NEW DELHI: The focus of FMCG firms has now shifted to smaller packs, as demand for these packs are rising across categories, including biscuits, snacks and bakery products. Observing that price hikes and grammage reductions have reduced consumption, companies are now focusing on the production of Rs 5/10 price packs more than others.
Mayank Shah, senior category head at Parle Products, told TNIE they are witnessing consumers moving towards Rs 10 packs across both rural and urban markets in the past few months. “Hence, we are focusing on the production of Rs 10 price packs more than others. Witnessing the traction in that segment, we have improved the production capacity of Rs 10 packs by 12-15% over the last two months.” According to the latest NielsenIQ report, traditional trade has seen a 4.9% volume decline led by shift towards smaller packs.
Sonika Gupta, Customer Success Lead (India), NielsenIQ said that there is an evident shift by consumers to smaller pack sizes to manage external factors for both foods and non-foods. For biscuits and bakeries primarily the demand for lower unit packs of Rs 10 is more, whereas for snacks, the lower unit pack of Rs 30 is more in demand, Shah informed. “At this point, it is not contributing to profitability since the margin is being affected by input cost inflation.
Grammage cuts and price hikes of products have also not reflected positively on consumption patterns. What can be leveraged, though, is sales maximisation,” he said. Arvind Chintamani, Vice President, Marketing, Colgate- Palmolive India, in the company’s latest investor call for the financial year ended March 31, 2022, said the firm will continue to focus aggressively in this environment on the low unit packs of Rs 10 and Rs 20.
Chief Financial Officer of Colgate-Palmolive India M.S. Jacob said the margin is not a function of unreasonable pricing. “A big chunk of our sale comes from Rs 10 and Rs 20 packs where we are not changing the pricing. The pricing is restricted to the higher sales where elasticity is a little bit lower than for the lower packs.”
Manish Aggarwal, Director, Bikano, Bikanervala Foods also noted that over the January-March, 2022 quarter, the company has grown 14% in sales volumes and its on-the-go packs are a key reason behind the growth, even amidst high-inflationary conditions.
Adding that small packs are key for FMCG growth, Aggarwal said, “Even in the future, Bikano looks to increase sales volumes through these packs.”