Amid inflation-induced price rise of fast-moving consumer companies, consumers have started buying smaller stock keeping units (SKU), a report by Business Standard noted. As per the report, four out of six FMCG categories tracked are witnessing downtrading in rural markets, while five of six in urban markets have also seen a similar trend.
“There is a significant increase in contribution towards lower price point among commodities mainly on account of hyper price inflation from edible oils, which is a key ingredient in the India food plate,” Akshay D’Souza, chief growth and insights officer at Bizom, told the daily.
“Price inflation remains a key driver of this shift across categories, especially among those where oil remains a key input ingredient. As brands announce the next round of price hikes, we do see an impending pressure on volumes driven by the drop in usage in the coming months,” it added.
They further stated that in packaged foods, low-price point packs have witnessed an increase in consumption in urban areas with the opening up of the economy. Meanwhile, in home care, there is a clear preference of consumers towards mid-size packs in rural areas, whereas in urban areas, again low-price packs are being preferred, it noted.
However, packaged food companies are yet to witness any such downtrading. Parle Products and Balaji Wafers said they have not seen consumption taking a hit yet, the report informed.
“The impact of price rise will be felt in the next two months once the new increased prices hit the market,” Mayank Shah, category head at Parle Products told Business Standard.