The slowdown in consumption has not stopped fast-moving consumer goods companies from launching new products and the last few months have been particularly busy in this respect with market leaders also foraying into new categories.
A significant feature of the new launches was that they are all premium products targeted towards the affluent segment. With rural demand and spending at lower-end of the income segments subdued, FMCG companies have been aggressively pursuing deep-pocketed consumers.
Among the first-time launches was Coca Cola that has introduced, for the first time in India, an alcoholic drink Lemon Dou, a lime-based cocktail. Sales are restricted to Goa and Maharashtra as the sale of alcoholic drinks in India are highly regulated. Tata Consumer has launched a millets-based flour for the first time, while Maggi entered the frozen foods category with Kebabs and Pops.
Key launches
Nestle India also launched premium Espresso Concentrate Coffee for cold coffee lovers.
Honasa Consumer made its foray into the personal wash segment with a range of moisturising lotion soaps while it made an entry into colour cosmetics with ‘Staze.’
The personal care category has been seeing a lot of launches by established players. Godrej Consumer launched Cinthol bodywash, while Hindustan Unilever launched a range of skin barrier care products, hair serums and mascara.
Adani Wilmar launched its premium first-pressed mustard oil, Maya Pistola Agavepura launched its premium variants of Agave spirits, while ITC launched Himalayan pink salt with no added colours.
- Also read: FMCG companies target volume growth recovery for FY25, banking on lower inflation and good monsoon
Premiumisation shift
For the last couple of years, lack of rural demand has dragged down the FMCG sector, as poor monsoons have lowered their purchasing power. Raw material inflation has further dampened consumer demand there. While last year raw material prices softened and there was negative pricing growth, rural demand is still to take off because incomes have not risen.
In order to protect margins and ensure volume growth, FMCG companies have turned towards premiumisation as a strategy and going where the money is – that is the high income, paying customers. They have also been raising prices and over the last 2-3 months, prices of many products have increased across categories in the range 2-17 per cent, further pushing many items out of the reach of rural consumers.
Many of the new launches also signify changing preferences among urban consumers, such as the entry of established food players in the frozen foods segment. A number of alcoholic drinks or cocktails have also made their entry into the markets, such as Tilaknagar Industries’ apple flavoured brandy.