Women in workforce drive shift in investor spending: From staples to discretionary goods

Mint

11-08-2025

Not too long ago, pureplay FMCG staples had all that investors loved. But the spotlight is shifting – thanks in no small part to more women joining the workforce.
Consumer discretionary companies are quickly becoming the new favourites. The alpha, it seems, may now lie beyond toothpastes, soaps and shampoos in the fast lane of aspirational spending, according to experts.
Mint took a closer look at the five-year CAGR returns of traditional FMCG giants and stacked them up against the newer consumer discretionary pack, a space that now spans everything from quick commerce, paints and automobiles to apparel, travel and leisure.
The analysis showed that the five-year CAGR returns of good old FMCG names Britannia Industries, Colgate-Palmolive, Nestle India, Hindustan Unilever, Gillette India, Dabur India, Marico and Emami ranged from 7% to 17%. Decent – but a far cry from the solid returns by consumer discretionary companies including Dixon Technologies (113%), Carysil (52%), Tata Consumer Products (32%) and Chalet Hotels (23%).
Navin Matta, equity fund manager at Mahindra Manulife, points to a few key reasons for the divergent performance. First, discretionary demand rebounded strongly after the covid years (2020-2021), driven by pent-up demand and the 'YOLO' effect, boosting spending on categories such as apparel, jewellery and travel.
In contrast, listed FMCG players faced several challenges – from high inflation hurting profitability to market share shifts toward D2C and regional brands, leading to muted volume growth for listed companies, he explained.
Biscuit maker Britannia highlighted in a recent investor presentation that its overall market share remained little changed in Q1 of FY26 as regional companies gained traction in select markets and categories.
The K-shaped recovery post-Covid resulted in higher-income groups benefiting more from the economic rebound, boosting their spending power. Health-related challenges during the pandemic also influenced consumer behaviour, leading to increased spending on travel, apparel, and jewellery – habits that have largely stuck.
Low base
Additionally, discretionary companies came off a very low base in terms of business activity and valuations five years ago, which amplified their returns, Matta added.
Eternal, Dixon, Trent, Chalet Hotels, Dollar Industries, Delta Corp, Swiggy and Yatra Online are among the companies included in the BSE Consumer Discretionary Index, which accounts for about 9% of the exchange's total turnover.
According to Deepak Shenoy, CEO of Capital Mind Mutual Fund, most staples companies were expensive five years ago and discretionary ones not quite so.
'The exact mix of discretionary versus staples will change and many staples companies will move into the discretionary universe," he said.
He noted that in terms of financial performance, many discretionary consumption companies have done very well, while the consumer staples segment has not seen much profit growth.
Dabur India's sales of personal care products grew at about 7.6% compounded annually over the past five years, with net profit rising about 4%. Emami's sales of skin and healthcare products grew a modest 7.5% CAGR, although profit jumped about 22%. Turnover at Marico, the maker of Parachute oils, grew 8% but profit rose just 10%.
Now compare that with Dixon Technologies, an electronics manufacturing services company – revenue surged 54.6% annually and net profit soared 59% CAGR over the same period. PepsiCo bottler Varun Beverages clocked an 18.6% CAGR in sales over the past five years, with net profit up 40.8%.
Trent, which operates Westside and Zudio fashion stores, has been in a league of its own: sales have surged 37.5% and net profit has leapt 66%, Mint's analysis showed.
From 2012 to 2019, traditional staples such as soaps and shampoos enjoyed a phase of rapid growth. But since then, pureplay FMCG companies have struggled with growth and revenue visibility, observed Manish Jain, head of fund management at Centrum.
'In contrast," Jain said, 'the quick commerce space offers far more visibility when it comes to growth, which is why investors are leaning more towards consumer discretionary plays."
This shift is driven by a clear evolution in consumer and investor behaviour – from focusing on basic needs to embracing aspiration and convenience-led consumption, Jain said.
The hunt for alpha
Sonam Udasi, senior fund manager at Tata AMC, said consumer discretionary is where the real action is: with volume growth outpacing that of traditional staples.
Zomato and Blinkit parent company Eternal's B2C businesses delivered a solid performance, with net order value rising 55% year-on-year in Q1 of FY26. Swiggy's food delivery gross order value grew almost 19% YoY, while quick commerce more than doubled.
In contrast, growth in staples was far more muted: Britannia posted 2% volume growth, Marico rose 9%, Emami's volumes fell 3% and Dabur recorded a 1% drop.
One big factor driving this shift is the rising number of women entering the workforce, Udasi said.
'With both partners working, there is less time for daily chores and convenience becomes a priority, and that's driving up demand for categories like ready-to-eat meals, packaged foods and lifestyle related choices," Udasi explained.
Jain of Centrum said categories like quick commerce could grow 10x, apparel by 5-7x, and even big-ticket items like TVs and ACs are set to outpace staples and 'that is where the opportunity lies."
With India's per capita income expected to rise from $2,500 to over $4,000 in 5-7 years, Jain said lifestyle upgrades will make discretionary consumption a key theme for the next decade.
That said, the wider perception is that recent fiscal and monetary moves by the government and the Reserve Bank of India will leave more discretionary income in the hands of low- to mid-income consumers.
Matta of Mahindra Manulife expects a pick-up in demand for these low-end consumption segments including two-wheelers, footwear, value fashion apparel, and quick service restaurants.
'We expect some alpha generation opportunities from these spaces," Matta said.
How do valuations stack up?
Nestle, HUL and Britannia currently trade at price-to-earnings multiples of 71.2, 55.2 and 59.1 times, respectively. Marico is at 54.7 times and Godrej Consumer Products at 63.4%.
In contrast, Dollar Industries, a maker of hosiery products, trades at a far lower multiple of 23.52 times. Sula Vineyards is currently at 38.6 times price-to-earnings multiple, casino gaming company Delta Corp at about 15 times, and kitchen sink maker Carysil 34.9 times. Yatra Online is at a multiple of 41.1 times and Trident at 32.3 times.
Udasi of Tata AMC said traditional FMCG companies have to adapt and innovate. The only way for them to keep up and justify their still-rich valuations is to revamp their portfolios and tap into newer, fast-growing categories including convenience foods.