'Small is beautiful' mantra is back

Consumption has slowed in Tier-II and -III towns, while it is growing in rural areas, industry data indicate

Amid the economic crisis, FMCG companies are pushing smaller packets, with the category clocking in a double digit growth. The cost-conscious consumer is being wooed by these companies with products, across categories, priced between Rs 5 and Rs 20 a packet. These are key to driving volumes during the tough economic situation.  Keen to protect market share, companies are sharpening their marketing focus to promote low unit packs, especially in highly competitive segments.

Breakfast cereal major Kelloggs India’s Rs 10 packs, one of the first to do so in its category, has worked well for the company and has helped it maintain its leadership position. H S Tibb, marketing director at Kelloggs India, said the small packs have done well for the company and the company might extend the Rs 10 pack products in other categories as and when the consumer need is felt. The breakfast cereal market is about Rs 700 crore, Tibb said quoting Nielsen data. Kelloggs India’s attempt to localise flavours has been paying dividends as well, claimed Tibb. While these smaller price point products have traditionally been focused on semi-urban and rural areas, companies feel when the sentiments are weak, these are likely to attain a greater presence in the urban market as well. Consumption of small ticket items would be encouraged, a recent trade data had also indicated. Kolkata-based Emami has its products starting from as low as Rs 1 Naresh H Bhansali, chief executive officer-finance, strategy and business development at Emami said, “What the consumer likes about this range of products is a value-added product at such a low price point. When the overall economy is not doing well, this would help Emami and all other companies in the industry for sure.”

Emami’s Navranta Oil is available in the market with a price point of Rs 1, while Boroplus is also sold at Rs 5 packets, followed by Mentho Plus in similar small packets. Ujala maker Jyothy Laboratories echoed the same by adding that the company’s recent launch of smaller ‘Fa’ deodorants has been received well in the market.

According to Kaustubh Pawsarkar, analyst at Sharekhan, small packs are an integral part of the companies now and plays an important role in deeper penetration. “Urban consumption is showing signs of a dip in consumption, so Rs 5-10 packs would keep the momentum going in semi-urban and rural areas.”

Ullas Kamath, joint managing director of Jyothy Laboratories, said the segment had been growing in double digits, but products with lower price points also helped in earning the loyalty of new consumers as some might not spend large amounts while buying a company product for the first time. Jyothy Laboratories too has its range of products starting from Rs 5. Multiple reports have indicated that urban consumption has slowed down and Tier-II and -III towns and rural areas are showing better growth. To keep the volume growth intact, surely the mantra would be ‘small is beautiful’.