306245 Mckinsey the India Consumer Story

8/9/2019 306245 Mckinsey the India Consumer Story

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McKinsey Global Institute

Tapping Into the Indian ConsumerMarket

28 June 2007

The India-Europe Investment Forum


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1

HOW WILL INDIAS CONSUMER MARKET EVOLVE IN THE FUTURE?

Indias economy has been growing rapidly

What impact has growth had on Indian incomesand how quickly will they grow in the future?

How is the distribution of income changing? Whenwill its middle class take off?

How is income growth effecting urban versus ruralareas?

How much of rising Indian incomes will be spentversus saved?

What will Indian consumers spend their newfoundwealth on?

What does this

mean for business

and investment

opportunities?

How should

companiescompete for the

new Indian

consumer?


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OUR PANEL

Prashant Desai Group Head, Investor Relations andNew Ventures (PE), Pantaloon Retail (India) Limited

Richard Fairgrieve Director of Global Emerging Markets,WestLB Mellon Asset Management

Dippankar S. Haldar Chief Executive Officer, WadhawanFood Retail (P) Limited

A.P. Parigi Managing Director and Chief ExecutiveOfficer, Entertainment Network (I) Limited

R. Subramanian Managing Director, Subhiksha TradingServices


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KEY FINDINGS FROM McKINSEY GLOBAL INSTITUTE RESEARCH

Indian incomes will triple over the next two decades,significantly reducing poverty

India will emerge as the worlds fifth largest consumereconomy

A large urban middle class will develop, but rural areas willbenefit too

Patterns of consumption will shift rapidly towardsdiscretionary spending

Income and consumption growth will create opportunitiesand challenges for business and government


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4Source: McKinsey Global Institute

HOUSEHOLD INCOME GROWTH WILL ACCELERATE ACROSS INDIA

Average household disposable income

thousand, Indian rupees, 2000

19852005

20052025

0

100

200

300

400

500

1985 1990 1995 2000 2005 2010 2015 2020 2025

Rural

Urban

5.8%

3.6%

All India

5.3%

4.6%

2.8%

3.6%

Actual Forecast

Compound annualgrowth rates


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5

Note: Figures are rounded to the nearest integer and may not add up to 100%.

Source: McKinsey Global Institute

93

80

54

35

22

18

41

43

36

6 000

0755

1985

02

928

1995

4 1

2015F

29

32

2025F

100%1,107

2005E

11 1

19

1,278 1,429Globals (>1,000)

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)

Deprived (


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5 4 3

9 12 12

5

3 00

1

00

17

2005E

43

12

34

2015F

14

16

25

2

70

2025F

0 17

1985

110

1995

12

Globals (>1,000)

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)

Deprived (


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INDIA WILL BECOME THE FIFTH LARGEST CONSUMER MARKET IN THEWORLD BY 2025

Aggregate private consumption, 20052025

billion, $, 2000

India Brazil India Italy India Germany

334 18,4292,082 584 13,540 1,064Per capita$, 2000

Source: Global Insight; UN Population Division; McKinsey Global Institute

370 388

746 783

1,5111,521

12 611 8 7 5Rank

2005 2015 2025


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Food, beverages, and tobacco

Apparel

Housing and utilities

Household products

Personal products and services

Transportation

Communication

Health care

Education and recreation

14

12

12

10

8

9

11

11

17

19

20

6

69

7 9 13

4

1 5

2

34100%

2025F

248

5

3

2015F

140

34

5

3

56

60

1995

2

3

25

42

82

2005E

3

5

6

Share of average household consumption%, thousand, Indian rupees, 2000



INDIA'S SHARE-OF-WALLET IS SHIFTING AS INCOMES RISE

Discretionary spending

Necessities


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McKinsey Global Institute

Tapping Into the Indian ConsumerMarket

28 June 2007

The India-Europe Investment Forum


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Back-up


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0

100

200

300

400

1985 90 95 2000 05

Proprietary database

19852005

Econometric

forecasting model

20062025

On-the-ground insightsfrom McKinsey experience

0%

10%

20%

30%

40%

50%

60%

2006 2009 2012 2015 2018 2021 2024

What makes our

work unique?

Focuses on futureconsumption

Covers 100% ofdemand

Includes detailedincome distributions

Integratesmacroeconomic

scenarios

THE MCKINSEY GLOBAL INSTITUTE (MGI) HAS SPENT THE PAST YEAREXAMINING THE FUTURE OF THE INDIAN CONSUMER MARKET

Exclusive access to NCAER 300,000household MISH survey

Government NAS, NSS, and RBI data Other sources, e.g., UN, World Bank,

Oxford Economics


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MGIs FORECAST ASSUMES 7.3 PERCENT COMPOUND ANNUAL GDPGROWTH

0

20.000

40.000

60.000

80.000

100.000

120.000

1985 1990 1995 2000 2005 2010 2015 2020 2025

History Forecast

Real GDPbillion, Indian rupees, 2000


Overall compoundannual growth

Per capita compoundannual growth

6.0%

4.0%

7.3%

5.9%


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KEY FINDINGS







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GROWTH HAS LIFTED 431 MILLION FROM POVERTY AND COULD LIFT465 MILLION MOREPopulation in households with annual disposable income less than 90,000 Indianrupees, 2000

millions of people

* Number added to deprived if poverty remained at 1985 and 2005 rates respectively


327431

180

465

313

598

702

Deprived in2025

Net reductionin poverty

Increase inpoverty dueto populationgrowth*

Net reductionin poverty

Deprived in2005

Increase inpoverty dueto populationgrowth*

Deprived in1985


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THE SHAPE OF INDIA'S INCOME PYRAMID WILL CHANGEDRAMATICALLY AS INCOMES GROW

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)

Deprived (1,000) 1.2

10.9

91.3

101.1

2.4

Number ofhouseholds

million

Household incomebrackets

thousand, Indianrupees, 2000

Aggregatedisposable income

trillion, Indian rupees,2000


Aggregateconsumption

trillion, Indian rupees,2000

2.0

3.1

11.4

5.4

1.6

1.2

2.1

8.5

4.1

1.0

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)


55.1

106.0

74.1

5.5

6.3

15.2

14.6

3.8

3.8

4.1

11.8

12.2

3.3

2.7

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)


94.9

93.1

49.9

33.1

21.7

30.6

13.7

2.6

20.9

14.1

24.6

11.9

2.4

16.5

2005E

2015F

2025F


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THE INCOME DISTRIBUTION IN THE COUNTRY WILL WIDEN ASPOVERTY FALLS AND THE MIDDLE CLASS GROWS

-5

0

5

10

15

20

25

30

35

0 100 200 300 400 500 600 700 800 900 1000


Annual household disposable incomethousand, Indian rupees, 2000

Distribution of household income% of households

1985

1995

2005

2015

2025


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17

0

20

40

60

80

100

120

140

1985 1990 1995 2000 2005 2010 2015 2020 2025

FIRST ASPIRERS AND THEN SEEKERS WILL BECOME THE LARGESTINCOME BRACKETS


ForecastActual

Deprived (1,000)

Seekers (200500)

Number of households in each income bracketmillions of people

Household income brackets



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KEY FINDINGS







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RISING HOUSEHOLD INCOMES WILL BE THE KEY DRIVER OFCONSUMPTION GROWTH NOT CHANGES IN SAVINGS

Sources of growth in private consumption 20052025

billion, Indian rupees, 2000

16,896

69,503

8,360

Privateconsumption2005

42,326

Disposableincomegrowth

Growth innumber ofhouseholds

1,922

Changes insavings

Privateconsumption2025

80%

Contributionto overallconsumptiongrowth

16% 4%


Source: Oxford Economics; UN; McKinsey Global Institute


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KEY FINDINGS



A large urban middle class will develop, but rural areaswill benefit too




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URBAN INDIA WILL ACCOUNT FOR MORE THAN TWO-THIRDS OFCONSUMPTION GROWTH OVER THE NEXT 20 YEARS

Aggregate annual consumption


16,695

Rural

Urban

69,502

62%

57%

43%

16,896

All Indiaconsumption,2005

Ruralconsumptiongrowth

35,913

Urbanconsumptiongrowth

38%

All Indiaconsumption,2025

Contribution toconsumptiongrowth


32% 68%


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MIDDLE CLASS HOUSEHOLDS WILL DOMINATE URBAN INDIA

Share of urban households by income class%, millions of households

81

46

219 5

18

50

66

32

12

00100% =

34

53

8333

1985

14

46

1995

12

10

2015F2005E

6

26

51

114

2025F

1 Global (>1,000)

Strivers (5001000)

Seekers (200500)

Aspirers (90200)

0

Deprived (


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LARGE CITIES TEND TO HAVE HIGHEST INCOMES,BUT SMALL NICHE CITIES PROSPERING TOO

0

50

100

150

200

250

300

350

400

0 2 4 6 8 10 12 14 16 18 20

Delhi

Kolkata

HyderabadChennaiPune

BangaloreAhmedabad

Estimated population, 2001million

Average annual household disposable income, 2001thousand, Indian rupees, 2000

Total disposableincomebillion, Indian rupees

Tier 1 Tier 2

Ludhiana

Surat

Nagpur

Kanpur

Tier 3

MumbaiCoimbatore

Chandigarh

Faridabad

Amritsar

Jallandhar

Goa

LucknowJaipur

Nichecities

Source: The Great Indian Middle Class, NCAER; McKinsey Global Institute


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RURAL POVERTY WILL DECLINE SIGNIFICANTLY BY 2025

8

32

47

48

20

60000

0

2005E

1

46

875

2015F

12

29

906

2025F

Global (>1,000)682

Seekers (200500)

Aspirers (90200)

Deprived (


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PER-HOUSEHOLD CONSUMPTION IN RURAL INDIA WILL REACHTODAY'S URBAN LEVELS BY 2017

158

104

67

5045

116

UrbanIndia,2005E

1985 1995 2005E 2015F 2025F

Average consumption per household



Rural India


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KEY FINDINGS







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FALL IN SHARE OF SPENDING ON NECESSITIES IN INDIA ISCOMPARABLE TO SOUTH KOREA'S DURING ITS HIGH-GROWTH PHASE

* Necessities include food and apparel; discretionary spending includes all other household spend categories.

Source: Euromonitor; India data from McKinsey Global Institute

Discretionary spend*

Necessities*

Share of average household spending

%

Discretionary

Food

Apparel

0

25

50

75

100

1981 1986 1991

0

25

50

75

100

1985 1995 2005 2015 2025

History Forecast

South Korea India

Per capitaincome

$, PPP, 2000

5,017 12,850 1,173 2,500 7,364


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NUMBER OF URBAN HOUSEHOLDS WITH DISCRETIONARY SPENDINGPOWER TO MULTIPLY TWELVE TIMES

44

58

6

29

11

8

2005E

23

49

2015F

7

94

2025F

Number of urban households with true discretionary

spending power*million


Globals (>1,000)

Strivers (5001,000)

Seekers (200500)



Middleclass

* Consumers with sufficient budget to have significant levels of choice-driven spending (beyond categories such as food,housing, health care, education, fuel and transport services)

12x


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INDIAN SPENDING PATTERNS WILL BE UNIQUE

Share of total consumption, %

Note: Figures are rounded to the nearest integer and may not add up to 100%

Source: Euromonitor, MGI China Consumer Demand Model v2.0, McKinsey Global Institute

Food beverages andtobacco

Apparel Personal products and

services

In line with benchmarks

15

414

21

510

19

68

23

413

35

114

42

68

25

511

U.S. Germany BrazilSouthKorea China

India(2005)

India(2025)

Consumption category

Housing and utilities Household products Education and recreation

Less than benchmarks195

12

2778

229

13

184

16

96

15

1235

1039

Transportation Communication

Health care

More than benchmarks

111

19

171

4

134

6

122

8

67

7

172

7

206

13


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FOOD WILL REMAIN THE LARGEST CONSUMPTION CATEGORY WHILECOMMUNICATIONS WILL GROW THE FASTEST

0

2

4

6

8

10

12

14

16

0.0 1.0 2.0 3.0 4.0 5.0

Food,beverages,and tobacco

(17.3)

Market size in 2025trillion, Indian rupees,2000

Housing andutilities (6.6)

Householdproducts (1.8)

Apparel(3.3)

Personal

products(7.4)

Healthcare(8.9)

Communications (4.3)

Education andrecreation (6.1)

Transport(13.8)


7.0 8.0

2005 market sizetrillion, Indian rupees, 2000

20052025 compound annual growth rate of aggregate consumption%


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KEY FINDINGS





Income and consumption growth will createopportunities and challenges for business andgovernment


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OPPORTUNITIES AND CHALLENGES FOR BUSINESSES

Opportunities

Along with China the fastest growing of worlds large consumer marketsover next two decades

Major discontinuity, winners have yet to be determined $1.1 trillion ofnew market growth not yet owned by anyone

Most accessible market upper income urbanities will grow twelvetimes

Almost half of middle class will be new consumers at any point in time

loyalties up for grabs

Challenges

Indian companies Retaining existing customers and market shares Adapting rapid pace of change Innovating to capture new growth opportunities Educating new consumers

Multinationals Meeting middle class aspirations at Indian price Adapting products and services to meet Indian needs and task points Building brands Overcoming infrastructure, regulatory, and distribution hurdles


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OPPORTUNITIES AND CHALLENGES FOR GOVERNMENT

Opportunities

A chance to make further significant inroads in poverty reduction Domestic demand growth will spur further domestic production and

employment particularly in higher value-added industries An opportunity to attract FDC to serve Indian consumers The potential to improve the material well-being of hundreds of millions

of people

Challenges Long-term growth must be maintained Infrastructure issues need to be addressed Regulatory constraints on business need further reform to enable

businesses to meet growing demand and improve productivity Financial system needs reform to efficiently allocate investment, re-

balance savings away from households and provide consumer credit Significant investments in human capital required (education, health

care) in fiscally constrained environment


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INCOME BRACKET CONVERSIONSHousehold annual disposable income, real 2000

Source: NCAER The Great Indian Middle Class; McKinsey Global Institute

Bracket Indian rupeesU.S. dollarsnon-adjusted

U.S. dollarsPPP adjusted

Globals

Strivers

Seekers

Aspirers

Deprived

1,000,000 plus

500,0001,000,000

200,000500,000

90,000200,000

Less than 90,000

21,882 plus

10,94121,882

4,37610,941

1,9694,376

Less than 1,969

117,647 plus

58,823117,647

23,52958,823

10,58823,529

Less than 10,588

Middleclass


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BACK-UP

Macroeconomic base case

Urbanization, rural growth and education

Additional results


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MGI'S BASE-CASE GDP FORECAST IS MIDDLE OF THE RANGE

2.7

4.2

4.3

4.7

4.7

5.7

5.9

6.2

6.2

7.1

7.2

7.2Planning CommissionHigh

HSBCHigh

Goldman SachsBase

HSBCBase

Deutsche BankHigh

MGI/Oxford EconomicsBase

Planning CommissionBase

EIU

Global Insight

PWC

Deutsche BankBase

Deutsche BankLow

Source Real per capita GDP growthCompound Annual Growth Rate, %

Source: Oxford Economics; India: Pitfalls and Possibilities, HSBC, July 2006; India's rising growth potential, GoldmanSachs, Jan 2007; India Rising: A Medium-Term Perspective, DB Research, May 2005; Towards Faster and MoreInclusive Growth: An Approach to the 11th Five Year Plan, Planning Commission, Government of India, June2006; The World in 2050: How Big will the Major Emerging Market Economies Get and How Can the OECDCompete?, PWC, 2006

Timeframe

20052015

20062020

20072012

20052025

20062020

20062020

20062025

20052025

20052050

20072012

20052015

20062020


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SERVICES WILL CONTINUE TO BE THE MAIN DRIVER OF GDP GROWTHOVER THE NEXT TWO DECADES



24

26

2736

199

40

8.8

1985

55

28.3

2005E

65

115.3

2025F

Agriculture

Industry

Services

100% =

Share of GDP%, trillion, Indian rupees, 2000

2.7Agriculture

6.4Industry

7.8Services

3.1

7.4

8.2

2005202519852005

Growth by sectorCompound annual growth rate, %


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INCOME GROWTH WILL ACCELERATE WITH ECONOMICGROWTH

5.75.7

19851995

6.06.3

19952005E

6.4

7.3

2005E2015F

7.47.2

2015F2025F

GDP versus household disposable income growth

compound annual growth rate, %, Indian rupees, 2000


GDP

Householddisposable income


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INDIA'S CONSUMPTION SHARE OF GDP IS CLOSER TO JAPAN AND THEUNITED STATES THAN IT IS TO CHINA

44

23 2820

14

18 12

16

-6

Privateconsumption

Governmentconsumption

39

Net trade

100% =

3

2,216

China

57

1

4,553

Japan

62

-2

801

India

70

12,456

UnitedStates

Investment

Source: Global Insight; McKinsey Global Institute

%, billion, nominal $, 2005


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* MGI estimate based on 2005 GDP and estimates of flow-of-funds information.

Source: Country National Accounts; IMF; McKinsey Global Institute

21,1

16,28,1

10,47,8

11,3

-0,5

10,27,3

21,3

6.4

-1.3

26.4

Japan

7.9

2.9

21.2

Mexico

9.9

0.3

18.0

France

2.1

12.922.0

50.4

China*

22.3

2.0

32.4

India

6.4

32.8

SouthKorea

UnitedStates

Corporations

Households

Government

Gross national savings rates% of nominal GDP, 2005

INDIA HAS A RELATIVELY HIGH NATIONAL SAVINGS RATE COMPAREDWITH OTHER COUNTRIES


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* MGI estimate based on 2005 GDP and estimates of flow-of-funds information.

Source: Country National Accounts; IMF; McKinsey Global Institute

Household savings as a share of gross national savings rates, 2005

%

INDIAN HOUSEHOLD SAVINGS ACCOUNT FOR A DISPROPORTIONATESHARE OF NATIONAL SAVINGS

1620

24

37

44

55

69

India France China* Mexico Japan SouthKorea

UnitedStates

32.4 18.0 50.4 21.2 26.4 32.8 12.9

Gross nationalsavings rates% of nominalGDP, 2005


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INVESTMENT WILL GROW APPROXIMATELY IN LINE WITH GDP

Source: National Accounts; McKinsey Global Institute

Expenditure share of real GDP

%

-10

0

10

20

30

40

50

60

70

80

1985 1990 1995 2000 2005 2010 2015 2020 2025

ForecastHistory

Private consumption

Investment

Government consumption

Net trade


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Government expenditures and revenues*

0

5

10

15

20

25

30

35

40

1985 1990 1995 2000 2005 2010 2015 2020 2025

-11,0

-10,0

-9,0

-8,0

-7,0

-6,0

-5,0

-4,0-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

GOVERNMENT SPENDING AND DEFICIT WILL GRADUALLY DECLINE ASA PROPORTION OF GDP

* Government expenditure figures are available through 2005.


Government budget deficit

History Forecast

Revenues (left scale)

Expenditures (left scale)

Deficit (right scale)% of GDP


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BACK-UP



Additional results


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INDIA REMAINS LESS URBAN THAN ITS COUNTERPARTS IN ASIA, BUTDEFINITIONS VARY

Source: United Nations World Urbanization Prospects 2005; McKinsey Global Institute

81

696665

48

40

2927

Vietnam India China Indo-nesia

Malaysia Japan UnitedStates

Korea,Rep.

Urban share of total population, 2005

%

Urbanpopulation,2005million

23 318 530 108 17 84 210 39


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BIRTHS AND MIGRATION WILL DRIVE URBAN POPULATION GROWTH

Urban population, 20052025*million

105

100

523

318

Urbanpopulation,2005E

Net births Netmigration

Urbanpopulation,2025F

* Estimate of birth versus migration split assumes urban birth rate = 19 per 1,000 and death rate = 6 per 1,000


1.6 x

Share of totalpopulation orurbanization rate

29% 37%


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CLASSIFICATION OF CITIES AND TOWNS

* Population for each city estimated using the average urban household size (from MGI model) and the estimatednumber of households in each city from NCAER (in the year 2001).


MumbaiKolkata, Delhi,

ChennaiBangaloreHyderabad

Ahemdabad, Pune

Surat, Kanpur, Nagpur, Lucknow,Jaipur, Kochi, Vadodara, Indore,

Ludhiana, Madurai, Bhopal, Patna,Nasik, Agra, Varanasi, Rajkot, Meerut,

Jabalpur, Dhanbad, Kozhikode . . . .

Tiruchirapalli, Amritsar, Faridabad, Aurangabad,Allahabad Gwalior, Jodhpur, Raipur, Bhubaneshwar, Goa,Pondicherry Aligarh, Moradabad, Mangalore, Gorakhpur,

Bhavnagar

Rohtak, Rourkela, Udaipur, Anand, Faizabad, Hassan,Shimla, Roorkee, Gurgaon, Shillong

Tier 1: Major cities

Tier 2: Mainstream cities

Tier 3: Climbers

Tier 4: Small towns

26 cities

Population >1 million

33 citiesPopulation >500,000

8 citiesPopulation > 4 million

Total income >100 billion Indian rupees

5,094 towns


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HIGHER INCOME HOUSEHOLDS CONCENTRATED IN LARGE CITIES,POOR IN SMALL TOWNS

63

43

27 2522

9

9

98

8

Strivers

60

10

Deprived Globals

Tier 1: Major cities 15

13

47016,809

33

16

34,139

Aspirers

50

13

3,750

Seekers

55

12

806

Tier 2:Mainstream cities

Tier 3: Climbers

Tier 4: Smalltowns

100% =

Proportion of households in each income class across city tiers, 2001%, thousand, households




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RURAL EMPLOYMENT HAS BEEN GRADUALLY SHIFTING AWAY FROMAGRICULTURE

7567

74

52

7

1987

8

7

8

47

2004

Manufacturing

Construction

Trade, hotelsand restaurants

Transport, storageand communication

Others*

Agriculture

* Sectors with minimal shift in this period (6% in other services, 1% in mining, quarrying, electricity and water).


Source: Employment and unemployment situation in India (200405), NSSO; McKinsey Global Institute

Distribution of rural male workers by economic activity%


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AGRICULTURAL GROWTH IS FORECAST TO ACCELERATE FROM ITSRECENT HISTORICAL RATE

Agricultural value added in GDP



Compound annualgrowth rate

9,974

7,529

5,462

4,299

1995 2005E 2015F 2025F

2.4%

3.1%


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* Enrollment is measured as a percentage of 15 to 24 year old population; attainment is measured relative to 15and above population.


ACHIEVEMENT IN HIGHER AND SECONDARY EDUCATIONWILL CONTINUE TO BECOME MORE WIDESPREAD

Rate of secondary-school andhigher-education enrollment

Rate of secondary-school andhigher-education attainment

0

5

10

15

20

25

30

35

40

1985 1995 2005 2015 2025

Secondary

Higher% of relevant population groups*

History Forecast History Forecast

0

5

10

15

20

25

30

35

40

1985 1995 2005 2015 2025

History Forecast


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BACK-UP



Additional results


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53

77

54

2410

15

32

51

36

17

712

0

8

10,098

1995

6

12

16,896

2005E

8

35

34,089

2015F

6

24

35

3

69,503

2025F

20

6,6792

1985

15

100% Globals (>1,000)

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)Deprived (


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HALF OF URBAN CONSUMPTION WILL COME FROM UPPER INCOMESTRIVERS AND GLOBALS

64

267

28

56

55

17

0100% 2

17

2.2

1985

26

10

4.0

6

1995

12

8

7.2

2005E

18

10

53

2

17.4

2015F

26

33

37

4

Global (>1,000)

1

43.1

2025F

Strivers (5001000)

Seekers (200500)

Aspirers (90200)Deprived (


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ASPIRERS WILL DRIVE RURAL SPENDING OVER THE NEXT TWODECADES

84

72

37

188

79

15

33

6

8

612

6

26.4

2025F

0

Strivers (5001,000)

Seekers (200500)

Aspirers (90200)

Deprived (1,000)

2

9

4.5

1985

04

17

6.1

1995

34

55

47

9.7

2005E

16.7

2015F

39

Share of rural consumption by income class%, trillion, Indian rupees, 2000






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CONSUMPTION BY NEW-TO-BRACKET CONSUMERS WILLBE SIGNIFICANT, ESPECIALLY IN THE MIDDLE CLASS

* Calculated by determining the number of households that have shif ted income class, assume they consume at newbracket levels in the first year, and then consider them new to that bracket for three years.


New-to-bracket share of cumulative consumption 20052025*%, trillion, Indian rupees, 2000

78

57

59

89

Globals

Deprived 70.9

Aspirers

22 111.5

100% =

93.4Strivers

11 245.8

Seekers 41 262.6

43

Middle

class

New-to-bracketconsumers

Existingconsumers


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FROM ASPIRER TO STRIVER THE EVOLUTION OF SPENDING FOR ATYPICAL HOUSEHOLD

63 90

23

4248

119

47

46

69

40

24

49

13

22

Food, beverages, and tobacco

Apparel

Housing and utilities

Household products

Personal products and services

Transportation

Communication

Health care

716

7211 5

94

Aspirer2005E

137

186

12

Seeker2015F

13

497

Striver2025F

214


Average household consumption




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SHARE-OF-WALLET ON FOOD IS ALREADY LOW IN MIDDLE- ANDUPPER-INCOME BRACKETS

6172 79

39

Aspirers

28

Seekers

21

Strivers

Food, beveragesand tobacco

Other spendingcategories

100%

4253

65

58

Deprived

47

Aspirers

35

Seekers

Food, beveragesand tobacco

Other spendingcategories

100%

58

66

75

42

2005E

34

2015F

25

2025F

Food,beveragesand tobacco

Otherspendingcategories

100%

All India average share-of-wallet evolutionShare-of-wallet of urban households in 2005E

Share-of-wallet of rural households in 2005E

%



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* Approximately 90% of spend on the broad category food, beverages, and tobacco is on food.


FOOD CONSUMPTION WILL ACCELERATE SIGNIFICANTLYEVEN AS ITS RELATIVE SHARE DECLINES

3,931

1985

5,622

1995

7,147

2005E

11,547

2015F

17,296

2025F

3.0%

4.5%

Total consumption of food,beverages, and tobacco*


Per-capita consumption of food,beverages, and tobacco*

Indian rupees, 2000

12.102

9.035

6.4546.058

5.207

1985 1995 2005E 2015F 2025F

1.1%

3.2%

Share of totalconsumption%

59 56 42 34 25 59 56 42 34 25

Compoundannualgrowth rate


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FIVE CATEGORIES WILL ACCOUNT FOR MORE THAN 80 PERCENT OFCUMULATIVE CONSUMPTION OVER THE NEXT 20 YEARS

Breakdown of total cumulative consumption across categories (20052025)

trillion, Indian rupees, 2000

S M Ki Gl b l I i

784

41

54

Household products

Communication

Apparel


Totalgrowth

248

Food,beverages,

andtobacco

148

Transport

87

Housingand

utilities

79

Healthcare

74

Personalproducts

andservices

3222

148

Other

Documents

306245 Mckinsey the India Consumer Story