Hindustan Unilever (HUL), the country’s largest consumer goods company, is pushing large or family packs into select general trade outlets in top 100 towns, as it seeks to shore up volume growth, at least three distributors from Maharashtra, Gujarat and Madhya Pradesh have told FE.
The move is also aimed at bringing large general trade stores, those measuring 1,000-1,200 sq ft and above in terms of size, up to speed with modern trade by providing them large packs commonly found in modern trade outlets. The initiative has been rolled out across soaps and detergents, foods, beverages and personal care in what HUL calls ‘Bharat ke Shehar’, distributors said. The initiative also allows HUL, say distributors, to offer steep price-offs and discounts (as much as Rs 100-150 on some packs), making it attractive for consumers to buy and helping them uptrade in the process.
HUL also hopes to increase sales volumes with fewer store visits through the move, experts said, by tapping into stable urban demand. “For most fast-moving consumer goods (FMCG) companies, the challenge is to increase volume growth. Rural demand remains weak at the moment, while urban demand is steady. Large packs may not work in rural areas since purchasing power of rural consumers is limited. The initiative therefore is focused on urban areas,” G Chokkalingam, founder & MD, Equinomics Research & Advisory, said.
In response to a mail, HUL said that it had no comments to offer since it was in silent period ahead of its Q3FY24 results.
Some distributors see the latest move by HUL as a positive one, aimed at reducing the disenchantment that general traders have felt with regard to modern trade and e-commerce. Distributor bodies have routinely pointed out that general traders have felt left out with regard to packs and products. Larger packs and new launches, they say, are normally pushed first into modern trade and e-commerce, with traditional trade last in the list of priorities for consumer goods companies.
General trade, for the uninitiated, contributes to 80% of an FMCG company’s business, with modern trade and e-commerce contributing to the balance 20%.
“HUL’s large packs have been introduced in the last one to two months into those general trade outlets that are bigger than kiranas. These large general trade outlets are basically standalone shops where consumers can go and pick up products much like they do in modern trade or organised retail. By stocking family packs at these large general stores, HUL is sending out a positive message that consumers can come to general trade for their family needs,” a distributor in Madhya Pradesh said.
The large packs being pushed by HUL into general trade include 6-kg Surf Excel detergents, 3-litre Surf Excel matic liquids, 150-gm soaps bundled into 5+1 offers; 1.5 to 2-kg Brooke Bond Red Label packs; 2- to 3-litre Vim pouches; 2-kg Kissan ketchup, 1-kg Kissan jam, etc.