Price-Point Packs (PPP) continue to drive growth in the fast-moving consumer goods (FMCG) sector. Companies are expecting to see an uptick in rural demand with low- and medium-price packs.

The growth in the price-point packs is coming from across product segments, while the FMCG firms are focusing on increasing grammage with commodity inflation moderating.

“One-third of the business in our categories at Hindustan Unilever Ltd is locked in price-point packs. The consumption of the packs has increased over the years. We should be looking at ‘Are we doing enough on the pack strategy and how to get the bridge going up’,” said Deepak Subramanian, Executive Director -Home Care, Hindustan Unilever Ltd (HUL) at the Confederation of Indian Industry (CII) FMCG Summit.

“One of the things the FMCG companies have done is access pack in rural distribution. About 60 per cent of India still live in villages and companies need to grow focus in that area. The volume growth in FMCG could be better,” said Sudhir Sitapati, Managing Director and CEO of Godrej Consumer Products.

During the summit, industry leaders stated that consumers at both ends of the spectrum should be targeted. “Where companies could do better is play the price piano. We have become good at price-point packs with business being generated from them as they address consumers who have limited money. The other end of the spectrum are consumers who have money; I would urge companies to address those consumers and see if we are providing an adequate range of products,” said Prabha Narasimhan, Managing Director of Colgate Palmolive India.

Volume growth

The volume growth in FMCG is expected to pick up in the rural and urban areas over the next few quarters.

“The volume pick-up is taking place in urban and rural areas. There is a huge headroom to grow, as there are about six lakh villages and we are reaching out to one lakh villages in the country. Rural will grow on the back of penetration, increase in reach by FMCG companies, and also putting the right price-points. In the urban areas, e-commerce contributes to 10 per cent, and modern trade is up to 11 per cent. We will be back to pre-Covid margins by the end of this year. We have given an EDIBTA-margin guidance of 19 per cent and in another year it will be back to 20 per cent,” said Mohit Malhotra, CEO of Dabur India.

“A healthy mix of volume-based growth and category development is needed in the rural India FMCG market to reignite the desired growth,” said Saugata Gupta, MD & CEO of Marico India.

“The FMCG industry demonstrated a 3.4 per cent volume growth over the last 15 years, while consumption overall has grown at 6.1 per cent,” said Abheek Singhi, MD and Senior Partner, Chair of Practices at Boston Consulting Group, Mumbai.