The government has decided to reintroduce standard pack sizes for several items of everyday household consumption.
Over the last three years, while most fast moving consumer goods (FMCG) companies have hiked product prices directly in a bid to pass on the increase in raw material costs, they have also taken indirect hikes through a reduction of grammage. This has led to non-standard pack sizes, such as 72g or 84g packs.
The government doesn’t deem this to be in the consumers’ interest. Its contention is companies reduce grammage without changing the price, and consumers can’t guess the weight change.
As per The Legal Metrology (Packaged Commodities) Rules, 2011, Rule 5, certain categories of products can be sold only under specific pack sizes. These include baby food, weaning food, biscuits, bread (including brown bread, but not bun), un-canned packs of butter and margarine, cereals or pulses, coffee, tea, beverages, edible oil along with vanaspati, ghee and butter oil, milk powder, detergent, flour along with atta, rawa and suji, salt, laundry soap, toilet soap, aerated drinks and non-alcoholic beverages, mineral water, cement, paint varnish along with base, solid and paste paint, as specified in the Second Schedule of the Rules.
The regulation comes into effect next fiscal. The impending changes, which were communicated around October-end, have left consumer companies worried. Going by analysts, the companies’ margins are in danger.
Most consumer companies offer products at popular price points like Re1, Rs2, Rs5 and Rs10 in a bid to reach the lower-end consumers, who are very price-sensitive. Under the new rules, they will need to play this segment by pack size rather than price point.
“The changes proposed by the government will take away the flexibility to pack in denominations other than those specified in the Second Schedule,” said a spokesperson of Hindustan Unilever.
For consumers, on the other hand, it could mean frequent price hikes.
