India’s Top 2% Are A $100B Opportunity

There’s a perception that businesses catering to the affluent in India can only thrive as small, niche ventures.

The tried-and-tested strategy for building in India’s consumer space has been to target the nation’s vast consumer base, a narrative buoyed by the much-touted demographic dividend.

While the rising middle class and Bharat markets have their appeal, there is a very real opportunity to build large businesses catering to India’s affluent population, a TG that’s evolved and unique enough to warrant a dedicated focus.

We foresee multiple billion-dollar companies getting built solely by serving India's top 2% households.

The Power of the Affluent Consumer

India's top 5 million households, constituting approximately 2% of the population, hold more than 50% of the country's wealth and are climbing even higher on the prosperity ladder.

2%

Indian Households

=

50%

India’s Wealth

These households contribute disproportionately to consumption as well.

Power Law in India’s Consumption

2 Mn

Power users

50-60% GMV

2 million power users (6%) contribute 50-60% of GMV at 8-10 times the average revenue per user (ARPU) of $175.

12-15 Mn

Power users

40-50% GMV

On Amazon, 12-15 million power users (12%) contribute 40-50% of GMV at 4 times the ARPU of $121.

1%

Households

40-50% Flights

In aviation, 1% of households account for 45-50% of all flights.

Source: Elevation internal estimates, ICCT

Moreover, the affluent in India are getting richer, with the majority of their incremental income being allocated to discretionary spending.

Adopting a conservative stance, we estimate that the top 5 million households allocate approximately $40 billion annually towards discretionary expenditure. Over the next decade, this spending pool is projected to expand to $100 billion as their incomes grow further.

The $100 Billion Opportunity

The rich in India are getting richer and a majority of their incremental income moves to discretionary spends

Discretionary Spends of India’s 2%

How Can Founders Attack This Opportunity?

Targeting this audience demands a keen focus on earning trust. The usual "fail fast" mantra may not apply here, as the customer expectations are high and the room for error is zero.

Given the depth of this market and the evolution of this base into a distinct but heterogeneous demographic, a differentiated approach is essential. A playbook that’s different from what works for the broader middle-class or Bharat markets. A one-size-fits-all strategy won’t cut it.

Founders should not shy away from full-stack business design choices if that is what it takes to effectively solve the real customer problem and offer a level of customer delight that’s critical to building a large company.

The Opportunity

Unique
Needs

Premium
Quality

Unique
Needs

Examples Emerging Opportunities

Large opportunities exist to solve needs that are unique and differentiated due to different aspirations and decision-making frameworks in life situations for this audience.

Examples

Urban Company

Urban Company solved unique needs for this audience with their salon and spa (accounting for over 50% of their revenues). At a time when the norm was to visit beauty salons outside, offering comparable or better quality service at home allowed their customers (busy women juggling multiple responsibilities) to have more flexibility and time

Cred

In a different industry, CRED addressed a unique pain point for affluent customers with multiple credit cards (10-15 million unique users). At a time when more than 95% of credit card holders didn't have auto-pay enabled and due dates of different banks were usually on different dates, CRED solved the anxiety of missing repayments, being penalized with late fees, and damaging credit scores. This enabled CRED to use this as a wedge to build a large, engaged customer base to further cross-sell other financial services and e-commerce offerings.

Emerging Opportunities

Pets

The current pets market across products, healthcare, etc., is ~$1 billion and growing at 22% y-o-y to reach $7 billion in the next decade. India is the fastest-growing pets market globally at the moment. The big shift happening is higher. adoption of pets due to social acceptance, increasing loneliness, etc., and a huge unlock in customer mindset where they think of themselves as "pet parents" rather than "pet owners," and hence are willing to spend much more on their "pet babies" compared to the utilitarian mindset that was more common earlier.

Premium Leisure Travel

The travel preferences and aspirations of the affluent Indian consumer have evolved meaningfully compared to the broader audience. This segment is characterized by a higher frequency of weekend getaways and international leisure trips. On the one hand, they desire a sense of agency over their travel decisions, but on the other, they value curation and convenience due to their busy lifestyles. They prioritize unique experiences over simply ticking off popular sights and activities and exhibit a willingness to pay for them, often opting for unconventional accommodations like Airbnb over traditional hotels when traveling abroad. Moreover, this segment demands a higher level of quality and convenience in core travel services such as visa processing, forex, and hotel bookings and is happy to pay for the privilege (e.g., Atlys). Successful businesses in this space will need to straddle the fine line between providing the customer agency and allowing them to be in control and ensuring the right curation and convenience while leveraging the core universal social triggers that motivate travel decisions.

Premium
Quality

Examples Emerging Opportunities

The opportunity lies in addressing existing needs where quality trumps price, and customers are willing to pay a fair premium for that superior quality.

Examples

Country Delight

a >$200 million ARR company, distinguishes itself by providing premium quality pure milk and essential groceries. In contrast to the prevalent market trend of packaged milk often tainted with adulterants, Country Delight offers subscribers a simple proposition: rich, creamy milk devoid of impurities and chemical-free staples and vegetables. It offers an easy-to-use milk purity test kit for families to assess their current milk sources and see the proof of the pudding themselves before signing up. Families, prioritizing their children's well-being, gladly pay a premium of ~30-50% for this quality. This focus on quality has allowed them to earn their customers' trust and build a highly retentive (>90% after 3 years) subscription model with milk as the wedge and cross-sell into higher-margin categories like curd, paneer, staples, veggies, etc.

Tanishq

In the early 2000s, when local jewellers dominated purchases due to trust, Tanishq launched their Karatmeter campaign to test the purity of existing jewelry owned by customers and offered to exchange the slightly impure gold for pure gold from Tanishq. This made Tanishq the poster child for purity and trust in the market, setting them on the path to $4 billion in revenue over the next two decades.

Emerging Opportunities

Real Estate

We believe there's a large opportunity in home rentals ($2 billion opportunity, poised to grow to $8 billion in the next decade). From the quality of new inventory available for rentals and middlemen to processes involved in the rental process, much was broken. NoBroker has beautifully solved some parts of it through their marketplace model. But there remains an opportunity to build a full-stack services brand that manages the process of showing homes, all communication between landlords and tenants, and standardizes rental contracts and payment processes to give more comfort and assurance to both parties. The value unlocks here can come from expanding the market and bringing in previously unavailable homes, charging a service fee for the same. Companies like QuintoAndar in Brazil have had early success in delivering value using this model.

Premium Healthcare

Providing specialized healthcare services (e.g., IVF, cancer treatment) that cater to the affluent segment's demand for quality and personalized attention. Key segments here will be IVF, Maternity, Pediatrics, Oncology and Dental.

The potential to create meaningful, large-scale businesses that resonate with India's affluent consumer base is vast and exciting, and we look forward to supporting the audacious who will build these.

India’s Top 2% Are A $100B Opportunity

The Power of the Affluent Consumer