Packaged foods companies are cutting down on the grammage of smaller-sized packs or resorting to price hikes in categories such as salty snacks, chips and cookies following an inflation in commodity prices and higher transport costs.
Beverage and snacking company PepsiCo India, which sells the popular Lay’s and Kurkure snacks, may reduce grammage in its ₹5 and ₹10 packs starting next month.
The entire packaged consumer goods industry, including PepsiCo India, has been facing strong headwinds over the past few months because of inflation in commodity prices, a company spokesperson said. “Our focus is always to try and protect consumer value by undertaking stringent cost efficiencies across the business. However, given the significant increase in input costs, particularly palm oil and paper, PepsiCo India, like other consumer companies, is also selectively revisiting the price-value equation across various snacks brands," the spokesperson said.
Food inflation, including that of edible oils, especially palm oil, has been a cause of concern for several firms.
Packaged foods company Parle Products Pvt. Ltd, which sells biscuits under the Parle-G and Milano brands and salty snacks under Full Toss, has reduced the grammage in biscuits at ₹5 and ₹10 price points. In chips, the company has reduced grammage in some packs priced at ₹50, while also reducing the pack size of those at ₹30. In namkeens, the company has raised prices on the 400gm and 1kg packs.
“When we talk about price increase, it is taken largely in two ways. One way is to straight away increase the price and that largely happens in the ₹30 and above packs. The second is to reduce weight for lower pack sizes," said Krishnarao Buddha, senior category head, marketing, Parle Products.
The grammage could come down from 50 grams to 45-40 grams, for instance, depending on brands and pack sizes. Lower priced packs are crucial for driving volumes for the snacking and confectionery industry. As a result, companies rarely move away from the ₹5, ₹10, and ₹20 price points.
In the last quarter, Parle Products took a 3-5% price hike on some biscuit brands. In the ongoing quarter, price hikes to the tune of 3-7% are underway for its confectionery and salty snacks portfolio, the company said.
“The oil prices are killing and salty snacks are highly dependent upon oil. It has become pertinent for us to make these increases," said Buddha.
Bikano, which makes salty snacks, cookies and namkeens, said the rising price of palm oil that doubled over the past one year has affected the snacks industry in a big way.
Inflationary trends may continue for three to four months, said Manish Aggarwal, director, Bikano, Bikanervala Foods Pvt. Ltd.
“We have not hiked prices as of now. The prices of palm oil have more than doubled over the last year. In our deliverables, palm oil is one of the major ingredients. As a result of the constant increase in the cost of palm oil, packaging, we have reduced grammage in the ₹100 stock-keeping unit only," Aggarwal said.
In the June quarter, prices of packaging materials, oil and grams or pulses were higher than in the March quarter. However, since March, inflationary pressure has come down marginally, Aggarwal said. “So, we are eyeing a calibrated and smart balance of price corrections and volume growth," he said.
ITC Ltd, Nestle India and Mondelez India declined to comment.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!
Packaged snacks go light as price pressures weigh heavy - Mint
Read More
No comments:
Post a Comment