Growth comes in all ‘sizes’ in Rural India
by Mehak Jaggi
April 03 2025 | 08 min read
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Something fundamental is shifting in the way consumers are buying and stocking. The patterns suggest this may be more than a seasonal surge— a combination of natural response to the social and economic environment along with a rewiring of food choices.
In January, packaged foods were flying off the shelves—27% growth across the board. At first, it looked like the usual post-festive correction. But in February the pace eased to grow at 13.8%.
This isn’t noise. It’s a signal.
Driving the Growth Cart
The JFM quarter in 2025, had multiple festivals, rising temperatures across the country, dropping inflation and…IPL. Shoppers aren’t splurging yet but they’re recalibrating—buying more, but only what feels justifiable, and there are plenty of growth drivers behind that.
Our internal research tells us what’s moved:
Quarterly movement shows how categories are rebounding or resetting:
Beverages, dairy products and packaged foods have specifically had a sharper rise recently. Let’s discuss the individual factors that might have played a role in this consumption surge.
The Inflation Cooldown
You could feel it in store conversations—shoppers were stretching their baskets a bit more. We saw a strong rise in commodities, packaged foods, beverages, and dairy, so we thought to investigate a little.
Food inflation eased consistently over the last five months:
It would be a sound assumption if we say that this would have directly impacted commodities and packaged foods. It brings shoppers back to the shelf, and that changes how categories flow. The question to ask was whether it was restricted to Urban areas?
Our data suggests that rural is outpacing urban markets in terms of percentage growth but Q1 shows a rebound from the urban centres.
The past three quarters tell a sharper story:
Urban momentum dipped in Q4 before rebounding in Q1, while rural markets showed steadier patterns—less volatile but consistently contributive.
Rural Windfall — Agricultural Smile
It is a fact that the discretionary spending power of urban India is higher than that of rural Bharat. The gap is narrowing as we speak, but the absolute delta is still high, almost double as per MPCE.
So what is happening this quarter? Maybe it is the good agricultural output.
India’s wheat output is expected to touch 115.4 million metric tons this year—its highest ever. The monsoon held well. Procurement has been strong. Both Rabi and Kharif crops seem to perform much better compared to the past, thanks to the rainfall.
Wheat production for 2024-25 (Rabi season) is projected at 115.43 million metric tons, up from 113.29 million metric tons the previous year. This is the highest wheat output on record, according to the Second Advance Estimates from the Ministry of Agriculture.
Economic Survey 2024-25 confirms healthy Kharif production, driven by: above-normal monsoon rains (107.6% of LPA in 2024) (Source: Government Agricultural Output).
This windfall is good news for the rural story.
And our internal data suggests a similar story but let’s look at what kind of packs is rural buying.
For the rural part of India, numbers suggest affordability is rising for packaged food and beverages, also indicating more family consumption and value-conscious buying.
The rural growth is going strong in Q1CY25. The double engine growth for the consumer goods sector seems to be back with urban centres also rebounding. Rural India seems to become more and more aspirational and moving towards a more consumption led growth. Let’s look at the category growth break up for urban and rural India.
The Urban and Rural Growth Trend
February 2025 has been the hottest month in the last 125 years. This combined with the above two factors we discussed, we land up with more than 20% growth in the beverage category.
And it is visible if we observe the Kirana shelves. More no. of SKUs are being launched, from carbonated water to protein drinks, by brands. Jeera soda, Cola, dairy, etc, all are seeing new ₹10 SKUs into the market.
As SKUs increase, brands will have to be mindful of training and educating the distribution partners about it, would place more emphasis on branding assets, and will be required to monitor the inventory levels in real time. The market has opened up, and the competition is stiffer than last year.
The Retail Reconnaissance
People are consuming more, but for certain categories that rely on impulse are seeing smaller packets on the rise. Kirana shelves were moving stock, without needing aggressive schemes. With several major festivals like Mahashivratri, Ugadi, Lohri, Holi, the food category has seen multiple spikes throughout the quarter, especially impacting the large size SKUs.
Handling the Distribution Strain
We’ve seen a clear shift. Static routes don’t work anymore. India is getting divided into more markets, smaller bubbles of India, Bharat, Rural, Urban, Metro, Non metro, and more. Brands are aligning the product strategy by understanding the ground realities and nuances of such markets. More SKUs, mean more lines, and a headache at the backend. This also translates into more effort on market activation, and awareness in the distribution chain. Combined with different distribution models in different markets, the RTM operations become more complex.
Real Intelligence for Route-to-Market
The data is telling us what the market has already felt: distribution has become dynamic, adaptive, and context-led. Higher SKU proliferation with every passing day, more outlets are being reached, and more channels of distribution are being explored. New age problems require new age solutions, and this is where Real Intelligence, the AI powered by sharp data insights & human intuition comes into the picture. Real Intelligence is using technology to give relief to everyone involved in the distribution cycle, from sales people to distributors.
