Amid inflation-induced price rise of fast-moving consumer companies, consumers have started buying smaller stock keeping units (SKU). According to Bizom, four out of six categories tracked are witnessing downtrading in rural markets, while five of six in urban markets have also seen a similar trend.
“There is a significant increase in contribution towards lower price point among commodities mainly on account of hyper price inflation from edible oils, which is a key ingredient in the India food plate,” Akshay D’Souza, chief growth and insights officer at Bizom, said.
In packaged foods, low-price point packs have witnessed an increase in consumption in urban areas with the opening up of the economy. In home care, there is a clear preference of consumers towards mid-size packs in rural areas, whereas in urban areas, low-price packs are being preferred.
“Price inflation remains key drivers of this shift across categories, especially among those where oil remains a key input ingredient. As brands announce next round of price hikes, we do see an impending pressure on volumes driven by the drop in usage in the coming months,” D’Souza said.
However, packaged food companies are yet to witness any such downtrading. Parle Products and Balaji Wafers said they have not seen consumption taking a hit yet. “The impact of price rise will be felt in the next two months once the new increased prices hit the market,” Mayank Shah, category head at Parle Products, said. Chandu Virani, founder and director at Balaji Wafers, expects larger packs to take a hit in the coming months.