A walk down to a supermarket and one will see a lot of discounts being offered by FMCG companies. The rush to push sales amid slowing demand environment is led by Hindustan Unilever, the unit of Anglo Dutch Unilever Plc, and the largest consumer goods maker in India.
For instance, you get Rs 5 off on its 250ml Vim Gel, Rs 12 off on 500ml and as much as Rs 25 off on its 750ml bottle. Similarly, Rs 42 worth Comfort fabric conditioner is free with every 1kg pack of Surf Excel Quick Wash.
Plus there are bottles of shampoos and conditioners to be had for free. For instance, you get 90ml of shampoo free on 400ml of Clear Men anti-dandruff shampoo costing Rs 245. Dove is giving away a free soap on 180ml Dove shampoo costing Rs 135 and a conditioner free on 340ml shampoo.
Others too are giving away discounts in a bid to sell more. Reckitt Benckiser is offering Rs 35 off on the 750ml bottle of Dettol Kitchen Gel, which rivals HUL’s Vim Gel. In the toilet cleaners category too there is a fierce battle, with RB offering 30 percent extra on market leader Harpic, while HUL’s Domex is giving away 40 percent more on its 500 ml bottles.
ITC is offering Rs 135 worth shower gel free if you buy 125g*4 bar pack priced at Rs 208. Elsewhere, Marico is offering 80ml free with its 300ml Parachute Advanced Coconut Oil and rival Bajaj Corp is giving away Rs 25 worth Colgate Total toothpaste free with its 200ml bottle of Almond Drop oil.
These discounts come on the back of slowing consumer demand, especially given the high consumer price inflation.
HUL’s first quarter revenue, for instance, rose lower-than-expected 7 percent year-on-year, with Volume growth slowing to 4 percent in April-June from 9 percent in the year ago quarter and 6 percent in Jan-March.
Analysts say demand for consumer goods (more so in premium and discretionary categories) has taken a hit and that may continue until the overall inflationary pressure eases.
Easing commodity prices over the last several months too helped FMCG companies in offsetting some of the higher marketing and promotional spends.
But now cost of some raw materials has increased. For example, Titanium Dioxide, Light Liquid Paraffin (LLP) and Linear Alkyl Benzene prices are up sequentially. So expect some hit on margins of some FMCG companies in the near future, given that the companies are unlikely to cut back on the advertising and promotional spends given the prevailing competitive intensity and the festive season that is around the corner.