Price cuts, discounts trigger sales volume bounce for consumer companies
High food inflation had dented demand in several categories as household budgets were disrupted.
Leading biscuit manufacturer Parle Products notched up 20% sales volume growth in the last few months, after offering a 7-10% price reduction via cuts or promotions.
Emami said categories such as healthcare and pain management saw 3-4% volume growth in the last two months after promotional offers. Adani Wilmar edible oil volumes surged 25% last quarter as prices plunged 40-45% over the past year.
Effect on electronics
Krishnarao Buddha, senior category head at Parle Products, said there is a strong and disproportionate correlation linking price cuts, demand and volume growth.
The price cut-volume growth effect is also visible in some electronic products.
Companies have cut prices from last year's peak to almost pre-Covid levels, passing on the benefit of a reduction in component costs.
According to the latest numbers by market researcher GfK India, television sales volumes grew 13% between January and June, compared with the year earlier. The value growth was just 2%, indicating a drop in prices.
Similarly, for microwave ovens, the volume growth is 4% against 3% value growth in the same period.
LG Electronics business head for home entertainment Gireesan T Gopi said there has been an on-year erosion of more than 8% in the TV market by value in the first half of the year due to lower prices and aggressive promotional offers. «The strong volume growth increase is due to price drop and consumers upgrading their televisions instead of buying ACs, due to a cooler summer,» he said.
Until recently, value growth was driving most categories due to recurrent price hikes that did not impact volumes of premium products.
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