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FMCG Outlook 2023: Shrinkflation by reducing the pack size of the product while keeping the price unchanged is something that has never been seen before in the country. However, in the midst of a sharp jump in raw material prices after the war in Ukraine, FMCG companies have taken a similar approach. The reason for this is that FMCG companies want to ensure that the weak recovery in demand does not stop completely.
Rising cost for the FMCG sector
When the FMCG companies ran out of all options amid rising raw material costs, they started increasing prices. FMCG companies are hoping that the year 2023 will prove to be better for them and they will register an increase on the margin as well as on the volume front. In particular, these companies expect an improvement in demand in the rural sector amid a reduction in commodity prices.
FMCG sector hopes for improvement in rural demand
FMCG companies are also ‘cautiously optimistic’. He is hopeful that the rural market will once again come on the path of improvement. The rural market accounts for one-third of their total sales. Good harvest, government incentives and improvement in farm income are expected to improve rural market conditions.
Why FMCG companies had to adopt the path of ‘shrinkflation’
At a time when demand in the FMCG sector was improving, the Ukraine war pushed up commodity prices. To cope with the high cost of raw material, many FMCG companies did not change the price, but they reduced the packaging and weight of their products. This is called ‘shrinkflation’. This means that consumers are paying the same or old price for lesser products.
year 2023 How is the outlook for
Demand started improving in the last quarter of 2022 with the Kovid transition reducing and the economy opening up. FMCG companies which were severely affected during the last two years due to the pandemic are hoping that things will get better in 2023.
What do the management of Dabur India have to say?
Dabur India Of Chief Executive Officer (CEO) Mohit Malhotra “We are optimistic about the year 2023 and we expect rural demand to improve,” he said. Urban demand will continue to grow through emerging channels such as modern trade and e-commerce, he added. The industry is expected to witness double-digit price increases of over 10 per cent in 2022, said a recent report by data analysis company NielsenIQ. It is said that in the FMCG industry, there was a decline of 0.9 percent in terms of volume in the September quarter as compared to the previous three months.
Know the opinion of Emami’s management
Emami Of Vice Chairman Mohan Goenka Said that high inflation and rural slowdown remain a matter of concern, but commodity prices have started coming down. He said that commodity prices have been coming down since October but its benefits will start showing only in the next financial year.
Learn from the management of Britannia Industries how the trend will be for the FMCG sector
Britannia Industries Of executive vice chairman And Managing Director Varun Berry Said that demand has stabilized after the pandemic. But if seen on the cost and profit front, the prices of commodities are high. Overall, it can be said that the prices of commodities have not softened yet. However, we expect commodity prices to come down going forward. Berry said that only the price of palm oil has come down. Wheat prices have gone up while sugar is stable. However, we expect the situation to improve in the future.
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