Those using larger packs hit harder

Prices of almost everything have been on an uptick in the last few months and consumers have been feeling the heat due to the recent developments. But a recent report by TOI shows that those using larger packs of consumer goods in their households felt more pressure, than those who consume medium or low-priced packs.

In a reply to ToI, Bizom, a platform that automates retail execution at 7.5 million kirana outlets, said that 62% of high-priced boxes saw price/grammage fluctuations across categories.

In comparison, price rises or grammage reductions were seen in 49% of medium-priced packs and 30% of low-priced packs. As a result, while many SKUS increased their pricing in May compared to February, this is more for high-priced packs.

“Many factors have contributed to rising input costs in 2022, including the third wave of the pandemic (December 2021-February 2022), the Russia-Ukraine crisis, the Indonesian palm oil export ban and global crude prices. Across FMCG companies, we see that they find it easier to increase prices of medium & higher price-point packs rather than the established low-price ones. This has led to customers downtrading in the hope of a correction in prices and, in cases, there may also be tempered usage,” Bizom’s chief of growth and insights, Akshay D’Souza told ToI.

According to the analysis, although roughly 97% of high-priced SKUs in chocolates saw a price hike or grammage reduction, the same was true for low-priced chocolate packs by 40%. In the packaged food industry, around 29% of high-priced SKUs had a rate increase or grammage reduction. On the other hand, just about 6% of low-cost food packets increased in price.

Up to 71% of high-priced packs of personal care goods witnessed a rate increase, while the proportion for high-priced packs of home care products was around 64%.

In the beverage industry, rate increases were seen in 51% of high-priced packs and only 12% of low-priced SKUs.

D’Souza noted that this movement in prices is highest among discretionary products. Commodities have also seen a comparable number of products where the prices have seen a hike.