In nearly half a dozen categories including soaps, milk food drinks, edible oils and home cleaning products, consumers mostly bought either mass segment brands or unbranded products during the quarter ended September, as per latest data from research firm Kantar that tracks household consumption trends across urban and rural India and covers branded and unbranded categories.
This is a marked reversal from the consumption trend since the onset of the pandemic last year when consumers shifted to bigger national brands or from unbranded loose staples to branded packaged ones.
Experts attribute the downtrading trend to higher product prices and rising household expenses.
Several companies have increased prices of their products over the past three months due to inflationary pressures, and hinted at continuous price hikes until next quarter. Palm, crude and tea prices have increased by more than 50% since a year ago while packaging material prices have increased 30-35% over last year.
Consumer wallets are also getting squeezed due to an increase in outdoor mobility as people slowly return to pre-Covid lifestyle. This includes higher spending on commuting to offices and schools and holiday travels with high fuel prices, entertainment outings, dine-outs, and social gatherings.
“With hints of normalcy back, the erstwhile behaviours are starting to kick in and the 2020 base numbers are playing a major part,” said K Ramakrishnan, managing director – South Asia, Worldpanel division, at Kantar.
“During the lockdown and peak of the pandemic, consumers went for more trusted brands and they also had restricted avenues to spend elsewhere, and, therefore, having premium products in their baskets wasn’t a challenge,” he said.
ITC Ltd’s chief executive for foods business Hemant Malik said there has been an increase in sales of lower price packs of ₹5 and ₹10, especially for discretionary products like snacks. The impact is more for base variants, he said.
Kantar said there is a surge in sales of unbranded products in some categories like floor cleaners, toilet cleaners and edible oils for the first time since the outbreak of Covid-19.
Non-premium segment in bathing bars expanded 9.4% in the September quarter while the premium segment was almost flat, it said. Similarly, sales of premium milk food drinks fell 11.6% during the quarter, while the mass segment grew 7.5%.
Within floor and toilet cleaners, sales of the branded range declined 7% and 22%, respectively, but proxy products or alternatives used in place of these categories grew 4% and 20%, respectively. In edible oils, the unbranded segment saw a growth of 6% while branded products declined by 0.6%.
Downtrading, however, is not seen across categories, Kantar said.
Consumers are continuing to buy branded or premium products in detergent bars, washing powders, noodles and tea where the growth rate of such products are higher, it said.
Angshu Mallick, chief executive of Adani Wilmar, too, said downtrading is category specific. “For instance, within edible oil, there has been reduced buying or shifting to other reputed brands, but consumers have not compromised on hygiene and health. However, the rice and dal segment may see people opting for lower prices or in-store brands.”
Adani Wilmar owns the Fortune brand of edible oils and food products.
Sushil Kumar Bajpai, president at RSPL Group that owns Ghari brand of detergent, said, “It could be temporary as crude oil prices have cooled down and if it comes down further then there could be even price-cuts.”