FMCG cos push lower unit packs as inflation bites

NEW DELHI: Fast-moving consumer goods (FMCG) makers are ramping up the availability of their products in smaller packs at lower prices to keep them affordable as inflation poses a heavy burden on households, especially low-income ones.

Several companies and analysts point to greater consumption of low-unit packs or those priced at ₹2, ₹5, ₹10, and ₹20. These are popular price packs within the FMCG ecosystem, making up 30-40% of revenues for some categories.

The smaller packs help companies avoid price hikes and sustain sales, especially among lowincome consumers.

Firms have also introduced more so-called “bridge” packs, priced between ₹5 and ₹20, to ensure their availability across the price pyramid while accounting for commodity inflation. For instance, biscuit maker Parle Products introduced its flagship glucose Parle-g brand and crackers at ₹15. Snacking brand Cornitos is set to launch a ₹50 price point for modern trade stores.

India’s largest packaged consumer goods maker Hindustan Unilever Ltd (HUL), introduced a ₹16 pack for its soap brand Lifebuoy, a bridge between the ₹10 and ₹36 packs it sells currently.

“We have approximately 30% of our business in price-point packs. The high levels of input cost inflation have had an impact on the offerings we have in some parts of this portfolio. We are, therefore, creating bridge packs to provide the right price-value equation to our consumers while making sure our products remain affordable and accessible. This will ensure that we protect and grow our consumer franchise in these times of unprecedented inflation,” a HUL spokesperson said in response to a query.

FMCG firms say taking price hikes or reducing the quantity of entry price packs is also becoming difficult. “Offering bridge packs is the best way to make consumers move up the price and value ladder,” said Mayank Shah, senior product category manager at Parle Products.

Meanwhile, with commodity inflation at a decadal high, manback ufacturing packs at ₹2 or ₹5 is also becoming tedious, according to the companies. “Whenever you have high inflation, and you need to push consumers to buy a bigger back or at a higher value, you have to introduce bridge packs,” said Shah. Parle also introduced a ₹15 pack for its Nutricrunch crackers. “The idea is to incentivize the consumer to buy a bigger pack, say from ₹10 to ₹20—a ₹15 pack helps with the transition,” he added.

Cornitos said it is facing 20-25% inflation on raw materials. So it is introducing a ₹50 pack, especially for modern trade stores. “We cannot take a price hike on the ₹35 pack or keep on reducing the pack size. With the current inflation, what we are offering at ₹35 and ₹90, we are unable to give offers and provide visibility in these modern stores. As a result, ₹50 is the middle path for us,” said Vikram Agarwal, MD, Greendot Health Foods Pvt. Ltd, the maker of Cornitos brand of snacks.

Meanwhile, firms facing fourdecade-high cost inflation are using a mix of steps, including direct price hikes and lowerweight products, to counter high raw material prices. “Low-priced unit packs or on-the-go packs costing on an average ₹5, ₹10, and, at the most, ₹20 have always been an integral part of the snacking segment of the Indian FMCG industry due to their pocket-friendly price range. In fact, over the last quarter (January-march 2022), we were able to grow 14% in our sales volumes, and our on-the-go packs are a key reason behind achieving this double-digit growth in sales, even amid high-inflationary industry conditions,” said Manish Aggarwal, director, Bikano, Bikanervala Foods Pvt.

SEVERAL FIRMS AND ANALYSTS POINT TO GREATER CONSUMPTION OF LOW-UNIT PACKS, OR THOSE PRICED AT ₹2, ₹5, ₹10 & ₹20