FMCG companies’ widespread introduction of small-pack launches to stimulate demand is causing distributors significant distress as they grapple with limited shelf space for inventory management. Consequently, distributors are making appeals to the government to impose a limit of four pack sizes.
Packaged product companies have countered, arguing that such a restriction is impractical due to the distinct preferences and needs of both consumers and distribution channels.
New smaller packs are “placing extra burden on retailers as they have to keep on adding new packs, leading to inventory management challenges, and impacting distribution efficiency,” said Dhairyashil Patil, national president of All India Consumer Products Distributors Federation (AICPDF).
The federation, representing over 400,000 distributors and stockists, has sent a letter to the government proposing the adoption of only four pack sizes: entry, small, medium, and large.
Nestle, Hindustan Unilever, Britannia, Parle Products, Dabur, ITC, Coca-Cola, and numerous other companies have introduced numerous budget-friendly packaging options across various product categories, including noodles, toothpaste, soaps, soft drinks, and biscuits. This strategic move is aimed at mitigating the impact of consumption slowdown caused by inflation.
Additionally, they are employing smaller packaging sizes to combat heightened competition from local/regional brands.
Products at the entry level are now available in various price options, including INR 5, INR 7, INR 10, INR 14, INR 15, and INR 20, departing from the previous fixed pack prices such as INR 5, 10, and 20.
Nestle’s basic Maggi noodles variant can now be found in packaging options of INR 7, 10, and 14, alongside various larger pack sizes.
“New pack sizes are introduced by companies on the basis of consumer convenience, pricing and need for smaller packs. We are in compliance with all regulations on pack sizes,” a Nestle India spokesperson said.
Distributors have expressed that these new packaging options impose an additional strain on the current infrastructure and resources within the distribution network, adversely impacting its efficiency.
They particularly highlighted the rapid introduction of new, lower-priced packaging options in rural markets.
They have submitted a letter to the Department of Food & Public Distribution, proposing the implementation of a standardized set of four packaging options.
Executives within FMCG companies have stated that imposing a limitation of four packaging sizes is not a practical proposition.
“Launching different packs for different markets is in response to consumer demand. We have to give consumers what they want, whether it’s kiranas where consumers top-up, modern trade where they look for large packs, or quick commerce which caters to mid-level sizes,” said Mayank Shah, senior category head at biscuits maker Parle Products.
Other executives argued that promoting larger packaging options in smaller grocery stores is counterproductive, and the diverse demand patterns in both rural and urban areas necessitate a range of packaging sizes.
Dabur has introduced packaging tailored for specific distribution channels across various products, including Vatika shampoo, Real juices, and Red toothpaste.
Coca-Cola and PepsiCo have been promoting 200-ml bottles and cans of their beverages across various distribution channels.
According to a report by NielsenIQ in August, volume growth in urban, rural, and modern trade sectors has surged by double digits, primarily driven by the popularity of smaller packaging sizes.
“At this stage, it is important to focus on the right assortment and pack sizes of products,” said Roosevelt D’Souza, lead, customer success at NielsenIQ.
