Fireside Ventures, which has backed brands like Mamaearth, BoAt, Slurrp Farm, cult.fit, Pilgrim and The Sleep Company, believes the middle class isn’t shrinking but evolving into multiple consumer personas. Dipanjan Basu, co-founder and partner at Fireside Ventures, tells Anees Hussain that this transformation presents an opportunity for new brands that established players struggle to address. Excerpts:
Large FMCG firms often speak of a ‘shrinking middle class’. Are brands in your portfolio experiencing this trend?
The middle class isn’t shrinking, it’s fragmenting into multiple consumer personas. Traditionally, large brands built for a singular middle-class archetype, but today, we see at least 7-8 distinct segments. While value-seeking remains a core trait, consumer preferences are diverging. Established brands aren’t naturally equipped to navigate this shift. For example, in beauty and personal care, the market leader’s share dropped from 25% in 2014 to 20% in 2024, while the number of brands exceeding Rs 100 crore in revenue surged from under 100 to over 100. By 2030, we anticipate further fragmentation, with 200-250 brands surpassing the `100-crore mark. Similar trends are unfolding in food and fashion, fueling increased M&A activity.
How is Gen Z reshaping consumption patterns?
Gen Z already contributes 25% of middle-class consumption, projected to rise to 50-60% by 2030. Key categories witnessing the most significant shifts include beauty and personal care, fashion, travel, sports, and fitness. Unlike previous generations, Gen Z isn’t loyal to legacy brands, creating space for agile new entrants that align with their evolving preferences.
What major shifts are emerging in consumer spending?
Our research shows that 7-10% of consumer spending now goes toward health and fitness, a category that was negligible just 5-6 years ago. New consumption priorities are emerging, such as increased expenditure on travel, dining out, and children’s needs. Women aged 25-35, in particular, are spending significantly more on health-related products. Consumers are making strategic trade-offs — paying up to a 20% premium in high-priority areas like children’s nutrition and branded essentials while cutting back on unbranded or loosely sold products. Notably, even in Tier 2-3 cities, trends like ‘no maida’ and ‘no palm oil’ are gaining traction. While awareness is strong, affordability remains a challenge.
Can you share examples of brands effectively catering to this evolving middle class?
The Sleep Company is a great example,
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