FMCG firms bet on small packets to evade big inflation monster, drive growth

LUPs – which are essentially small packets priced at Rs 5-20, and bridge packs priced anywhere between LUPs and bigger volume packs – are the way to go now.

FMCG firms bet on small packets to evade big inflation monster, drive growth
FMCG companies are launching low unit packs (LUPs) and bridge packs. Image: Bloomberg

As inflation continues to bite into household budgets, FMCG companies are launching low unit packs (LUPs) and bridge packs to drive growth while trying to keep their customer base from going to other brands. “Low value packs or bridge packs are usually the best option to increase sales in our country as Indian consumers prefer small packs over large ones due to their pocket-friendly price range. Majority sales contribution in the snacks category is from tiny packs,” said Manish Aggarwal, Director, Bikano, Bikanervala Foods Pvt Ltd.

LUPs – which are essentially small packets priced at Rs 5-20, and bridge packs priced anywhere between LUPs and bigger volume packs – are the way to go now. FMCG major Parle Products and others have, in the last two years, gone for grammage reduction to offer the low price point for its consumers and are now experimenting with bridge packs even as LUPs continue to go off the shelf, especially in rural areas.

Small packets, big sales

“With the extraordinary inflation, it has become very essential for brands to come up with bridge packs. Rs 10 and Rs 20 packs which we refer to as bridge packs are gaining importance. Marketers are looking at upgrading consumers from extreme LUPs to bridge packs which serve as a middle category between low and large unit packs,” Krishnarao Buddha, Senior Category Head, Parle Products, told For Parle, LUPs contribute to about 50-60 per cent of its overall sales. “Over the last quarter (January-March 2022), we were able to grow our sales volumes by 14 per cent and our on-the-go packs are a key reason behind it,” Bikano’s Manish Aggarwal said.

“People are now buying products in smaller quantities and so low-value, bridge packs are registering a huge demand, more than what we had seen before. Rs 10, Rs 20 and Rs 25 price points are becoming more prominent and this helps consumers to try quality products at affordable prices. With respect to our in-house brands such as Mamafeast and Naturefest, we are working on the launch of a variety of bridge packs for almost all of the products,” said Amarnath Halember, Executive Director and CEO, NextG Apex India Pvt Ltd. LUPs contribute to around 25- 30 per cent of the sales value for the firm.

LUPs or bridge packs or both?

Parle had, in a previous interaction with, said that ‘there is no scope of further reducing the pack sizes’. The brand recently launched its bridge pack for its Parle-G range as well as Nutricrunch crackers priced at Rs 15. This month, Cornitos launched its products in smaller packs and at a lower price point of Rs 35. The brand is also planning to launch its range of nuts and seeds priced at Rs 10-20. HUL also introduced a Rs 16 pack for its Lifebuoy range which is a bridge between Rs 10 and Rs 36 pack.

Also Read: No more price hikes on Parle products, no more cuts in packet sizes hereon | INTERVIEW

Even as bridge packs are the way to go for many FMCG companies, LUPs still has its takers, especially in rural markets. Brand specialist and founder of Harish Bijoor Consultants, Harish Bijoor said, “Today, LUPs assume a bigger role as they are able to still swim in the murky waters of inflation gone haywire. LUPs are also very useful packs for a young generation in India that run on single use packs rather than packs that get poured into kitchen canisters and containers.”

The categories going for grammage reduction

Price sensitive and low brand loyalty products are witnessing grammage reduction as ‘buyers tend to shift to other brands in case of price increase’. Anurag Gupta, MD and Lead – Strategy & Consulting, Accenture in India, said, “This is more prevalent in discretionary consumption categories, select food and beverage categories, among others. Also, this is more pronounced in lower per capita income parts of the country across rural and urban India.”

Bikanervala Foods Pvt Ltd: “We have more than 60 SKUs including mixture and Moong dal in Rs 5 packs, around 80 SKUs including Khatta- Meetha and Navratan Mix in Rs 10 range, and our Rs 20 range offers around 25 SKUs including our Aloo Bhujia and Bikaneri Bhujia packs.”

NextG Apex India Pvt Ltd: We are looking at introducing LUPs in breakfast cereals such as Corn flakes, Muesli. Spreads like peanut butter and hazelnut chocolate spread, etc. will be anywhere between 25gm to 100 gm.

Rural and urban preferences

So, what’s working for rural and for urban markets?

The FMCG companies, while retaining the ‘sacred price point’ of Rs 1, Rs 5 and Rs 10, have been also going strong with their bridge packs to maintain the weight of the product with a little price hike. “The pricing dynamics are different for urban and rural areas. Buyers in rural areas prefer smaller-sized packs due to the lower purchasing power compared to urban areas. Companies have reduced the product size to maintain the same pricing in the rural markets. On the other hand, companies launched bridge packs for urban areas with a little hike in the price to maintain the same weight of the product,” Anuj Kejriwal, CEO & MD, ANAROCK Retail, told Krishnarao Buddha agreed, “For rural markets, below Rs 10 packs are working and for the urban markets, above Rs 10 or R 15 packs are in demand.”

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