Packs, promos, discounts push FMCG sales

Aggressive promotional offers, smaller pack sizes and price discounts – the three Ps – have led to a value growth of 13 per cent in fast moving consumer goods (FMCG) sales, according to an AC Nielsen study.

With rising inflation, FMCG companies are basically targeting the ‘impulse category' of products, such as biscuits, chocolates, shampoos and soaps, to push sales.

In 2010, the volume growth in food categories was slower even as growth was higher in value terms.

However, both value and volume growth in non-food products grew at around 8 per cent over the last year.

The study cautioned that if inflationary pressures did not ease, non-essential products such as butter, margarine, milk powder, jams/jellies and squashes would be the worst-hit, as these had already seen price increases during 2010.

Categories such as packaged atta (wheat flour) and packaged rice, etc. saw sluggish volume growth as consumers temporarily resorted to unbranded alternatives.

To beat this trend, FMCG companies banked more on the ‘impulse' category of products, the study said.

“Small treats continued to be important to the Indian consumer at a time when inflation cut into bigger items of discretionary expenditure like eating out, out of home entertainment etc”, the study said.

Due to initiatives such as small packs, product innovations and attractive promotions, the study found no evidence of inflation's impact on top non-food categories such as washing powder, shampoo, and toilet soap even though the lead players in these categories had stepped up prices.

Lifestyle products

Interestingly, while lifestyle/personal grooming categories such as hair conditioners, hair dyes, hair remover, liquid soap did not seem to be affected by inflation, more ‘external' manifestations of indulgence and aesthetic expenditure such as nail enamel and lipsticks slowed down, indicating a temporary adjustment in the consumer's purchase basket.