Fast-moving consumer Goods (FMCG) companies’ volumes were impacted by downgradation, down trading and competition fromunbranded players across product categories during Q2.

While major FMCG players have stated that a slowdown in demand in urban areas has impacted their growth, companies also pointed out that consumers are opting for lower unit packs and cheaper product alternatives.

“Down trading is a phenomenon. There is economic pressure in terms of budgets and discretionary budgets inflationary trends continue will be under pressure. We are conscious of it and therefore, we are trying to put in bridging price packs to be able to take care of it. But walking away from the ₹2, ₹5, I think or maybe ₹2 you still could, but an ₹5, ₹10 price point is still a little bit fraught with risk or trade-offs that you might have to make,” said Suresh Narayanan, Chairman and Managing Director of Nestlé India Ltd during the earnings call.

FMCG makers have pointed out the increase in tea prices, which would result in calibrated increases in Tea prices during the December quarter.

“In tea, we continue to strengthen our market leadership, we have maintained our leadership position. Overall the market has been impacted by downgradation, and the climate of business is different with 25 per cent inflation. We will have to wait and see but we will continue to invest in the tea business despite the downgradation that is happening,” said Ritesh Tiwari, Chief Financial Officer of Hindustan Unilever Limited during the earnings call.

During the quarter, unbranded players and local competition impacted volumes in price-sensitive categories of established companies. “We do have the local competition. Let me take coffee for example. There have been players who have come in but one of the things in coffee is that when the prices of coffee beans are as high as they are, it does not give much play for the local player to come in with lower prices and hope to make a deal.

“In the area of the MAGGI portfolio, there have been some entrants as far as the Masala-e-Magic type of products are concerned. I must say that according to our estimates, they have not gained much traction. . Only where there is acute price competition, there has been some loss of volume. In noodles, when we took up the small pack prices, a few competitors entered the market. At the fringe in particular geographies, there was some impact. But once we did a specific RURBAN package and part of it was to tailor the portfolio also in terms of the ₹10 price point, we saw volumes come back. There is local competition, but we are at least as of now trying to respond fast enough to mitigate any losses that we might have,” added Suresh Narayanan.

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