Business - Sachets paying off

Companies bet big on small packs to beat inflation heat
Small is paying off in a big way for inflation-hit FMCG companies. As consumers’ monthly budgets come under pressure, smaller packs at lower-price points have become critical for consumer product firms since these have begun registering faster offtake than mid-sized packs.Companies are either introducing newer, lower-priced packs at cheaper price points or sharpening focus on the existing smaller packs. The pinch due to inflation is not being felt by the semi-urban and rural households alone. Henkel has just introduced a new 400 gm pack of Henko washing powder at Rs 40 and withdrawn the 500 gm pack that used to sell for Rs 46. It has re-introduced Pril liquid for Rs 50 (425 gm bottle), down from Rs 55 (500 gm). “A family of four requires only 400-425 gm of washing powder in a month. We withdrew the 500 gm packs as as they were making consumers spend more and consume more. In the next two-three months, offtake of products at price points of Re 1, Rs 5, Rs 10 will be higher. We are working at our distribution system so that the smaller packs are easily available,” said Henkel India marketing V-P (laundry and homecare) Ranju Mohan. According to a marketing head of a consumer goods company, unlike the slowdown five years ago when small local players gained in volumes, this time they may not be able to flex their muscles too much, owing to high input costs limiting their presence. Large companies can gain with some planning and good consumer insight. “Households are buying provisions in small packs and when they run out of them by the 21st-22nd of the month, they buy even smaller packs to sustain for the rest of the month. Companies should therefore have products to cater to such needs,” he said. Gujarat Cooperative Milk Marketing Federation’s Amul introduced 25 gm packs of butter few months back, which is now clocking higher sales than the traditional 100 gm and 500 gm packs. Said GCMMF CGM RS Sodhi: “The same is the case for our milk powder. Earlier, traditional packs of 200 gm, 500 gm and 1 kg used to sell more, with the 500 gm packs selling the most. Now, it’s the 25 gm and 50 gm packs that are selling in higher numbers.” Said FritoLay marketing director Deepika Warrier: “Our smaller packs are moving faster than the bigger ones, but the reasons could be more than just inflation. We have upped penetration and distribution of the smaller SKUs, which could also be the reason why the smaller SKUs are registering higher offtake.” In FritoLay’s case, the Rs 5 pack of 15-20g is selling more than the 30-50g and 80-130g packs. Godrej Consumer Products ED & president Hoshi Press said: “It’s easier to increase prices of premium products but in case of sub-popular products, the choice is between reducing grammage and maintaining the same price points or introducing another price point to suit consumer pockets.”