Aiming for a deeper penetration in rural markets, FMCG majors, including Coca-Cola, PepsiCo and Britannia, are introducing products in low price points particularly in the Rs 5 category as part of their strategy to shore up volumes.
While global beverages firm Coca-Cola has introduced 'Fanta Fun Taste' powder sachet for Rs 5 targeting the lower end of the market, Pepsico had also recently brought out 200 ml bottle for Rs 5 for its popular lemon flavour drink 'Nimbooz' as part of a promotional offer.
According to these companies, the bottom of the pyramid segment provides a huge opportunity although it currently contributes only 20% of India's consumption and "is tipped for explosive growth."
"According to some estimates, by 2015, more than half of the consumption spending in India would come from families earning nearly Rs 25,000 per month, which makes them a market ready to be tapped," a Coca-Cola spokesperson said.
The company, which has launched 'Fanta Fun Taste' powder in 23.5 gm sachet as pilot project, plans to place the product in around 1,500 retail outlets in Maharashtra and Gujarat by the next week.
On other hand, to maintain its market leadership, biscuit giant Britannia has consistently focused on the lower end of the segment by bringing out products in small pack sizes and in low price points.
According to analysts the company, which sells around seven biscuit brands like 'Tiger' and '50:50', has been able to enjoy a market share of 34.9 per cent because of its focus on the rural markets.
"Despite high cost of commodities such as sugar, milk and palm oil in FY2010-11, Britannia was able to maintain its market leadership on account of its ability to distribute to rural areas as well as maintain minimal price increases," an Angel Broking report said.
According to the report, Britannia has made significant efforts to provide premium biscuits under its brands 'Tiger' and 'Treat' at lower price points (Rs 5 for a three-piece pack of cream biscuits).
Besides, snacks and soft drink giant PepsiCo, which has already launched its chips brands 'Lays' and 'Kukure' for Rs 5, had also introduced its popular drink 'Nimbooz' at the same price point for a limited period of one month to encourage more consumers for the product.
While it has not extended the promotional offer of 'Nimbooz' in the rest of the country, the campaign is still on in Tamil Nadu.
"The demand is increasing from the bottom of the pyramid. Such price points are helping to penetrate into the rural areas and this is a strategy that has worked well in establishing a brand," India Infoline Research Analyst Vanmala Nagwekar said.