Sharp reduction in household grocery bills, cooking oil prices are dropped by top FMCGs

Rural demand has been hit after consumers traded down to cheaper and smaller packets after inflation hit their doorsteps much harder than it did for urban consumers. If and when consumers shift to smaller pack sizes, most FMCG players tend to lose market share to local and regional players who cater more variety at those price points

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One of India’s top FMCG companies, Adani Wilmar reduced the prices of one of the priciest of groceries in recent times – cooking oil.

This comes after Hyderabad-based Gemini Edibles & Fats and Mother Dairy both cut prices of cooking oil by ₹15 on one-litre pack-bringing relief to this household essential which has been on the receiving end of inflation for months now.

This sentiment could spread across more packaged products, by more FMCG majors.

In the last few months as input costs rose, FMCG players have been resorting to reducing pack sizes while increasing pack prices. A reduction in base import of crude palm oil, soy oil could be passed on to other products in which it is used like — soaps, biscuits, noodles and even shampoo, lipsticks and detergents.
It would mean a sharp reduction in household grocery bills, which have only been on the rise for consumers.

Rural demand has been hit after consumers traded down to cheaper and smaller packets after inflation hit their doorsteps much harder than it did for urban consumers. If and when consumers shift to smaller pack sizes, most FMCG players tend to lose market share to local and regional players who cater more variety at those price points.

However, if pack prices improve, FMCG majors’ volumes will improve – which have been losing revenue for the last eight months. Rural economy is key for FMCG players as a cool off in agricultural commodities inflation will also help reduce their own costs and improve margins.