)
Fast-moving consumer goods (FMCG) companies are pulling out all the stops to improve sales of premium products. As consumers cut spending, companies are redrawing strategies to keep the interest alive in premium and discretionary categories, which have borne the brunt of the slowdown.
From pushing smaller packs of premium products and packing multiple benefits into brands to simply bringing down prices and driving offers, these companies are doing whatever it takes to get consumers to buy their products. Hindustan Unilever Ltd (HUL), India’s largest FMCG company, is pushing a new 50g bar of its Dove soap for Rs 22. This is the first time the company has launched a smaller stock-keeping unit (SKU) of its premium beauty bar, which comes for Rs 42 for a 75g bar. HUL also has offers on bigger bars of Dove — a pack of three 100g Dove bars, for instance, is now available for Rs 158, instead of Rs 168. The company’s endeavour to push its premium brands is not restricted to soaps.
It has packed the goodness of a skincare and fairness cream into its new Pond’s BB cream. Its Fair & Lovely cream now comes in a new pump tube that prevents wastage. (THE GROWTH NUMBERS)
In the last few weeks, HUL’s archrival Procter & Gamble has been pushing its premium Olay Regenerist, claiming it has 20 per cent more anti-ageing ingredients. It has also come out with an improved version of its Bollywood actor Kajol-endorsed Olay Total Effects.
British consumer goods giant Reckitt Benckiser is retailing a 35g pack of its Dettol soap for Rs 10-12, say trade sources. Reckitt Benckiser has always had bigger packs of Dettol (75g, 125g, etc) and the maximum retail prices of these have been slightly more than the products of its rivals. But considering the current market, it has launched a smaller Dettol SKU to improve sales, say analysts.
Dalip Sehgal, former managing director of Godrej Consumer, says reducing the put-down price of products is effective during a slowdown.
“By making it affordable, companies ensure two things — consumers stick to the brand and sales of the product continue.”
Counting on volume
To improve revenues, the Rs 1.8-lakh-crore FMCG sector continues to count on volume, rather than price realisations.
At the recent announcement of HUL’s first quarter results, the company’s outgoing managing director and chief executive Nitin Paranjpe said, “Our growth model will be volume-led, because that is a reflection that consumers are buying your products.”
Emami Director Harsh Agarwal says small packs account for about a fourth of his company’s sales. This figure, he adds, could rise as the company looks at smaller packs for products across its portfolio. In the packaged foods segment, single-serve packs of noodles, oats, biscuits and snacks have become common, as consumers hesitate to buy large packs during a slowdown.
Harpreet Singh Tibb, marketing director, Kelloggs India, says the Rs 10 price point has become a key segment for it, prompting it to launch new offerings at this price. Kelloggs, the leader in the Rs 800-crore breakfast-cereal market (60 per cent share), already offers corn flakes and oats at Rs 10 price. Cadbury India is retailing its Oreo Vanilla cookies for Rs 5. Biscuits giant Britannia, too, has been pushing two- and three-cookie packs for Rs 5. Says Abneesh Roy, associate director, research, Edelweiss, “In many cases, low-unit packs generate good trials. When launching a new product, this works well.” Nestle, for instance, launched its premium Alpino chocolate last month in packs of two for Rs 25. The strategy was also intended to take on brands such as Ferrero Rocher and Toblerone from Mondelez.
