The Telegraph
Since 1st March, 1999
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Feel-good can’t push fast goods
- Consumer product giants slash prices to breathe life into sales

New Delhi, March 2: If the heat of an election summer gets you, at least the drink will be cheaper. And if the dust does, the washing powder is coming at a lower price.

Blame it on the absence of feel-good or the heat in the marketplace: the consumer product big daddies — Hindustan Lever, Procter and Gamble, Coke and Pepsi — are slashing prices.

All the feel-good sentiment supposedly swirling about in the economy has not translated into big earnings for fast-moving consumer goods companies (or FMCGs in business parlance), prompting desperate attempts to whip up sales.

Procter & Gamble has reduced the prices of the large pack sizes of its Ariel and Tide brand by 20-50 per cent. Hindustan Lever is set to follow suit in the same big-pack category for its Surf and Wheel detergent powders.

Both P&G and Lever recently cut the prices of their sachets to Rs 1.50 from Rs 3. However, sachets constitute only 15-20 per cent of detergent sales.

The two giants claim that they are dropping prices to increase volumes but others contend that it is because sales are not as good as they used to be or were forecast to be.

According to industry observers, the price cuts for the big packs had to follow the reduction in sachet prices. Consumers reckon that the sachets give them more bang for the buck and this was threatening the market for the big packs.

The forever-warring cola kings — Coke and Pepsi — are also paring prices ahead of the summer.

What is more, Coca-Cola is introducing new pack sizes, either giving more cola at the same price, or bringing down both pack size and price in the case of its fruit pulp drink Maaza.

The 200- and 300-ml bottles of Coke and Pepsi are already available at the earlier slashed prices of Rs 5 and 6, respectively. Now, Coca-Cola will increase the volume of its 500-ml PET bottle to 600 ml at the same price for Coke and Fanta.

Maaza, which was earlier priced at Rs 10 for a 300-ml glass bottle, will now be available in 200- and 250-ml bottles at Rs 6 and 7, respectively. Coke is also introducing 125-ml tetra packs of Maaza priced at only Rs 5.

Giving out the new pricing points and pack sizes, Sunil Gupta, the vice-president, public affairs & communication, Coca-Cola India, said: “We are driving the affordability plank. The returnable glass bottles will be mainly targeted at the rural market and the PET bottles at the home segment.”

The PET bottle pack sizes of Coke and Pepsi do not exactly tally with each other but both cut prices for the bigger bottles about a month ago.

A former senior Coke employee said: “In earlier times also prices used to come down but, god forbid, not at the onset of summer. If you do that, where do you earn the profits from'”

Market watchers feel competition and sluggish sales are forcing companies to slash prices.

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