Demand for value packs grows as Indian shoppers turn frugal

Salary cuts and job losses are making Indian consumers of packaged foods and personal care products frugal, leading to an increasing propensity to purchase low-value packs.

Fast-moving consumer goods (FMCG) firms that saw shoppers hoard large packs of staples and home-care products during the first phase of India’s lockdown are now anticipating consumers to down-trade.

More people are buying smaller packs as demand for bulk packs has fallen sharply, according to Adani Wilmer Ltd. The company, which sells packaged flour, among other things, added consumer packs or those up to 5kg are seeing rising demand.

“Our ratio of consumer packs and bulk packs has changed from 65:35 earlier to 85:15 now. This is because we are seeing more people buying smaller packs and also because restaurants and hotels are closed,” said Angshu Mallick, deputy CEO, Adani Wilmar.

Sunil Kataria, CEO, India and Saarc, Godrej Consumer Products Ltd (GCPL), agreed. “In rural areas, we are likely to see an increase in demand because of the reverse migration of workers and their families. Affordable, low-value packs will be a big draw for consumers in rural areas,” Kataria said. GCPL sells hair colour, soaps and mosquito repellents, among other things.

There will be opportunity for popularly priced products as a result of some down-trading that will happen in semi-urban and rural markets, Suresh Narayanan, chairman and managing director, Nestlé India, said in a video call. “You will start seeing the smaller packs starting to do better,” he said.

Marico Ltd’s Saffola cooking oil registered strong growth during the quarter as consumers cooked more at home during the lockdown, but its discretionary portfolio of personal care products, such as male grooming, serums and hair care, was hit, it said in a post-earnings call last month to state its fourth-quarter results. As a result, the company is “mulling over a low-value small package strategy to allow consumers to access some of these offerings in personal care in a slow economic environment”, said Saugata Gupta, the company’s managing director.