P&G said that launch of premium variants in personal care and laundry has been offset, with the roll-out of more satchets (in shampoos), price cuts in laundry (Tide), and availability of lower-priced variants in feminine care (Whisper). Experts said the growth of small packs within the portfolios of firms is likely to accelerate, as the slowdown prolongs over the next few quarters.
Market research agency Nielsen has already forecast low single-digit FMCG market growth for the October-December period, saying this could worsen in the coming months.
In the past six quarters, FMCG market growth has consistently fallen from levels of 16 per cent in July-September 2018. FMCG market growth for October-December (2019) is now estimated to be in the region of 3 per cent. Though experts say that green shoots are beginning to show especially in channels such as modern trade.
Experts said penetration and premiumisation would still be the most important sources of growth for companies in the FMCG sector, especially in a slowdown.
“Our research shows that more people spend more at affordable price points, especially in a slowdown. It is almost 55 per cent. At the same time, 26 per cent people are spending on better products while 19 per cent on new products,” said Nikhil Ojha, partner, Bain and Company.
HUL, for instance, launched Love and Care, a premium detergent, a few months ago. It has now introduced mayonnaise brand Hellman in India and is expected to ramp up its premium variants in skin care, beauty, and hair care.
Simultaneously, it has maintained advertising and sales promotion expenditure, keeping its presence going on television and digital medium despite a slowdown.
Ojha said companies such as HUL do not cut on advertising spends despite the pressure to rein in expenditure.
Over a 15-year period, HUL has reinvested its surplus into advertising and sales promotions and the rest into growing retail reach.