FMCG slowdown: Demand for drinks, jam, sauces, juices declines despite low costs

Even while prices of certain product categories have been on a southward trend, demand and production of FMCG items such as jams, butter, drinks have declined from FY16-17 to FY18-20, a report showed. “Lifestyle changes, increased health concerns have prompted consumers to avoid aerated drinks, alcoholic drinks, butter, jam, sauces, fruit juices, resulting in lower production of these products,” a CARE Ratings report said on Friday. The report added that out of 36 fast-moving consumer goods products taken into account for the study, 18 products witnessed a slowdown in demand and production despite lower inflation. 

“Several factors including change in tastes and preferences of the consumers, increased awareness among consumers, income levels, changes in prices of substitutes and complementary goods and consumers’ inflationary expectations in future also affect the demand/production of any good,” the report said. The same is evident by the decreased demand of items such as aerated drinks, butter, besan, fruit juice, alcoholic drinks, cakes, pastries, Jam/jellies, toothpaste, detergents and pickles/sauces.

However, as the demand declines, the onus is on the brands to improve their positioning. “Advertisements and increased penetration impact the buyers’ decision, thereby resulting in higher/lower demand,” the report said. The brands are also aware of the changing realities of the FMCG world and are making steps in the direction to improve demand. Brands are now deploying new age methods such as campaigning on social media platforms such as Twitter and Instagram before product launch. Perfetti Van Melle’s ‘Share a CompliMentos’ and PepsiCo’s ‘Smile Deke Dekho’ campaigns are two such examples. 

Recently addressing a FMCG meet, Suresh Narayanan, chairman and managing director, Nestle India, said that industry must acknowledge the change happening in the FMCG industry and respond to the new realities. “The ‘spray and pray’ model of earlier times that sought to introduce a product and grow it to maturity may not work as customers today require localisation and customisation,” Financial Express had reported earlier.