August18 , 2022

fmcg: Indians buying less despite more shopping trips; small packs seeing higher sales growth: Kantar report

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Indians are making more shopping trips to grocery stores but buying over 7% fewer quantities compared to pre-pandemic levels, even shifting to unbranded products in some segments as household budgets are squeezed due to inflation, according to the latest data by Kantar.

Consumers made 142 trips to stores on average during the year ended April compared to 135 trips during 2020. However, they purchased 966 grams per trip versus 1033 grams two years ago. The overall fast moving consumer goods (FMCG) market declined 1% by volume during the year to April. Consumers rationalized by buying more packs on more occasions while companies shrunk pack sizes which in turn impacted volume growth, say experts.

FMCG companies are reducing the weight of the pack to mitigate input cost hikes. Lowering pack size unburdens consumers from spending too much even as the total number of shopping trips are beyond the pre-pandemic levels,” said K Ramakrishnan, managing director, South Asia, Kantar Worldpanel Division.

Due to rising prices, consumers are also opting for smaller packs at affordable price points such as Rs 1, 5, 10 and Rs20 which account for 28% of the overall consumer goods market. As a result, sales of small packs expanded 11% compared to the rest of the products that grew 7%. Over the past year, shrinkflation, or reduction in pack sizes without lowering prices, has helped companies post value growth as volume declined. But not for these price points, say companies.

“If a sachet of shampoo has to give a hair wash for a lady,you want to ensure that there is sufficient amount of shampoo in the sachet. For that matter if Rs 2 Horlicks sachet has to give a cup of Horlicks, there’s no way we could reduce the quantity in that Horlicks cup beyond a point which will not give a full cup of Horlicks,” Ritesh Tiwari, chief financial officer at

said during its earnings call. “We have not fully priced all the inflation that has happened in the price point pack.”

Companies, however, said smaller packs increase product reach but are not margin accretive since weight reduction is such products are difficult.

“While there is a stress on profitability due to higher sales of these packs, they generate trials and attract new consumers for us. Hence, it becomes critical to continue focussing on such price points and instead look at ways to improve efficiencies and extract margins,” said Krishnarao Buddha, senior category head at India’s biggest food company Parle Products.

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Traditionally, modern trade or supermarkets and online channels see higher sales of bigger packs. But as direct-to-consumer companies expand their presence offline, the need to have lower priced packs has increased.

“Small packs have always been a great way of driving trials, especially in the general trade or kirana channel in India. For consumers, a smaller pack is comfortable to try a new product and for the shopkeeper, it helps keep his investments lower, increase velocity of the products, thereby improving his income per shelf space allocated. Smaller packs also help increase penetration across general trade stores,” Soumyadeep Mukherjee, co-founder at Spice Story said.

Kantar data also shows unbranded products growing between 7-16% for categories such as edible oil, butter, floor and toilet cleaners while branded ones in these segments declined 2-11%. Even premium products that account for 20% or Rs75,000 crore to the consumer goods market, are expanding at a slower pace last year across product categories, especially in discretionary segments such as personal care products.

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