Consumer Goods Makers Are Coming After Your Pocket Change More Than Ever
Nearly three decades after it started, India’s sachet revolution is only getting bigger.
The nation’s largest consumer goods makers are not just selling shampoos and biscuits in smaller, affordable packs but also branded dairy products, cosmetics, beverages and more. Users in smaller cities and rural areas, they said, are willing to switch to premium brands.
“We find a tremendous increase in demand for small Rs 5 to Rs 20 packs. People are buying or consuming less of bigger packs and more of smaller ones,” said RS Sodhi, managing director at Gujarat Co-Operative Milk Marketing Federation Ltd., the maker of Amul branded milk to ice-cream. “Earlier, we used to give good bargains on bigger packs. But now brands are giving bargains on small packs as well.”
Sodhi attributed it to a shift from unbranded to branded products in price-sensitive markets. “Demand for smaller packs is higher for branded food products in rural areas, and tier II and III cities,” he said. According to him, competition from regional and local brands also prompted pan-India companies to focus on lower-priced packs.
Citing examples, he said for Amul, the contribution of smaller packs to its dairy whitener volumes has gone up to 30 percent from 5-6 percent three to four years ago. In butter, the share of Rs 5 and Rs 10 packs jumped to 15 percent from 1-2 percent during the period.
Multinational consumer companies first started selling shampoo sachets in rural areas to boost volumes in the 1990s. So successful was the strategy that they emulated it for other categories like biscuits and chips. Consumer goods makers now say that selling packs priced at Rs 5-20 each is still among the best options to boost volumes in India's FMCG market—pegged at $52.75 billion by India Brand Equity Foundation.
A distributor from the north and another one from the west said the demand for such smaller packs has increased from mom-and-pop stores, confirming the trend. They spoke on the condition of anonymity.
Companies are making premium products more accessible at lower price points and there is a higher movement in the breakfast and energy bars categories, according to Dhananjay Sengupta, chief executive officer-small format at the Future Group—it includes Easyday stores. There is also demand for premium cookies and biscuits in smaller packs, he said, adding that consumer exposure to different recipes is creating a bigger market for herbs and seasoning sachets.
Mondelez’s Oreo, Parle India Pvt Ltd.’s Hide & Seek, and Britannia’s Bourbon and Good Day biscuits are among the premium brands available at smaller packs of Rs 10 each. Detergents, soaps, skin creams, deodorants and a host of other items are now sold in smaller sizes. Coca-Cola India, too, is betting on lower-priced units with its Glucocharge Auqarius and Maaza Refresh at Rs 10 each.
Lalit Malik, chief financial officer at Dabur India Ltd., had earlier told BloombergQuint in an interview that the size of the purchasing purse has also shrunk a little, making companies focus on lower-priced packs. “There is a price-point sensitivity among the consumer.”
K Ramakrishnan, country head at market researcher Kantar Worldpanel, however, sees only marginal downtrading. He also attributed the increase in demand for lower-sized packs to shift from consumption of unbranded to branded items. “Premium brands are making themselves accessible to everybody at lower price points,” he told BloombergQuint. “They are growing because they’ve introduced smaller packs.”