FMCGs brave it out on small packs

  • warning: Illegal string offset 'type' in /home/retailri/public_html/modules/node/node.module on line 393.
  • warning: Illegal string offset 'has_title' in /home/retailri/public_html/modules/node/node.module on line 427.
  • warning: Illegal string offset 'has_title' in /home/retailri/public_html/modules/node/node.module on line 429.
  • warning: Illegal string offset 'title_label' in /home/retailri/public_html/modules/node/node.module on line 430.
  • warning: Illegal string offset 'has_body' in /home/retailri/public_html/modules/node/node.module on line 434.
  • warning: Illegal string offset 'has_body' in /home/retailri/public_html/modules/node/node.module on line 436.
  • warning: Illegal string offset 'body_label' in /home/retailri/public_html/modules/node/node.module on line 437.
  • warning: Illegal string offset 'help' in /home/retailri/public_html/modules/node/node.module on line 441.
  • warning: Illegal string offset 'min_word_count' in /home/retailri/public_html/modules/node/node.module on line 444.
  • warning: Illegal string offset 'custom' in /home/retailri/public_html/modules/node/node.module on line 447.
  • warning: Illegal string offset 'modified' in /home/retailri/public_html/modules/node/node.module on line 450.
  • warning: Illegal string offset 'locked' in /home/retailri/public_html/modules/node/node.module on line 453.
  • warning: Illegal string offset 'type' in /home/retailri/public_html/modules/node/node.module on line 456.
  • warning: Illegal string offset 'orig_type' in /home/retailri/public_html/modules/node/node.module on line 456.
  • warning: Illegal string offset 'is_new' in /home/retailri/public_html/modules/node/node.module on line 457.
  • warning: Illegal string offset 'name' in /home/retailri/public_html/modules/node/node.module on line 395.

As input costs rise, the dilemma for fast-moving consumer goods (FMCG) companies is, should they guard margins by fresh grammage reductions or offer value till things turn around?

For now, they are preferring to brave it out, even as their eyes keep darting skywards for assurance.

Unlike last fiscal, which became tough for FMCGs due to a very weak monsoon, there is hope crops are likely to be better this time round because of the forecast of a normal monsoon. A good monsoon improves farm productivity and brings down raw material prices.

The prices of wheat, sugar, cocoa and milk had darted up last fiscal, forcing FMCGs to hike retail prices of everything from biscuits to chocolates and beverages.

A majority of the hikes was in bigger stock-keeping units (SKUs), which is retailese for packages.


On the other hand, prices of smaller SKUs weren’t changed; instead, the packs just got smaller in terms of grammage, to offset the cost increase.

Structurally, small SKUs are not very profitable, but since they are bought frequently, they drive volumes of FMCGs, and cater to the needs of a larger base of consumers — the so-called mass-segment.