It’s deja vu for the FMCG industry. Down-trading, a phenomenon which disappeared from the FMCG universe a few years ago, is expected to make a comeback, thanks to high inflation.
Fearing the worst, consumer goods companies, which were getting used to high-margin products gaining ground riding on higher disposable incomes, are revisiting strategies for their price-warrior brands and are turning them into focus areas.
Discount detergent brands like Nirma, Ghadi and Fena, toothpaste brands like Ajanta and Anchor and a host of other brands in soap, hair oil and biscuit categories, could once again pose a threat to the big players, as consumers have started looking for cheaper alternatives. This will be a repeat of 2003-04, when these smaller players forced the big brands to significantly alter their marketing and pricing strategies.
Neeraj Chandra, biscuits major Britannia India’s vice-president (sales, marketing & innovation) said, “In the current scenario, some amount of downtrading is certainly expected. We have started preparing for this not only by stepping up focus on our mass brands, but also by exploring new value price points which may emerge.”
The mass-priced Tiger, Britannia’s biggest brand by volumes, could be specially vulnerable to losing share from smaller regional brands. It’s the same story for soaps. “There may be a resurgence of downtrading across categories. To counter this, we have decided to increase focus on our price-warrior brands, specially Godrej No 1 soap,” said Godrej Consumer Products executive director and president, Hoshedar Press.
Among the company’s leading brands, Godrej No 1 competes directly against HUL’s Breeze and Nirma beauty soap.
Dabur is another company gearing up to cope with downtrading. Dabur India chief executive officer, Sunil Duggal, said, “We are taking a closer look at some of our competitively-priced brands.”
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