Downtrading – when consumers shift from larger packs to smaller packs in a category – has been visible in several categories this year. In October, however, the tide turned, albeit temporarily.
According to Bizom, a platform that automates retail execution at 7.5 million kirana stores, customers bought higher-value packs across branded commodities as prices remained low.Consumption also spiked due to sweet and savoury preparations during Diwali. On a month-on-month (MoM) basis, higher-value packs of branded commodities grew 4.6% in October.
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On the other hand, an increase in contribution of gift packs drove higher-value packs in confectionery, with the pack size registering a growth of 5.5% MoM, while the same in packaged foods grew by 2.1%.
Low-unit price pack sales in commodities, confectionery and packaged foods shrunk by -1.5%, -7.9% and -3.5%, respectively, as consumers uptraded to higher-value packs.
Bizom’s chief of growth and insights, Akshay D’Souza, said upgrading is due to a spike in consumption driven by festive demand for Diwali. “It’s unlikely that this will continue next month as repeat purchases may be based on a non-festive, lower consumption estimate for the household,” he said.
“For the rest of November, we will see a slight mismatch in terms of store level stocking and actual consumption, leading to an increase in inventory days. This will lead to a number of brands offering strong discounts and schemes to ensure stocks are liquidated from stores and restocking can happen sooner,” added D’Souza.
Mayank Shah, senior category head at Parle Products, said traditionally, there is a spike in large-pack grocery purchase during Diwali, given the meet-and-greet that follows such festivals. “With modern trade and other retailers offering discounts on high-value packs, there is an inclination for more consumers to go for these pack sizes, especially during Diwali. Many get converted to buying high-value packs post Diwali as well. However, while the absolute volume of high-value packs goes up drastically during Diwali, the contribution of Diwali to overall sales would not be that significant because every year, there are more households shifting to buying high-value packs,” said Shah.
Personal care, however, continues to be under stress as consumer spending has remained slow in this category.
