Attend Chai with CPG Leaders at Ahmedabad - November 23, 2022

Bizom India Kirana Report (August 2022)

The Indian FMCG industry has been under constant pressure with multiple waves of COVID presenting challenges in production and distribution. Demand has swung from strong Out-of-Home before the pandemic to at-home consumption, taking centre stage during the pandemic.

We are definitely affected by the global economy with hyperinflationary commodity prices, cost of logistics soaring, supply challenges created by the Russia-Ukraine war & the local appeasement of Indonesian consumers leading to the temporary export ban on palm oil from the world’s largest producer.

We’ve seen smart FMCG companies adopt a variety of strategies to pass on price increases through Shrinkflation and Bridge packs. Companies are also looking at altering ingredients where relevant, all the while looking to ensure continuity in supply and trying to make sure that consumers continue to find their favourite products easily at a shop near them or even on their favourite shopping app.

While consumers lapped up the price rise initially, they had to make adjustments to their monthly budgets and we started seeing them adopt a variety of methods to tackle this price rise. Across categories, we saw consumers down trade and this has impacted consumption.

This made us wonder, is this trend here to stay??

However, with edible oil prices lowering we saw an immediate bounce back in higher value pack consumption. This really indicated that consumers were holding out in anticipation of a drop in prices.

We see this being as the rocket-fuel as we approach the festival season. Many brands have started focusing on driving consumption with numerous consumer offers and also secondary schemes as they look to drive strong placement during the season.

With COVID cases remaining in control, it does make us optimistic that India will emerge out of this consumption challenge sooner and it’s going to be a great festival season.

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