Households across India bought around 645 packs in 2021 on average, 8% more than a year ago, according to a recent report by Kantar. Yet volumes, which indicate the number of products sold, increased by just 0.1%, with the average size of packs purchased falling to 321 grams, down 10% from 356 grams in 2020. As consumers purchased smaller packages more frequently, companies reduced grammages to maintain prices. unchanged in a context of escalating costs which had an impact on volume growth.
“Volumes remained under pressure during the year due to rising prices, leading to frequent purchases of smaller packs. However, commodity consumers came to terms with the new price structure , especially of staples, and will not lower prices or reduce their consumption simply because of price increases,” said Angshu Mallick, managing director of Adani Wilmar, which sells the Fortune brand of foods. base and edible oils.
Additionally, several segments such as coloring, chocolate, soft drinks, deodorants and coffee have seen a strong recovery with growth of around 15% due to a weaker base in 2020 where they fell by 9%.
Consumer packaged goods volumes plunged 1.8% in the quarter ended December – the second straight decline – as companies raised prices to offset rising input costs.
Several companies including Hindustan Unilever (HUL), Britannia, ITC, Godrej Consumer, Parle and Dabur have warned that prices will continue to rise over the next two months amid the highest levels of inflation seen in decades . From soaps to skincare products, prices in all categories have already increased by 10-15%.
“In small packs, we are seeing a growing trend of people preferring Rs 10 packs instead of Rs 5 packs in categories such as snacks and biscuits. Therefore, there is an improvement in terms of value, as the lower prices now offer significantly reduced gram weight,” said Krishnarao Buddha, senior category manager at Parle Products, India’s largest food company.
Kantar said consumers are adapting to these changes by buying less. “With inflation expected to be high in 2022 and many manufacturers already confirming price changes for the first quarter, we expect this behavior to continue,” the report said.
Hindustan Unilever, in its recent earnings call, said almost a third of its overall business came from affordable prices such as Rs 1, Rs 5 and Rs 10, where prices remained unchanged but grammage was reduced .
“A lot of the price packs are sold in rural areas and in those packs, even if you don’t touch the MRP (maximum retail price) but adjust the volume, it’s reflected in your lower volume growth “, said the president of HUL. said Sanjiv Mehta.
Not all categories were impacted despite a secular upward price trend, according to data from Kantar. While segments such as toilet cleaners, hand sanitizers, ready-to-eat foods, chyawanprash, honey, detergent bars and atta saw a sharp drop in volume of around 5%, categories such as hair wash, noodles, cookies and savory snacks saw stable volume growth of 12%.
Additionally, several segments such as coloring, chocolate, soft drinks, deodorants and coffee have seen a strong recovery with growth of around 15% due to a weaker base in 2020 where they fell by 9%.