Inflation Begins To Sting Indian Consumers - July 2, 2008

Consumer good companies are facing a new kind of competition, as with rising inflation their cheaper range is taking the business off their topline product offerings. So instead of buying Britannia''s Good Day biscuits, some people are opting for the cheaper Tiger or Marie biscuits and the concept is called down trading. The need is to focus on products that are not only delightful, but also affordable. There has been a change in our packaging strategies, as we have launched immediate consumptions packs, said Vinita Bali, MD, Britannia. But while sometimes consumers downgrade their options within the same brand umbrella, there is a chance of them going to a cheaper brand of a competitor.

Cheaper consumer brands try to cash in when inflation is high, and consumers are looking for cheaper alternatives across soapsm, detergents and even foods. There could be a case of some downtrading but that''s bound to happen as some people will move from more expensive products to less expensive said Adi Godrej, Chairman, Godrej. So it is a wake up call for consumer goods giants, as gone are the days of strong pricing power and instead it is time for stiff competition which means products will compete with brands of the same company and even those of the competitor.