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Honasa CEO Varun Alagh: The FMCG Shift Towards Regional Brands Is Real

Swarnadwip Nath Published Aug 18, 2025, 11:26 PM Updated Sep 17, 2026, 05:40 AM

India’s fast-moving consumer goods (FMCG) sector is undergoing transformative change, with a sharp swing in consumer choices favoring newer and regional players. According to Varun Alagh, CEO and Co-founder of Honasa Consumer, parent firm of Mamaearth, this evolving landscape is causing established giants to rethink their strategies and priorities—heralding a new era of competition, value-driven propositions, and hyperlocal innovation.

The June quarter of 2025 marked a pivotal point for the Indian FMCG sector. Large companies such as Britannia, Hindustan Unilever (HUL), Dabur, and Marico reported muted performance, acknowledging a noticeable shift toward smaller, nimble, regional brands. As these dynamic brands leverage aggressive pricing, distributor-friendly margins, and deeply local strategies, they are reshaping consumer expectations and market share.

Key Highlights: Driving Factors Behind the Surge

Regional brands are gaining traction due to aggressive pricing and better distributor incentives, which appeal directly to small retailers and local consumers.
Consumers, especially in urban regions, are expressing a strong preference for value-driven offerings and products catering to localized tastes and needs.
Newer FMCG brands are focusing on vernacular branding, adapting products and campaigns to resonate more closely with regional cultures.
According to the latest statements from Varun Alagh, the industry’s growth in recent months has remained subdued for large players, with little to no substantial volume gains. Contrastingly, Honasa Consumer claims double-digit volume growth, driven by increased customer acquisition rather than price hikes.

Changing Market Dynamics

Major players, previously considered untouchable in certain categories, now face competition in their core segments. Britannia and HUL have publicly acknowledged the difficulties posed by small, regional competitors who excel in local markets and specific product niches. FMCG volume growth for industry leaders has plateaued, while regional and niche brands surge in categories like snacks, ready-to-eat meals, and personal care.

Localized brands offer a greater variety of flavors, formats, and price points, which attract middle-class and rural consumers.

Distributors are increasingly favoring brands that promise better margins, leading to wider and faster shelf penetration for regional players.

Strategic Response from Established Players

Britannia’s management has signaled readiness to compete in “smaller territories” with a war chest for regional battles.

HUL’s finance chief cited intense competition, especially in the detergent segment, where global and local players alike are vying for market share.

Companies are recalibrating strategies, investing in vernacular marketing, and rethinking price promotions to recapture lost ground.

Honasa’s Growth and Future Outlook

Honasa Consumer stands out as an exception to the general slowdown with its reported record quarterly revenue—Rs 595 crore in Q1 FY26 and a profit of Rs 41 crore. Its focus categories, such as skin and personal care, have achieved double-digit YoY growth. In particular, newer brands under Honasa grew more than 20% year-over-year, and product lines like The Derma Co.’s cleansers have crossed Rs 100 crore annual run rate milestones.

Varun Alagh attributes this success to attracting more consumers, sustaining double-digit volume growth, and innovation targeted at specific demographic profiles.

Industry-Wide Implications

Urbanization, the rise of dual-income households, and health-conscious buying are fueling interest in regional and functional product variants.

The diamond-shaped income pyramid means more consumers actively seek distinctive offerings that prioritize value, health, and local flavor profiles.

Personal care, snacking, and beverages remain the fastest-evolving spaces, with Ayurveda-inspired brands and men’s grooming witnessing strong adoption.

Conclusion

All signs point to a recalibration in the FMCG sector as it adapts to a consumer base that demands more choice, value, and regional relevance. With established players doubling down on strategic innovation, and regional brands riding the crest of consumer appetites, India’s FMCG sector is primed for vibrant, competitive growth in the months ahead.

Source: Economic Times, PTI, Newsbytesapp

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