In the current economic landscape, a stark contrast in consumer demand is becoming evident across different income levels. Kenneth Andrade, Founder & CEO of Old Bridge Capital Management, believes that while consumption at the higher end of the population pyramid remains robust, the lower end is facing significant stress and limited demand.
“Consumption is back on the table for us, especially if you go stock picking into individual businesses….what we essentially look for is which company can premiumise and take the consumer to the next level of pricing,” said Andrade, who manages funds worth over $750 million.
“The era of mass consumption, in terms of purchases of low-cost apparel, footwear, etc., is behind us. We are in an era where affluent, well-educated people earn more money and are moving toward class consumption,” he said.
According to a note released by BNP Paribas in October, this trend, indicating the rich getting richer, could positively impact sectors such as automobile manufacturing, insurance, mutual funds, jewellery, multiplexes, and healthcare. The data shows that income tax filers with an annual income above ₹10 lakh have seen a 20% increase from 2012 to 2021, in stark contrast to a mere 4.5% growth for those earning below ₹5 lakh.
In fact, India’s consumer market is poised to become the world’s third-largest by 2027, propelled by an increase in middle to high-income households, according to a report by Fitch Solutions’ BMI, as cited by CNBC. Currently ranked fifth, India is expected to witness a 29% surge in real household spending, which Fitch predicts will elevate the country to the third position in the global market.
(Edited by : Shweta Mungre)
First Published: Nov 10, 2023 1:05 PM IST