As inflation rises, FMCG companies choose to cut weight rather than raise prices.

FMCG companies are battling back with grammage cuts, launch bridge packs, and a single-digit price increase on some large packs . Price inflation remains the driving factor in this shift across categories .

As part of the challenges of commodity price rise and unprecedented inflation, multinational FMCG manufacturers are choosing to minimize the product weight rather than price of items aimed at lower-end consumers, while also using single-digit price increases on some large packs and launching bridge packs, and cutting spending on advertising and marketing to counter sudden increase in costs as a result of geopolitical crises like the Russia-Ukraine War, as well as the export ban on Palm oil from Indonesia, said CEO Mohit Malhotr On the other hand, we have seen gramage reduction in rural markets, where LUP packs are sold, to preserve sacred price points like Re 1, Rs 5 and Rs 10, said he.With no signs of absorption in the coming quarters, FMCG companies are battling back with grammage cuts, launch bridge packs, and a single-digit price increase on some large packs.We have observed that many consumers have shifted to affordable packs or LUPs to cope with their monthly grocery budgets.To satisfy this customer demand, we have increased supplies of LUPs of our main brands across categories, according to Parle Products Senior Category Head Mayank Shah, as the selling of low unit price packs is just up, he said.Downtrading refers to the practice of switching from expensive items to cheaper alternatives by customers in a bid to save money.Price inflation remains the driving factor in this shift across categories, particularly among those in which oil, wheat, and other inflationary commodities remain a key input ingredient, according to Edelweiss Financial Services Executive Vice President Abneesh Roy, who said that the consumer is able to save money by purchasing smaller packs, accounting for 25 to 35 percent of the total sales of the FMCG categories.Even when downtrading occurs, the consumer stays with the brands, he said.There is a high rate of cost rise for FMCG companies, which can raise the prices of large packs, but the real issue is grammage reduction in lower unit points, because it cannot reach a threshold threshold.

In the current hyperinflationary period, corporations are trying to persuade the customer by offering more value, more grammage per rupee spent, according to Roy, who believes that HUL, which makes up about 30% of its market, will adopt a bridge-pack approach as it anticipates more sequential decline.Emami, a kata-based FMCG company, said that LUP has been the keystay of its business, accounting for nearly 24 percent of sales.However, an Emami Spokesperson reported that it was the mid packs that increased faster in the January-March quarter, representing about 50 to 55% of the company's total mix, and that company will need to nurture it, according to its Managing Director Varun Berry in its recent earnings conference.It would have to be a price increase.