Life Style - September 05

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY







The consumerisation of urban India India is one of the world’s youngest nations with nearly two-third of its population under the age of 35 years and a median age of 24 years. Urban India accounts for nearly 30% of this burgeoning young population. The young urban Indian consumer, aged between 21 and 40 years, has grown up in the post-liberalisation era with the tailwind of a booming economy and without any guilt of consumption. We believe there is a significant shift taking place in the consumption pattern of these young urban liberalised Indian consumers or Yulics, led by various demographic, psychological, and economic factors. Rising aspiration levels, spending power - changing the consumption behaviour of Yulics Increase in the number of middle- and upper-income households has expanded the reference group for consumption, creating a strong pull factor to consume certain products and services. Growing penetration of television, internet, and foreign travel has made information about the latest styles/fashion easily accessible. This has raised the aspiration levels of Yulics, who are no longer afraid to use credit to fulfil their needs. In our view, we will see a leap in the spending on certain consumption categories as aspiration levels rise further. Strong economic growth after liberalisation and increasing globalisation has resulted in higher household incomes, and these continue to rise with the Indian economy growing at a brisk pace. Easy availability of credit and the rise of sunrise sectors like BPO and retailing are further channelling more money into the hands of Yulics. This is increasing their ability to pay for their changing needs.







Emergence of the Lifestyle space Percentage of consumption expenditure on traditional items like food, groceries and footwear is already shrinking. The Yulics are not satisfied by purely spending on basic products and services; they want to indulge by consuming goods and services that satisfy their lifestyle needs, which can broadly be classified as leisure, convenience & comfort, wellness and aspirational needs. We believe products and services that satisfy these needs will show significant increases going forward. We combine all these under a single umbrella reflecting the homogeneity of their demand and term them as lifestyle goods and services. We estimate the current size of the Lifestyle sector at ~INR 828 bn and expect that this will more than triple by 2010 to INR 2,594 bn. Our top picks Within the lifestyle sector, certain categories will grow exponentially because of changing consumption behaviour as well as availability; others will show above average growth as income levels rise and people move to a more aspirational product. In this report, we focus on select lifestyle categories. While a few are almost entirely driven by the trend towards lifestyle consumption, many others are embedded in existing sectors. Some are still nascent but are likely to emerge as significant sectors going forward. We cover organized retailing, air travel, alcoholic beverages, hotels, media & entertainment and a few other embedded lifestyle categories. Our top picks are companies across sectors which will benefit the most from the trend towards lifestyle consumption – Trent, Shringar Cinema, Asian Hotels, TV18, Dabur, Marico and Jet Airways.

Edelweiss

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