Shrinkflation, or companies reducing pack sizes without lowering prices, also played a part in volume decline. Consumers paid 10.1% more per kilo for FMCG products during the period compared to a year ago while the pack size was reduced by 15% on ...
Nearly two-thirds of the fast-moving consumer goods segment, including biscuits, snacks, shampoo and bottled soft drinks, expanded by double-digit percentage in volumes in the February-April period.
Yet, the overall market fell 1% year on year after voluminous categories, particularly edible oil, atta, hair oil and detergent, either fell or grew at a slower rate, underlining that the consumer market slowdown is not widespread, according to the latest data by Kantar.
Shampoos, for instance, grew 13.6%, while noodles saw 30% growth, the fastest since the pandemic began. Even large categories - biscuits and salty snacks expanded by 13.3% and 14.7%, respectively. Bottled soft drinks erased their pandemic losses with a growth of 67% during their peak sales season.
"The growth in foods and beverages is riding on an upswing in at-home consumption of packaged juices and beverages in line with the growing consumer need for health. With mobility improving, hotels, restaurants and caterers (HoReCa) and canteen stores department channels are also back on track," said Mohit Malhotra, chief executive officer of Dabur. Shrinkflation, or companies reducing pack sizes without lowering prices, also played a part in volume decline. Consumers paid 10.1% more per kilo for FMCG products during the period compared to a year ago while the pack size was reduced by 15% on average.
Mayank Shah, senior category head at biscuits maker Parle Products, said packaged snacks pricing is still relatively lower compared to outside food. "There are ₹5 and ₹10 packs available for most packaged snacks and it satiates hunger better at that price point. Hence, even while consumers are downtrading, they are moving from low-priced street food to these packs," he said.
ADVERTISEMENT
Atta and edible oils contribute nearly 45% of FMCG volumes and both categories were impacted. Distribution of free wheat and atta by the governments led to a 30% decline in atta. However, branded players including ITC, Adani Wilmar and Tata Consumer, have grown volume and gained share, indicating a shift from loose and unbranded commodities to packaged ones.
"Because of high prices, there is a cut in demand. When it comes to oil, a particular brand may do much better than the market because in this type of scenario, what we are seeing clearly, is demand for brands where the retailer can exit fast," said Angshu Mallick, CEO of Adani Wilmar, during an earnings call.
