Small is beautiful for FMCG players as buyers turn thrifty

Aug 12 2013, 13:49 IST
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SummaryFirms turn attention to smaller packets, economy brands

the Amul brand, is increasing the production of smaller economy packs to retain consumers. As there's an increasing demand for smaller packs for our dairy products, we are increasing the production of small packs. As of now, we are not seeing any signs of downtrading at Amul as consumers still look for quality dairy products, said GCMMF managing director RS Sodhi.

The Indian FMCG industry, which registered 15% growth in 2012, is expected to slowdown in 2013. Boston Consultancy partner Amitabh Ball said a lot of discretionary and big-ticket spending is getting deferred with the economic downturn in India. This is hurting categories like automobiles, personal care, luxury fragrances and durables. On the other hand, categories such as fresh food/nutrition and health are seeing trading up. We are witnessing some drop in volume growth across FMCG, he added.

While some FMCG companies are gearing up to tackle the downtrading syndrome, there are others who are not worried about consumer's changing preferences this fiscal.

Our sales growth has been good in Q1 FY14. Our brands are doing well across categories and we do not see any downtrading at GCPL (Godrej Consumer Products), said GCPL chairman Adi Godrej.

Sharing similar views, ITC Foods chief executive Chitaranjan Dar said: I am not witnessing any downtrading in the branded foods sector, Our sales ration between premium brands and mass brands remain the same.

Echoing similar sentiments, Duncan Tea COO MC Appiah said there does not seem to be strong signs of downtrading at present as consumers have become conscious and more careful with their spending habits.

When consumers buy mass brands instead of premium products, it will have an impact on the overall margins of many FMCG companies, said an FMCG analyst with a domestic brokerage firm in Mumbai. Currently, the down trading syndrome is visible only in certain categories. We will get a clear picture in the next few months, he added.

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