How Ultra-Rich Indians Spend Their Money - Kishore Biyani Explains India 1, 2, 3

Summary

In a recent discussion, the focus was on the economic impact of India's '30 million CR households,' which contribute significantly to the country's consumption. The conversation explored the concept of 'India 1, 2, and 3,' representing different socioeconomic groups and their consumption behaviors. 'India 1' is characterized by higher discretionary spending, while 'India 2' and 'India 3' represent the middle and lower classes, respectively. The discussion highlighted the importance of understanding these groups for brand building and emphasized the growth potential in the middle class, as well as the significant consumption by 'India 1' despite its smaller size.

Takeaways

• 📊 30 million affluent households in India contribute to 60% of the country's consumption, highlighting the importance of this demographic in the economy.
• 🌏 The script compares India's consumption patterns with countries like Singapore, Poland, and Mexico, indicating the diverse and complex nature of the Indian market.
• 🔑 The concept of 'India 1', 'India 2', and 'India 3' is introduced to differentiate consumption behaviors and economic statuses within the population.
• 🏠 'India 1' represents the upper class with domestic help and contributes significantly to value-added consumption, while 'India 2' and 'India 3' represent the middle and lower classes, respectively.
• 📈 The growth of 'India 1' is slow, with an annual increase of less than 1% in terms of consumption, whereas 'India 2' is growing faster due to upward mobility from 'India 3'.
• 🛒 The majority of 'India 1' consumers are found in non-metropolitan cities, indicating a widespread distribution of affluent consumers.
• 💰 The discussion suggests that the consumption by 'India 1' is not reflected in e-commerce platforms like Amazon and Flipkart, possibly due to different shopping preferences.
• 🛍️ 'India 1' consumers are characterized by their spending on lifestyle and food, with a preference for premium and health foods, similar to consumption patterns in Singapore and Poland.
• 💳 'India 1' consumers are likely to use UPI for transactions more than credit cards, reflecting the growing trend of digital payments in India.
• 📈 The script suggests that the growth in consumption for 'India 1' is driven by both an increase in the number of items purchased and a trend towards premiumization.
• 🏢 For brand building, especially for startups, focusing on the 'India 1' demographic is crucial due to their significant contribution to the economy and their potential for growth.

Q & A

What demographic group is contributing to 60% of India's consumption according to the script?

The script mentions that 30 million households, referred to as '3 CR', are contributing to 60% of India's consumption.

How does the script describe the consumption behavior of Singapore, Poland, and Mexico in comparison to India?

Singapore, with 60 lakh people, Poland with around 2.5 to 3 CR people, and Mexico with approximately 78 CR people are consuming similarly to certain segments of India's population, indicating a behavior that mirrors India's consumption patterns.

What is the distinction between 'India 1', 'India 2', and 'India 3' as discussed in the script?

'India 1' refers to those who have domestic help and contribute to value-added consumption. 'India 2' consists of helpers like drivers, maids, and watchmen, who are significant in numbers. 'India 3' is made up of farm laborers who rely on government aid and make ends meet.

How is the script differentiating between the growth of 'India 1', 'India 2', and 'India 3' in terms of consumption?

The script indicates that 'India 1' is growing at a slower pace, possibly less than 1% in terms of consumption. 'India 2' is growing faster as people from 'India 3' are moving into this category, thus expanding the middle class.

What is the estimated number of people in 'India 1' and their contribution to the total consumption?

'India 1' is estimated to be around 100-120 million people, and their consumption is close to 800 billion.

How does the script suggest the growth in consumption for 'India 1' is occurring?

The growth in consumption for 'India 1' is attributed to both an increase in the number of items purchased and a trend towards premiumization, with the next generation consuming more than the previous one.

What are the estimated income ranges for families in Singapore, Poland, and Mexico as mentioned in the script?

Singaporean families have an income of more than 30-40 lakhs, with some even exceeding 60 lakhs. Polish families have incomes over 20-25 lakhs, while Mexican families have significantly lower incomes, around 12-15 lakhs.

What percentage of package goods consumption in India is attributed to 'India 1' according to the script?

The script states that 'India 1' accounts for 70% of the package goods consumption in value terms.

How does the script describe the distribution of 'India 1' consumers across urban and non-urban areas?

The script suggests that 'India 1' consumers are not concentrated in metropolitan cities but are spread across the top 100 cities in India.

What is the script's perspective on the importance of focusing on 'India 1' for brand building?

The script emphasizes that for brand building, especially for startups, focusing on the 'India 1' demographic, which is around 120 million people, is crucial due to their significant contribution to value-added consumption.

What is the script's view on the method of payment preferred by 'India 1' consumers?

The script suggests that 'India 1' consumers are likely to use UPI more than credit cards for their transactions, with all of them having experienced online transactions.