Those using larger packs hit harder

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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.

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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.

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