industry

Dry August decreases large FMCG pack sales



The ripples of the dry period in August are being felt in corporate balance sheets. The phenomenon of downtrading, in which consumers switch from purchasing larger product sizes to smaller ones due to financial difficulties or rising prices, has intensified in the fast-moving consumer goods (FMCG) sector, reported TOI.

According to data from the retail intelligence platform Bizom, smaller product sizes have experienced a more rapid growth rate compared to medium or high-priced alternatives across most FMCG categories. The data revealed that overall sales decreased by approximately 11% in August 2023 compared to the previous year.

The rain deficit in August appears to be fuelling the downtrading phenomenon, said Akshay D’Souza, Bizom’s chief of growth and insights.

Procter & Gamble Hygiene and Health Care’s VP (finance) Gautam Kamath said, “Retail inflation for the months of July and August have averaged 7% and August rainfall has shown an 11% negative deviation from norm, driving the caution. On anecdotal evidence, September rainfall appears to have bounced back — and might have a big say in how the rest of the year goes.” He told analysts that P&G is “cautiously optimistic” in its outlook on market growth.

Typically, large FMCG companies offer products at different price levels to ensure consumers stay within the company’s product basket.

At P&G’s first investor meet held recently, MD L V Vaidyanathan said the company continues to raise the bar on superiority in all price tiers where it competes. “We are leveraging this superiority to grow markets and, as a result, P&G’s share to sustainably build the business. Noticeable superiority is increasingly important in an inflationary environment, as consumers reassess value across all elements of their budget,” said Vaidyanathan.In most cases, prominent FMCG companies provide products across various price ranges to ensure that consumers find options within the company’s product range.During P&G’s inaugural investor meeting, Managing Director L V Vaidyanathan highlighted the company’s ongoing commitment to achieving excellence across all price segments in which it competes. Vaidyanathan stated, “We are leveraging this superiority to grow markets and, as a result, P&G’s share to sustainably build the business. Noticeable superiority is increasingly important in an inflationary environment, as consumers reassess value across all elements of their budget,” said Vaidyanathan.

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The data showed that in beverages, sales of mid-priced packs declined by 9.8%, while lower packs grew by about 6% (see graphic). Branded commodities, too, saw sales decline 9% in mid-priced packs, while lower price packs grew by 7.7%. In personal care, consumers downtraded from high-value packs (-8%) to mid-priced packs (8.5% growth).

The onset of the festive season, however, meant that confectionery and packaged foods bucked the trend, said Bizom.



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