Will bridge packs be the saving grace for FMCG company margins?
- Bridge pack to down-trading addresses
- Consumer businesses turn to ‘relay packs’ to maintain margins
- Products are launched at prices between low-priced and high-priced packs
What is the Bridge Pack?
Bridge packs provide the right price-value equation for consumers while ensuring that products remain affordable and accessible. Having SKUs between LUPs and large packs allows a business to capture some of that downside trade from larger packs, should a consumer want it.
FMCG grew 6% in the March quarter; but sees negative volume growth: NielsenIQ
Daily essentials get expensive as FMCG majors like Dabur, Parle to opt for 10% price hike
Why the need for Bridge Pack?
The volume growth of major consumer companies has taken a hit in recent quarters as they have chosen to reduce grammage instead of increasing prices for small packages. But companies are unable to take direct price increases in low-priced packs for fear of hurting demand in this category, which is why they are considering launching ‘bridge packs’ which would be more priced. raised.
FMCG business volumes have already seen a decline in Q4FY22 and FMCG business margins are expected to come under continued pressure. Now that FMCG companies are resorting to bridging packs, will this be the saving grace or will companies have to find a new, creative way to fight inflation and boost margins and volumes?