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  • Value-for-money continued to be a critical factor while making purchase decisions. It was the second most important reason for trying a newer brand.

Start-ups are gaining prominence

Democratized access to technology has lowered entry barriers, while supportive policy environment and improved access to funding have given a level-playing field to upcoming businesses. This has created a conducive environment for start-ups to flourish.

These start-ups rely on innovation to differentiate themselves from competitors and fuel growth. They are highly adept at spotting the unhappy consumer and leveraging the latest technology to address unexpressed desires.

Individually these start-ups may not pose a significant threat to the behemoth incumbents but together, they are forming a formidable challenge. Increasingly, incumbent companies are finding it difficult to capture growth. During the period 2012 to 2017, eight of India’s top 12 brands ceded market share in the range of 40-200 basis points to newer entrants in home care, packaged foods and beverages categories.

Competition from start-ups in India is intensifying, but it is still not as severe as some of the larger, global markets, where start-ups are unsettling the top order.

In the US, during 2012 to 2017, upcoming, local consumer companies (US$1 billion in sales) captured US$17 billion in market share from large, existing companies. During the same period, nearly 50% of the growth in the US consumer food and beverage categories came from 20,000 companies below the top 100 largest companies.

This phenomenon is not limited only to the US, but is seen across other large consumer products markets as well. These start-ups are competing with large companies and are chipping away market share across categories. In some cases, start-ups have displaced the legacy brand to capture market leadership owing their formidable value proposition.

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