FMCG companies make pack sizes bigger as inflation cools
retail packs of daily essentials lighter without changing their prices to offset steep inflation last year have started putting grammage back into the packs amid cooling inflation of key ingredients and reduction in packaging costs. Industry executives said the gains from declining input costs are being passed on to consumers by directly putting back grammage in packs, specially for categories in popular price points of ₹10, ₹20 and ₹25, where frequent price changes are inconvenient.
«We have put back grammage on some of our snacking brand packs as inflation cooled off for many of the commodities we use,» said Ahmed ElSheikh, president of foods and beverages major PepsiCo that makes Kurkure and Lays snacks. «We are hopeful that inflation will not escalate again, which also depends on the rains and crop cycle.» Retail prices of refined sunflower oil, soya bean oil and palmolien have declined 20-25% in the last one year due to good crop of edible oil seeds and cooling of global prices.
Costs of soda ash, a key ingredient in manufacturing soaps and detergents, and packaging costs, too, have declined. While the prices of wheat and sugar are still inching up, the rate of inflation is lower than last year.
«Pricing changes are not always feasible in highly competitive categories. So, the optimum way to pass on benefits is by increasing weight of packs and putting back grammage,» said Mayank Shah, senior category head at biscuits maker Parle Products that competes aggressively with Britannia and ITC.Fall in fuel, packaging costs Abneesh Roy, executive director at Nuvama Institutional Equities, said besides lower cost of key ingredients such as edible oils, companies are also benefitting from a reduction in fuel and packaging
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