Mass Premium: India's New Playbook

This article accompanies our video conversation with Ben Mathias on the premiumisation of India's consumer market.

For years, the playbook for building a consumer business in India read the same way: win on price, win on volume. Serve the largest possible base at the lowest possible cost, and scale would take care of the rest. According to Ben Mathias, Managing Partner at Vertex Ventures SEA and India, that playbook is now out of date.

The reason is a structural shift in how urban India spends. Aspirational purchases that were once deferred are increasingly being made today, and non-essential expenditure now makes up the majority of urban spending. India has become the fifth-largest consumer market in the world, with consumer spending above US$2 trillion, a figure Ben notes has roughly doubled over the past decade and is expected to quadruple over the next. The middle class, on some projections, could cross 700 million people by 2030. The country that was defined by low price and high volume is, in his words, becoming a mass premium market.

What premiumisation looks like on the ground

The shift is visible across categories. In beauty, Vertex portfolio company Pilgrim, founded in 2019 to bring globally sourced beauty ingredients to Indian consumers across face care, haircare, skincare and fragrance, sells at an average price point of around 1,000 rupees or more and has been growing at over 100 percent year on year, evidence that consumers are willing to pay for quality in a category once dominated by mass-market products. The same pattern shows up well beyond beauty. SUVs now account for around half of all four-wheeler sales. The fastest-growing television category is the 65-inch screen. In smartphones, high-end devices are the fastest-growing segment while entry-level phones are in decline. Spending on experiences and foreign travel is climbing in parallel. Across the board, Indian consumers are trading up.

Everyday categories are being reimagined along the same lines. Home appliances are a case in point: Vertex portfolio company Nuuk is building a design-led home appliance brand for the modern Indian home, applying a "design-first, function always" approach to categories such as fans, vacuum cleaners, garment care and kitchen appliances that legacy players had long treated as commodities. The thesis is that even the most functional corners of the home are now open to premiumisation when a brand competes on design and product experience rather than price.

Who is actually spending

One of the most important corrections Ben offers is to the myth of the 1.4 billion-person market. It is more useful, he argues, to think of India in tiers. "India 1" is the wealthiest roughly 10 percent, about 140 million people, with per-capita income comparable to Mexico, and it accounts for the bulk of premium and discretionary spending. "India 2" is the next segment of around 300 million people who think harder before making aspirational purchases but still drive a substantial share of premium consumption. Below them sits the roughly one billion who spend largely on essentials.

The strategic insight is where the growth is coming from. India 1 is, in Ben's phrasing, taken for granted; those consumers will buy premium regardless. The interesting cohort is India 2. In Vertex's portfolio, some of the fastest-growing customer segments are emerging from this tier and from smaller cities. Palmonas, the Pune-based brand that pioneered India's "demi-fine" jewellery category with everyday-wear pieces in 18k gold plating and lab-grown diamonds, now sees most of its growth coming from tier-two cities, and Ben points to reports of a majority of e-commerce sales originating in tier-three cities. Premiumisation, in other words, is not a top-of-the-pyramid phenomenon. The smart move for a premium brand is to capture India 1 while hooking the India 2 consumer early, because as that consumer's income rises, they become the core customer of the future.

The real moat is the supply chain

If demand is broadening, what separates a durable premium brand from one merely riding a trend and a marketing budget? Ben points to three things: unit economics, distribution, and supply chain.

On unit economics, the decisive factor is repeatability. With customer acquisition costs rising year on year as platforms raise their advertising rates, a brand with a higher repeat rate can be dramatically more profitable than one constantly buying new customers. Growth at all costs, he argues, is a losing strategy; growing sensibly while retaining customers is what compounds.

On distribution, the winning model is omnichannel. Consumers increasingly discover online but purchase offline, so brands need to sell across their own website, marketplaces, quick commerce and physical stores. Palmonas has grown from an online-first brand into a fast-expanding omnichannel retailer; Licious, the fresh meat and seafood brand, runs more than 100 stores across the country. Quick commerce, now more than half of online sales in many categories, has to be built into the margin structure rather than treated as an afterthought.

But the deepest moat, and the factor Ben says Vertex weighs most heavily, is a captive supply chain. Across the portfolio the common thread is control over sourcing, ingredients and manufacturing that competitors cannot easily replicate. Licious built India's fresh meat and seafood category on an owned, temperature-controlled supply chain. Anveshan sources wood-pressed and cold-pressed oils, A2 ghee and honey directly from a network of farmers, with QR-code traceability running all the way back to the source. Palmonas turns surgical-grade materials and lab-grown diamonds into an in-house design advantage. And Kapiva builds on the century-old sourcing and manufacturing heritage of the Baidyanath group to reinvent Ayurvedic nutrition for the modern consumer. The same logic extends to hardware: Nuuk is deepening its "Make in India" manufacturing base and designing its products in-house, turning supply chain control into a durable advantage against import-heavy rivals. Marketing matters, but it is the supply chain that is defensible.

The discipline behind the optimism

For all the momentum, Ben is clear-eyed about where investors should be careful. The 1.4 billion-person framing overstates the true addressable market; the realistic target is closer to 400 million consumers who make aspirational purchases. Rising acquisition costs and a growing structural dependence on quick commerce both compress margins in ways founders must plan for from the outset.

The throughline is that premiumisation in India is real, broad-based and still early, but capturing it rewards discipline over hype. The brands that win will be the ones that get the category timing right, build genuine supply chain moats, and grow with retention rather than spend. That is the lens through which Vertex is backing the next generation of Indian consumer companies, from Pilgrim, Palmonas, Anveshan, Kapiva and Licious to Nuuk.