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Britannia bets on small packs for big bucks

In these days of high inflation, certain FMCG companies are discovering that the big idea lies in going small. Saurabh Turakhia tells more.
Hindustan Times | By Saurabh Turakhia, Mumbai
UPDATED ON MAY 29, 2008 08:54 PM IST

In these days of high inflation, certain FMCG companies are discovering that the big idea lies in going small. Britannia’s bet on a ‘value pack’ strategy, the company claims, has paid off in a big way.

Satisfying that simple ‘chhoti si bhukh’ everyone experiences, through value packs (example- 65 gm pack of Tiger Banana for Rs 4 and 30 gm pack for Rs 2) of its various biscuit brands such as Tiger, Treat etc has fetched the company Rs 100 crore in revenues in a period of one year.

Speaking to Hindustan Times, Vinita Bali, managing director of Britannia said, “My experience in the confectioneries market and my colleague Neeraj Chandra’s experience in the shampoo market showed the significance of ‘sachetisation’ as it satisfies a valid need. BPOs have shown a very good response to such packs.” However, the biscuit industry seems to be divided in opinion on whether value packs work or not.

"The future is in family packs- which contribute to 25 per cent of the industry volume sales. Modern retail formats are also signaling the trend. At best, small, value packs are useful for trial generation but definitely not for margins or volumes", said Mayank Shah, group product manager, Parle Products, which gets 15-20 per cent of its volume turnover from family packs.

Agreeing with Shah, Nabankur Gupta, founder CEO of Nobby Brand Architects, insists that value packs may be a move to enable new users experiment with the product with pocket-friendly, low price-points. "Similar trends have been seen in the shampoos, talcum powders and toothpaste segments", he said. However, he pointed out that the profitability in such packs is low and it is essentially a market feeding policy.

Britannia’s Bali, however feels that value packs are great for on-the-go consumption. The insight, explained the CEO, is that there is considerable time that people spend out of office when they would want just a simple hunger filler and not necessarily other heavy snacks. The ‘sachetisation’ process, in her opinion has helped take biscuits from a pre-defined purchase to an impulse purchase category. However, Shah claims that biscuits are gradually moving to the category of ‘planned purchase’.

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