Is India's Packaged Food Industry Ready for 2025 & Beyond?

India’s consumer packaged goods (CPG) industry stands at a fascinating crossroads, shaped by evolving demographics and shifting consumer preferences. And at the heart of this transformation lies an often-overlooked hero—edible oils. 

These oils, indispensable across the food and personal care sectors, are not just fuelling our kitchens but are also influencing market dynamics in unexpected ways.

The Resilience of India’s Food Segment

India, home to the world’s largest population, is the most lucrative large market for packaged food. With 45.9% of the consumption basket dominated by food, it’s evident that this sector is a cornerstone of India’s growth story. 

From increasing urbanisation (now at 36% of the population) to the rise of nuclear families and a flourishing middle class, these trends are propelling the demand for packaged, convenience-driven products.

India's Packaged Convenience Food Industry is Projected to Grow at 11% CAGR Over The Next 3-4 Years

Indian Packaged Convenience Food Industry (INR bn)

The snacks industry alone is poised to surpass ₹4,883 bn by FY26, as consumers increasingly prefer branded, hygienic snacks over loose options.

This shift is creating opportunities and challenges, particularly for organised snack manufacturers, who are diversifying product lines to cater to diverse age groups and preferences.

But behind every chip or namkeen lies a crucial ingredient—refined palm oil (RPO)—the price of which is intricately linked to the sector's success.

Edible Oil Prices: The Butterfly Effect on CPG

Edible oils like palm, soybean, and sunflower are the backbone of several CPG categories. They’re critical not only for food products like snacks and biscuits but also for personal care items like soaps and cosmetics.

Recent import duty hikes on edible oils, with crude oil duties increasing to an effective rate of 27.5% and refined oil duties jumping to 37.5%, are sending ripples through the entire supply chain.

Impact on Food & Snacks Companies

For snacks companies heavily reliant on refined palm oil, the cost surge is inevitable. Industry leaders such as Britannia and Nestlé are already planning price hikes ranging from 1.5% to 2.5% to protect margins.

Small pack sizes, traditionally volume drivers, might also see inflation-driven adjustments while large players may absorb some costs or pass them on to consumers. Smaller, unorganised players might struggle to compete, inadvertently boosting market share for big brands.

Impact on Personal Care Products

In the personal care segment, companies like Hindustan Unilever and Godrej Consumer are also feeling the heat. Palm oil derivatives like Palm Fatty Acid Distillate (PFAD) are central to soap manufacturing. While HUL’s reliance on domestic PFAD may shield it slightly, imported PFAD users could face significant cost pressures, necessitating price hikes of 1.6% to 2.5%.

What This Means for the Consumer

For the average Indian, these cost hikes will trickle down as higher prices for everyday essentials—from a bag of chips to a bar of soap. However, this inflation isn’t merely a burden; it’s also a step towards empowering farmers.

By boosting import duties, the government aims to increase demand for domestic oilseeds like soybean, mustard, and groundnut, aligning with its goal of raising rural incomes.

A Strategic Shift for CPG Players

The edible oil conundrum is pushing CPG companies to rethink their strategies.

Diversification and innovation are becoming critical:

1. Shifting Ingredient Base: Companies are exploring alternative oils like rice bran and mustard to mitigate dependency on palm oil.
2. Efficiency in Scale: Larger players are leveraging economies of scale to absorb rising input costs better than their smaller counterparts.
3. Focus on Premiumisation: Brands are banking on premium, health-oriented products to justify price hikes. 

Exclusive Insights Await: Bites of the Future Report

We have curated the ultimate report to guide you through the latest trends shaping the packaged food market. Deep dive into:

• Emerging consumer behaviours driving product innovation.
• Industry Overview by channel, type and region
• In-depth Challenges faced in the CPG industry 
• Growth opportunities in India’s diverse and expanding food sector.

This report is built on extensive research and real-world data, offering actionable insights to help you stay ahead of industry shifts. Don’t be left behind. Download your copy now!