As pandemic impact wanes, regional players expand, challenge FMCG giants

The rusk market is one of the primary examples where local players give established companies a tough time. There are about 2,500 local players engaged in the rusk market

Local players making fast-moving consumer goods (FMCG) like biscuits, soap, washing powder, and detergent reached 31 per cent more households in the country in the September quarter, The Economic Times (ET) has reported. Senior officials at top consumer goods companies are concerned about the resurgence of smaller companies and the negative impact this has on their sales.

The ET report said that local brands expanded by 4 per cent in laundry bars and 13 per cent in washing powder. Compared to this, bigger companies registered a growth in the 0-3 per cent range, according to the ET report, which cited data from market research firm Kantar. 

The soap sales registered a similar trend where smaller companies grew 31 per cent against a meagre growth of 2 per cent for national brands. Biscuit sales also followed the trend and saw regional players growing by 22 per cent. On the other hand, larger companies engaged in marketing biscuits grew 10 per cent.

How are established players reacting to it?

Britannia's MD, Varuna Barry, discussed this phenomenon with ET. She said that while established brands have a bigger name, they are losing out to smaller companies in terms of price and the grams of biscuits they sell in their packets. Barry said that local players have very high margins, so they can afford to offer high discounts.

Local players had a challenging time during the pandemic, and many had to shut down their shops. However, things have changed in the past two quarters as the commodity prices have moderated, and smaller regional brands have again raised their heads. The fall in commodity prices allowed smaller players to cut their prices, which is likely to have helped them gain market share. Significantly, the FMCG giant Unilever said last month that it would cut the prices of products in a few categories in the Indian market, such as soaps, detergent, etc.

Local players versus global giants: Not a new phenomenon

The tussle to acquire market share is not new. For several years, regional brands have been challenging leading consumer product companies. This is especially true for products like soaps, detergents, hair oil, tea, and packaged food items like biscuits. 

The rusk market is a primary example of local players giving established companies a tough time. There are about 2,500 local players engaged in the rusk market. Local players control around 40 per cent of the snacking segment, the ET report said.