Prices of essential raw materials for the biscuit and chocolate industry are at an all-time high. Fast moving consumer goods (FMCG) companies are looking at alternatives to keep the volumes high as they are being forced to hike prices.
As this market is very price sensitive, a small hike is capable of collapsing volumes. So, many are introducing new stock-keeping units (SKUs) at a low price of Rs2, Rs4, Rs5 and Rs10.
Britannia Industries has introduced its 50-50 brand for Rs2 for four biscuits. It also launched Rs6 SKU under Good Day that has six biscuits in a pack.
Parle Products Ltd — with its Monaco biscuits at a price point of Rs7 — has now introduced Monaco at Rs5 (60 gm), which will soon be rolled out nationally. Parle has also introduced Hide & Seek Bourbon (44.5 gm) and Hide & Seek (25 gm) biscuits for Rs5.
“The idea is to remain in the popular slot,” said Shalin Desai, senior brand manager, Parle Products Ltd.
According to Pritee Panchal, FMCG analyst at SBICAP Securities Ltd, the biscuit business is not a high-margin one and is price sensitive.
Firms can make more money on low-priced units as they are able to gain from the less grammage they offer in the packs.
Chocolate major Cadbury India Ltd launched Perk chocolate with glucose for Rs2 (7.5 gm) and Rs5 (21 gm). “The real mantra for FMCG companies is to focus on low-price points,” said Anand Kripalu, managing director, Cadbury India Ltd.
Players such as Parle Products, Cadbury India, Britannia Industries, ITC, Nestle India and Gujarat Cooperative Milk Marketing Federation Ltd (Amul) have been forced to consider hiking prices to save margins. While Britannia has already taken a 15% hike, Cadbury and Parle are still evaluating the extent of the hike.
