingly growing cohort of younger shoppers open to experimenting with tastes, who also consider Western brands as aspirational, associating them with “quality and modernity”, Jindal says.
To strengthen and increase their hold on the market in the coming years, Jindal advises global F&B companies balance affordable, mass-market products alongside premium offerings to cater to a broad spectrum of occasions as well as incomes.
How can Western FMCGs create India appropriate NPD?
NPD in India requires a deep understanding of local tastes, cultural nuances, and socio-economic dynamics. India’s culinary diversity is vast, with strong regional preferences and loyalties to local brands. For instance, spices vary significantly by region, and local heroes like Arun and Hangyo in ice creams or Sosyo in beverages dominate their respective markets. Global brands must customise their offerings to appeal to these unique preferences.
Health and wellness trends also play a key role. Products incorporating traditional Indian ingredients like turmeric, ginger, and ayurvedic herbs resonate with health-conscious consumers. Additionally, companies must consider cultural sensitivities, such as avoiding beef and pork, and offering certifications like Jain or halal.
Affordability, accessibility, and localised distribution are also critical. Smaller pack sizes, value-for-money bundles, and omnichannel availability – spanning mom-and-pop stores to e-commerce platforms – are necessary for success. Ultimately, NPD in India isn’t just about adaptation; it’s about embracing the diversity, traditions, and aspirations of Indian consumers while innovating for their unique needs.
Sameer Jindal, MD for Houlihan Lokey’s corporate finance business
For example: “In metros like Bengaluru, Mumbai, and Delhi, younger professionals and tech-savvy millennials drive demand for convenience foods, ready-to-eat meals, and snacks, often shopping online and influenced by social media trends.” However, health-conscious consumers in urban areas demand products like low-sugar drinks, natural or organic snacks, as well as gluten-free options.
Though it’s not only the urban markets, which are often perceived as wealthier, that hold great financial rewards for FMCG players in India. Rural areas provide growth potential through traditional flavours, smaller pack sizes, and price-sensitive offerings,” explains Jindal.
In fact, due to India’s scale and unique makeup, “localisation” is key to succeeding in India’s market. “Brands must adapt to regional tastes, like chaat or South Indian-inspired snacks and cater to dietary norms with vegetarian and halal-certified options,” Jindal adds.
With that, the future of the market and F&B manufacture in the country is expected to grow significantly, analysts predict.
This is driven by changing consumer preferences – with an interest and trust in Western brands – as well as technology’s growth and government policies that encourage and support investment from businesses like Unilever, Mondelēz International, PepsiCo and Nestlé.
