Mumbai: Inflation may have cooled down in recent months. But consumers are still buying more of smaller packs in branded commodity products — a category which has grown 23% in May 2023 as compared to the same month in the previous year.
Last year, consumers were buying smaller packs due to the rising inflation in these products, in the hope of a drop in prices. However, while the year-on-year (YoY) category growth has been in strong double digits in May 2023, the share of smaller packs remains higher and these have grown faster (1.6%) than mid-sized packs (-2%) and large-packs (0.4%), according to Bizom, which is a platform that automates retail execution at 7.5 million kirana stores.
Bizom’s chief of growth and insights, Akshay D’Souza, said, “We see consumers moving towards an increased share of smaller packs even as inflation and commodity prices seem to be in control. This could also be due to the summer holiday travel inducing lower value purchases and stocking at home for these products.”
The growth in low-unit price packs has, however, reduced month on month from 2.4% in April 2023 to 1.6% in May 2023, while the same in high-value packs has inched up marginally from 0.2% in the preceding month to 0.4% in May 2023.
Home care, on the other hand, continues to see a movement towards mid & high value longer use packs driven by greater value offered here. “We see rural consumers’ sales are particularly strong for this need category of products,” said D’Souza. He added that, overall, there was a challenge of stocking of FMCG products, which was offset by higher number of kiranas in May this year and that helped post low single-digit FMCG growth YoY.
“Rural growth in commodities and home care have been a key driver to help FMCG get in the black for May 2023. Almost two-thirds of districts across India saw excess and large excess rainfall in summer months between March and May this year. It has dropped peak summer temperatures and that has impacted sales of seasonal summer products,” said D’Souza. A cooler summer is one of the reasons why beverages were impacted, with consumers moving towards single-use consumption packs.
On the other hand, personal care products seem to be moving from single-use, small-value packs to a multi-use, mid-sized pack. “Consumers seem to be looking for value even as sales are lower in both urban and rural,” said D’Souza.Overall, the FMCG industry posted a sales growth of 1.4%, according to Bizom.