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21 July 2022
India’s FMCG brands fret about discretionary spending
Money & financePurchase behaviourIndia
Inflation in India has been running at around 7% for some months but that is less of a concern to FMCG brands than the reduced discretionary spending that has been one of the fallouts from the pandemic.
Sudhir Sitapati, chief executive of Godrej Consumer Products, says about half of Indians have cut back on discretionary spending, some because their incomes are now uncertain, some because they need to rebuild savings which got spent on medical or funeral expenses during the pandemic.
A shift in strategy?
Many FMCG brands have responded to inflationary pressures by cutting pack sizes or developing “bridge-pack” strategies, which offer the consumer slightly more volume at a higher price, but this approach may not work where spending is being cut altogether. That said, Sitapati believes the effects of the pandemic on consumer spending will not be long term.
That assessment is backed by several FMCG companies reporting increased sales in recent weeks in rural India. Parle Products, for example, has seen accelerated sales of both value packs of biscuits (+10%) and small packs of premium biscuits (+5%).
Elsewhere, ITC is looking beyond India, announcing its intention to scale up its FMCG portfolio and take its brands into more overseas markets.