The Indian Fast-Moving Consumer Goods (FMCG) market is witnessing companies continually adopting new approaches in the dynamic landscape, facing economic ups and downs. One such strategy that gained prominence last year is the concept of the ‘Bridge Pack.’ Positioned between popular entry-level and larger packs, these packs serve as a crucial tool for FMCG companies to tackle challenges arising from inflation. However, currently, the ‘Bridge Pack’ strategy seems to be losing its efficacy in the FMCG market.
What’s Happening?
In response to economic uncertainties and rising inflation last year, Indian FMCG companies swiftly focused on the ‘Bridge Pack.’ Initially offered at Rs 7 and Rs 15 per unit, its primary objective was to make the middle path accessible to consumers. This aimed at facilitating a compromise between the affordability of entry-level packs and the quantity provided by larger packs. However, the trend is now showing some changes.
According to Financial Express, the Rs 7 and Rs 15 per unit ‘Bridge Packs,’ which aided FMCG companies in dealing with inflation a year ago, are gradually disappearing from store shelves. Top executives of FMCG companies suggest this happens when the focus shifts to the Rs 10 price point, where offering more grams for the same commodity cost becomes more feasible.
Reasons Behind the Rs 10 Pack Trend
The ‘Bridge Pack’ strategy significantly aids in mitigating the impact of inflation on consumer spending patterns. During such times, consumers often seek more cost-effective options to maintain their purchasing power. The ‘Bridge Pack’ helps companies retain those consumers who may opt for smaller and less profitable packs due to inflation pressures. However, the current trend in the FMCG market indicates a shift towards the Rs 10 pack.
Discussing the reasons behind the Rs 10 pack trend, as mentioned in the Financial Express, Mayank Shah, senior category head, Parle Products, one of the leading biscuit manufacturers in the country, mentions that the Rs 10 price point ensures that there won’t be issues with coins. Additionally, price-value parity works well at Rs 10, assisting in maintaining margins. Another reason is that packs for Rs 10 can function as an effective competitor for local brands.
For instance, Parle Products predominantly presents most of its biscuit brands at the Rs 10 price point, weighing 75-80 grams. The company officials state that the Rs 15 pack, launched earlier, weighted 110 grams. However, the Rs 15 pack did not perform well, as consumers were unwilling to spend an extra Rs 5 for a slightly heavier pack.
Softening Inflation Rates
Recently, India has witnessed some softening in retail inflation rates. According to government figures, the retail inflation rate on an annual basis reduced to 4.87% in October from 5.02% in September. This decrease was observed both in urban and rural areas, standing at 4.62% and 5.12%, respectively. This reduction contributes to increasing consumers’ purchasing power. However, it’s crucial to note that inflation still remains above the Reserve Bank of India’s average target of 4%.
What’s Next?
There was a time when Rs 5 packs were quite popular, but over time, the Rs 10 price point has emerged as a new sweet spot. This shift indicates FMCG companies’ ongoing efforts to strike the right balance between affordability and value, understanding consumers’ evolving preferences. India’s FMCG sector has played a significant role in the country’s GDP, being the fourth-largest sector, and there are hopes to maintain its high growth rate in the market.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The companies mentioned are for information purposes only. This is not an investment advice.
*Disclaimer: https://tejimandi.com/disclaimer
