Inflation and geopolitical pressures are reshaping the Indian FMCG market as consumers trade down to smaller, cheaper packs and manufacturers respond by cutting grammage in their smallest sizes.
The shift to smaller packs
Sales of small packs have been growing 4-10 percentage points faster than larger packs since April, compared with the January-March quarter. The trend is driven by demand for lower-priced options as inflationary pressures including higher product prices, fuel costs, and LPG rates strain household budgets. At biscuit maker Parle Products, packs priced at up to ₹20 have been growing 3-4 percentage points faster than larger ones over the past two months.
Smaller packs now account for a substantial share of sales across major categories. At Britannia Industries, packs priced at ₹5 and ₹10 comprise 60-65% of total sales, while smaller packs currently contribute 30-60% of total sales for most categories such as biscuits, soaps, detergent, shampoo, and staples.
Company responses
Companies are adjusting supply chains and product formulations to manage higher costs. AWL Agri Business, the country's largest edible oil company, said demand for its smaller 200 ml and 500 ml packs has accelerated this quarter, prompting it to add production lines dedicated to these pack sizes.
Rather than raising prices on popular price points, manufacturers are shrinking pack contents. Companies have now begun reducing grammage, particularly in smaller packs where altering the popular ₹5, ₹10, and ₹20 price points is difficult. Dabur's global chief executive Mohit Malhotra explained that the company is reducing the grammage in ₹10 and ₹20 packs as it's not possible to breach these price points.
Cost pressure and price increases
FMCG companies have flagged rising input costs and taken 4-10% price increases across categories since April. These increases were initially concentrated in larger pack sizes, but the shift to grammage reduction in smaller packs reflects the difficulty of raising prices on anchor price points that consumers expect.
Small packs contribute around 30% to Dabur's overall business, underscoring the commercial importance of these formats for major players.
Market signals
The acceleration of small-pack sales varies by region. The surge in sales of smaller packs over the past two months has been more pronounced in urban and semi-urban markets, as rural consumers have traditionally had a higher dependence on low-unit packs.