A ₹10 pack of Maggi isn’t what it used to be. Neither is the sachet economy

livemint.com:

₹10 – the same price it charged more than two decades ago. The rollback appears to be in response to a sharp drop in volumes after it hiked the prices of its most affordable packs last year. The ₹5 pack went up to ₹7 while the larger pack’s price increased from ₹12 to ₹14.

The hikes, which took effect in the December quarter of 2022, caused an immediate 1% drop in volumes, although net sales grew by over 14% in value thanks to the price hikes. The so-called ‘low unit packs’ (LUPs) are critical for Nestle's volumes, with the smallest accounting for a fifth of its sales volumes. During an analyst call on the December quarter results, Nestle India’s chairman and managing director Suresh Narayanan admitted that sales growth fell from 13% to 5% in towns with less than one lakh people.

“This is where the pricing action in LUPs, especially in the noodles category, has had an impact," he said. With competitors not following suit with price hikes, Maggi’s volumes saw further erosion, which presumably led to the rollback. However, the ₹10 Maggi pack of today – limited to what Nestle calls ‘rurban’ (rural and semi-urban) markets – is not the ₹10 pack of old.

The weight has dropped 60%, from 100 gm to 40 gm. Nestle is not the only FMCG company practicing the fine art of “shrinkflation", in which the price increase is masked by keeping the cost of the product constant while reducing its quantity. So a 100 gm pack of Maggi is now 40 gms but costs the same.