Consumers visit stores more, but buy less

Around 20% of overall FMCG volumes comprise premium segment and contribute Rs 75,000 crore in terms of value within the total FMCG industry, according to Kantar data.

Tata Tea natural segment saw 61% gains from new users.

By Kritika Arora

With inflation running high and households cutting down their discretionary spend, consumers have made more trips to shops in the year ended April 2022 compared with 2020, but have purchased less in terms of grammage.

According to a study by data consultancy firm Kantar, in the year to April customers made 142 trips to stores on an average compared with 135 during 2020. However, they purchased 966 g per trip during the year to April against 1,033 g in 2020.

While FMCG volumes have been under stress for the past year, according to the Kantar study, premium brands in segments like coffee, tea, snacks, biscuits/cookies, face moisturisers, sanitary napkins, toothpaste, hair oils, edible oils, dish wash, washing powder, and detergents have seen less stress compared with mass or mid-segment products. This segment continues to grow across sectors in the current year, albeit slower when compared with last year.

Though downtrading is a norm when prices rise, FMCG firms have been able to keep consumers within their fold by reducing the package size of their premium products, by branding products as “natural”, and through “specialisation”.

“Broadly, FMCG growth has slowed considerably, its almost flat compared to last year. Growth has slowed in mass, economy, premium segments but what has reduced least is the premium one,” K Ramakrishna, MD at Kantar Worldpanel, said.

Around 20% of overall FMCG volumes comprise premium segment and contribute Rs 75,000 crore in terms of value within the total FMCG industry, according to Kantar data.

By resorting to smaller pack size amid rising prices, products like face moisturisers in the premium segment saw 17% volume growth in the last 12 months ended April, and premium tea saw 5% volume growth. Here, Glow and Lovely natural segment cream saw 78% volume gains from new users. Similarly, Tata Tea natural segment saw 61% gains from new users.

Further, by providing smaller packs in the premium segment, brands are also able to push volumes through aspirational buyers. For example, in the dish wash category, the premium segment notched up 85% volume growth in small packs over the last 12 months ended April. In the washing powder, this segment saw 35% growth.

In the specialised segments, products like Sensodyne toothpaste within the sensitive segment and Kesh King within the hair oil segment continued to grow faster than products in other segment.

The study has noted that in some categories, like edible oils, floor cleaners, spices, butter and cheese, consumers tend to migrate to unbranded products.

The Kantar study pointed out that the magic price points of Rs 5, Rs 10, and Rs 20 still remain popular and more so in the food category, which contributes 61% within popular price points. These magic price points help add new triers. It has noted that Rs 20 is emerging as the new magic price point.

The study has also pointed out that e-commerce penetration in the FMCG segment has increased 5 times of the pre-Covid levels.

The personal hygiene category like hairwash and bar soap, and the food category like edible oil and biscuits are the topmost categories through which consumers enter the e-commerce space.

The report also said that consumers tend to buy larger packs through e-commerce and evolved consumers buy more of convenience food categories and home care categories from e-commerce channels.

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