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New Delhi: Indiscriminate small-pack launches by FMCG companies to push demand have distributors in a tizzy as they struggle for shelf space to manage inventory, prompting them to reach out to the government to restrict the number of pack sizes to four.
Packaged products companies have hit back saying that is not feasible as consumer and channel requirements are differentiated.
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, which represents more than 400,000 distributors and stockists, has written to the government suggesting there should only be four pack sizes – entry, small, medium, and large.
Nestle, Hindustan Unilever, Britannia, Parle Products, Dabur, ITC and Coca-Cola are among many others that have launched multiple low-priced packs across noodles, toothpaste, soaps, soft drinks and biscuits as a strategy to counter the consumption slowdown due to inflation.
They are also using smaller packs to fight off increased competition from regional brands.
Products at the entry level are being packaged in multiple price points of Rs 5, Rs 7, Rs 10, Rs 14, Rs 15 and Rs 20, unlike earlier fixed pack prices such as Rs 5, 10 and 20.
Nestle’s entry-level Maggi noodles is now available in packs of Rs 7, 10 and 14, in addition to multiple large packs.
“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 said these new packs are “extra burden on existing infrastructure and resources within the distribution network, affecting its efficiency”.
They especially called out the acceleration in launch of new packs with lower unit prices in rural markets.
They have written to the Department of Food & Public Distribution, mooting standard four packages.
Executives at FMCG companies said restricting packs to four sizes is not feasible.
“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.
Rural-Urban Demand
Some other executives said there was no point in pushing bigger packs in smaller grocery stores and the rural-urban complexity in demand calls for multiple pack sizes.
Dabur has been launching channel-specific packs across products including Vatika shampoo, Real juices and Red toothpaste.
Coca-Cola and PepsiCo have been pushing 200-ml bottles and cans of their beverages across channels.
Researcher NielsenIQ said in an August report that volume growth across urban, rural and modern trade has grown in double digits, led by smaller pack 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.
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