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India’s Tier 2 and Tier 3 cities demand packaged, standardised food brands with metro-level trust
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Friday, 02 January, 2026, 08 : 00 AM [IST]
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Nandita Vijayasimha, Bengaluru
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India’s Tier 2 and Tier 3 cities are witnessing a growing demand for packaged and standardised food brands. This shift reflects heightened awareness around health and hygiene, along with a preference for reliable brands that deliver uniform taste, clear labelling, and assured quality.
Prabhu Gandhikumar, founder, TABP Snacks and Beverages, pointed out that 2025 was the year the 'Bharat' consumer truly took center stage. "We saw a decisive shift from unorganised, loose beverages to packaged, standardised brands, even in the deepest rural pockets. The market has matured beyond just 'availability'—it is now about 'quality at the right price.' Consumers in Tier-2 and Tier-3 cities are no longer satisfied with generic options; they demand the same hygiene and brand trust as metro consumers but at price points that work for their wallets. On the regulatory front, the tightening of FSSAI norms has been a blessing in disguise; it has naturally filtered out non-compliant unorganised players, clearing the path for serious, quality-focused brands to capture market share.
The most fundamental reshape has been the 'democratisation of aspirational flavours.' Beverages that were once considered premium or urban-exclusive—like pulp-heavy fruit drinks or functional beverages—are now expected at the Rs 10 and Rs 20 price points. Another massive shift is the 'Regionalisation of Taste.' The era of a single 'pan-India' flavour dominating the market is fading. "We’ve seen that hyper-local flavours (like Lemon Salt, Mojito, Jeera, Grape and Pineapple), when packaged hygienically, outperform generic international flavours in specific belts," he added.
In 2026, there could be three major waves. First is 'Functional Affordability' as consumers will start asking: 'What does this drink do for me?' beyond just thirst quenching, even at mass price points. Second is the 'Return to Roots' where we will see a surge in traditional Indian beverages in ethnic versions being packaged in modern, convenient formats. Third, 'Clean Labelling' will become a hygiene factor, not a premium feature. The rural mother is just as concerned about sugar and preservatives as the urban one; brands that respect her intelligence by offering cleaner products will win loyalty, said Prabhu.
The single biggest challenge will be 'Margin Resilience.' With raw material costs fluctuating and inflationary pressure on the consumer's wallet, maintaining the 'magic price points' like Rs 10 or Rs 20, while delivering superior quality will be a tightrope walk. Supply chain resilience is the second hurdle; as we go deeper into rural India, the logistics cost per unit increases. The industry must prepare by investing in localised manufacturing—producing closer to the consumption point to kill logistics costs—and by adopting smarter procurement strategies to hedge against commodity volatility. Trust will be the currency of 2026; any compromise on quality for cost savings will be punished instantly by the market, noted Prabhu.
The key for 2026 is expected to be a shift toward spice. The Indian palate is demanding more sensation. "We are seeing a massive shift away from overly sweet Western colas toward spicy, tangy, and masala-led beverages: Jeera, Lemon Salt, Ginger. This flavour profile will dominate the non-alcoholic beverage market," he said.
The fundraising environment has changed. Investors in 2026 will look for ‘brick and mortar’ resilience over ‘paper unicorn’ valuations. Companies that can show real assets and real consumption will attract the best capital, said Prabhu.
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