Don’t be surprised if you notice a slight increase in the weight of your snack packs, soap bars, and toothpaste tubes. Last year, in response to significant inflation, FMCG companies had reduced the weight of retail packs for everyday necessities without adjusting their prices. However, with the recent stabilization of key ingredient prices and a decrease in packaging costs, these companies have begun to restore the original weight to the packs.
According to industry experts, the savings from reduced input costs are being transferred to consumers by reintroducing additional weight into the product packaging. This is particularly evident in product categories that are commonly priced at INR 10, INR 20, and INR 25, where frequent price adjustments can be inconvenient for consumers.
“We have put back grammage on some of our snacking brand packs as inflation cooled off for many of the commodities we use,” said Ahmed ElSheikh, president of foods and beverages major PepsiCo that makes Kurkure and Lays snacks. “We are hopeful that inflation will not escalate again, which also depends on the rains and crop cycle.”
Over the past year, the retail costs of refined sunflower oil, soya bean oil, and palmolein have witnessed a reduction of 20-25%. This drop can be attributed to a favorable harvest of edible oil seeds and a decrease in global prices for these commodities.
The expenses associated with soda ash, a vital component in the production of soaps and detergents, as well as packaging costs, have both experienced a decrease. Although the costs of wheat and sugar are still gradually rising, the inflation rate is currently lower compared to the previous year.
“Pricing changes are not always feasible in highly competitive categories. So, the optimum way to pass on benefits is by increasing weight of packs and putting back grammage,” said Mayank Shah, senior category head at biscuits maker Parle Products that competes aggressively with Britannia and ITC.
Abneesh Roy, executive director at Nuvama Institutional Equities, said besides lower cost of key ingredients such as edible oils, companies are also benefitting from a reduction in fuel and packaging costs. “Hence, for categories like biscuits, snacks, and confectionery, companies are directly increasing grammages,” he said. “For personal care categories such as soaps, detergent and shampoo, we are observing that extra grammage is being offered by way of consumer promotions.”
Jaideep Nandi, managing director of Bajaj Consumer Care, said the maker of Almond Drops hair oil and moisturising soap has increased grammage “in select packs in a few strategic markets”. Additional consumer offers have also been stepped up, he added.
Distributors have indicated that FMCG companies are reintroducing up to 10% of the product weight in certain packaged items, a weight reduction that had been implemented around the middle of the previous year. However, in most cases, these companies have not correspondingly decreased prices.
“We have not seen many price cuts in sync with reduction in costs of some commodities such as edible oils and packaging materials… But what is happening is that packs are starting to revert to the weight of what they were early last year,” said an executive of a leading Delhi-based distribution association. He requested not to be named since he is not an authorised spokesperson.
