Companies

Small packs give big comfort to FMCG firms in pandemic times

Meenakshi Verma Ambwani New Delhi | Updated on January 11, 2021

Companies are looking to woo new urban consumers with small packs LUPs as they opt for branded products amid a heightened focus on health and hygiene   -  istock.com/Suprabhat Dutta

Covid-led stress on household incomes drives growth

Amid a strong uptick in demand across both rural and urban markets, FMCG companies are stepping up their focus on small packs, also known as low unit packs (LUPs). These packs present a value-for-money proposition in pandemic times, and are hence found attractive.

It is the rural regions in particular that are driving growth for this category. In urban markets, too, companies seek to woo new consumers with LUPs as they look for branded products amid a heightened focus on health and hygiene.

According to data sourced from Kantar Worldpanel, in the categories of branded atta, floor cleaners, toilet cleaners and bar soaps, small packs grew at a faster rate than the overall category during March-November 2020 compared with the same period in the previous year.

Going with this trend, Del Monte is launching pomace olive oil in affordable 1 litre packs priced at ₹250. Anshu Anand, Head-Marketing, Del Monte India, said: “This is the first ever affordable pack launch for olive pomace oil in India.We believe this will drive affordability in the premium olive oil segment and bring in new consumers in the olive oil category. This new launch will make olive oil available in India at just 10-15 per cent more than other premium edible oils, making it an attractive proposition for health-conscious consumers.”

Ashwani Arora, MD and CEO, LT Foods, known for brands such as Daawat, said: “In the past few months, we have seen a shift towards packaged basmati rice due to factors such as brand assurance, hygiene and quality. This is evident from the fact that our small pack business was up nearly 25 per cent on a year-on-year basis.”

Rural growth

Companies such as Jyothy Labs and Dabur India also believe smaller packs will continue to be one of the key pillars of growth as rural demand is expected to remain robust in the coming months.

Dabur India, for instance, is focussing of late on introducing smaller packs of chywanprash after ramping up the LUPs portfolio in other segments. Ullas Kamath, Joint Managing Director, Jyothy Labs, said smaller SKUs are growing faster in rural regions.

While LUPs have played a significant role in driving penetration for FMCG companies even in the past, especially in rural regions, some companies believe it has gained further significance in the pandemic times due to the stress on household incomes even in urban regions.

Mayank Shah, Senior Category Head at Parle Products, said, “In 2019, we had seen some drop in contribution of LUPs to our overall sales. But, in 2020, we saw a reversal of this trend, with small packs gaining salience even in urban regions due to the financial impact of the pandemic on household incomes.”

A PepsiCo India spokesperson said that while smaller packs of Lay’s and Kurkure continue to perform well, the company is receiving encouraging response for LUPs for brands such as Pepsi and Slice.

“We expect the demand for LUPs to further grow in the rural areas, where a majority of consumers demand value for money. On the other hand, with people settling in the new normal and stepping outside of their homes, convenience while being mobile will contribute to the uptake of their sales in urban markets,” the company said.

Published on January 11, 2021

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