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FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on...

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Education You are here: ET Home » News » News By Industry » Cons. Products » FMCG Share More

FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on slowing demand
By RATNA BHUSHAN & SAGAR MALVIYA, ET Bureau | 10 Apr, 2013, 07.08AM IST 29 comments | Post a Comment READ MORE ON » Varun Berry COO | united states | spokesperson | Shoppers Stop | rush |

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NEW DELHI/MUMBAI: FMCG companies such as Cadbury, Hindustan Unilever, ITC, Procter & Gamble and Heinz have launched discounts ranging anywhere between 10% and 70% on high-value items in the past two weeks as they try to push premium products amid slowing demand. Leading the pack is Cadbury India, which now sells a Toblerone 400-gm pack for 250, against 430 earlier, in a promotional offer that the company says will run for two weeks at modern stores. "Brands often undertake strategic programmes to promote products to encourage trials and build a stronger association with consumers," a

FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on slowing demand

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FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on... http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/fmcg-biggies-s...

spokesperson at Cadbury India, which has also slashed 100 on 200-gm bars of the triangular Swiss chocolate, says. US food major Heinz is offering 20 off on its Complan milk drink, perhaps its highest price-off in recent times, while Hindustan Unilever BSE 0.73 % is running promotions and discounts on Pears soap, Dove and Sunsilk shampoo (see graphic). It's after several quarters (apart from festive seasons) that big discounts are coming to packaged consumer products such as chocolates, soaps, detergents and food with such intensity. While most FMCG players increased prices in 2011, there were hardly any price changes last year.

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Varun Berry, COO of biscuits maker Britannia Industries BSE 1.74 % , says growth has slowed down across multiple categories in the consumer goods space. "Promotions and discounts have accelerated because of a combination of this slowdown and aggressive competitors coming in," he says. Falling input costs helping too An official of a leading supermarket says the competition has increased particularly at the top end of the market where several brands have entered since last year. The sudden rush of offers follows a sharp slowdown in growth of discretionary spending-that is, spending on products and services that are not necessary or mandatory-among Indian consumers. Over the first nine months of 2012-13, discretionary spending growth has slowed to 17% year-on-year from 31% in the previous year, according to a recent Credit Suisse report. "From a consumer perspective, it's like a viral where discounting has shifted from aviation to auto to soaps and other consumer products now," Anand Mour, FMCG analyst with ICICI Securities Ltd, says. "Companies are offering discounts and price-offs

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FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on... http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/fmcg-biggies-s...

mainly to mop up more volume growth, 44 especially in the soaps and detergent category that have seen sharp deceleration in volume growth," he adds.
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A JPMorgan report dated March 15 said promotional intensity is increasing across soaps, shampoos and laundry segments. "P&G is offering 15% extra for its Rs 3 shampoo sachets. HUL BSE 0.73 % has been Share More offering price-offs on its premium detergent brand Surf Excel Matic," it said.

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Falling input costs are helping too. Prices of crude oil and palm oil-key ingredients for
29 and soaps and detergents-have declined 7% 3%, respectively, month-on-month, helping Post Your Comment P&G, HUL and ITC BSE 0.25 % offer promotional discounts on some of their brands.

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Analysts at Edelweiss Securities suggest that moderating growth has clouded next two quarters' volume growth at the country's largest consumer products maker, Hindustan Unilever, and hence the promotions. "Promotional pricing (no cut in MRP) has been initiated across soap brands in select SKUs (barring Hamam) in the 12-20% range owing to cooling palm oil prices," Abneesh Roy of Edelwiess wrote in a report. "This will limit price growth," he added. Ashutosh Chakradeo, head of buying and merchandising at HyperCITY Retail promoted by retail chain Shoppers Stop BSE 0.99 % , says marketers have also started aping big retailers' strategy of bundling products to offer discounts.

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"As retailers, we always bundled products or offer discounts from our side while 44 companies resorted to lowering of MRP. But now companies have started to club products together or give price-offs themselves with retailers adding on extra price36 benefits at the store level," Chakradeo said.
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Richie CBE (COIMBATORE) 7 Followers 4 Hours ago Silver: 2737

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These FMCG companies are not doubt having a fat margin on all these products. Consumers should not go with such brands, some their purpose is solved with any other locally available, low cost substitute. These companies are trying to inject fear into the minds of people telling that locally available products are not good. I have pledged not using Lays, Soft Drinks & to some extend (mineral water).

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Anuja (Vadodara) 16 Hours ago

Cadbury in particular has resorted to discounts because for the first time in years it has started to feel the pinch of Amul's relaunched portfolio of chocolates especially from the Amul dark chocolate category. Cadbury has had, for a long time, a monopoly in the Indian chocolate market with no worthwhile competition. Its time ITC also gets into the chocolate business to take on the competition heads on.

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M.V.APPARAO (Hyderabad) 18 Hours ago

Companies should fix the right price,Keeping minimum profits,at the initial stage only. This will help Aam Admi very much, thereby with larger volumes of quick sales such discounts need not be given. All products should be reasonably priced and should be in reach of common man.

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Destiny Sdaf (Delhi) 2 Followers 22 Hours ago Silver: 2476

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fsdfsa

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Kumana (Patna) 22 Hours ago

Some people will not touch these fake foods even if they are offered free.

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Abhisek (Mumbai) 1 Day ago

i think the price of the 200gm toblerone has been mis-stated... Otherwise makes no sense, u wud buy 2 200gm bars instead of a 400gm bar and it would still be cheaper...

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Nazeer Khan (Bangalore) 14 Followers 1 Day ago Silver: 3387 Agree (0) Disagree (1) Recommend (0) Offensive

Its consumer's time....!!!

COLRANBIRLAMBA Lamba (PTA) 335 Followers 1 Day ago Platinum: 55.6K

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TO ENCOURAGE SALES

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Sharma (India) Replies To COLRANBIRLAMBA Lamba 17 Hours ago

Really I was thinking to stop sales. How did u become a Col.

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Offensive 44 COLRANBIRLAMBA Lamba Replies To Sharma 335 Followers 8 Hours ago Platinum: 55.6K 36 Agree (0) Disagree (0) Recommend (0) Offensive
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>>>SHARMA ALLU CHOR TEHKEDAR >>BLACK LISTED U >> NOW FOUND JOB HERE AS CHAPRASI

COLRANBIRLAMBA Lamba Replies To Sharma 335 Followers 8 Hours ago Platinum: 55.6K

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SHARMA ALLU CHOR TEHKEDAR >>BLACK LISTED U >> NOW FOUND JOB HERE AS CHAPRASI

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Kapsy (Melbourne) Replies To COLRANBIRLAMBA Lamba 36 Followers 1 Day ago Gold: 12.3K

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thanx Lamba, we'd NEVER have guessed! you're so clever! you're so smart!

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Sofi Younis (Srinagar, Jk) 1 Day ago

apsolutely good move on part of the palyers. they gain achieve the economies of scale by prpducing and selling more and more at the lower cost which in turn could up to their profitablity irrespective of the fact that the market growth has shunned from past few months. more ever this could be also a good startegy for retaining the customers and keeping a place in theri minds of their brands.

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Satya (Bikaner) 1 Day ago

Less profiteering ,higher volumes.

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Growingup (India) 1 Day ago Bronze: 90 Agree (3) Disagree (0) 36 Recommend (0) Offensive

It is a good short term solution to gain new set of customers. However, in the long run all depends on the purchasing power of people, which in turn is dependent on economy. One can not expect a common man to purcahse a choclate worth Rs 430. The price should be within the reach of common man & then only customers will remain loyal, otherwise they will purchase products only when discounts are offered.

Rajib (Kolkata) 1 Day ago

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i think such type of discount not to pick up the market as much as thinking rather the market will be more little in its variance as in a result ultimately no better result comes in retailing of FMCG as its customers all the time to like better quality no inclination to lower price including discount, so what is need is to concentrate into how to improve our product quality and also to continue such process until their goodwill could be purchased in the market

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Rajib (Kolkata) 1 Day ago

i think such type of discount not to pick up the market as much as thinking rather the market will be more little in its variance as in a result ultimately no better result comes in retailing of FMCG as its customers all the time to like better quality no inclination to lower price including discount, so what is need is to concentrate into how to improve our product quality and also to continue such process until their goodwill could be purchased in the market

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Manish Jain (Delhi) 1 Day ago Bronze: 51 Agree (0) Disagree (0) Recommend (0) Offensive

Big profits on premium products.. discounts no big deal..certainly a way to raise MRP so that the comsumersdo not feel the punch suddenly..On the other hand, the economy has certainly slowed down and the tend is visible in all product categories..

Yakku (Mumbai) 1 Day ago

i think they are struggling to increase volumes. And, with slowdown consumer spending is

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coming down. Considering inventory and to push topline, such decisions are taken. Once things return to normal, they will jack up the prices again. Best decision is to use these products minimally and save. Do not get attaracted with such discounts. The money you will save can be easily earned by making an FD for sometime.

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36 Siva Ralla (Bangalore) 7 Followers 1 Day ago Silver: 1658 Agree (19) Disagree (0) Share More Recommend (4) Offensive

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Let us not get fooled by these discounts. This is the actual value and inspite of this they are still making profits. Having worked in the food industry, I am aware and know what is the production cost and profits involved. No FMCG and that too foreign companies have love towards India to give such huge discounts. Also I have seen the cost of the products shown above and they are not actually so heavily priced. These companies want to take India for a ride by saying we are bringing premium brands to India.

Rohan (India) Replies To Siva Ralla 22 Hours ago

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Yes you're right,i have worked for 1.5 yrs in an FMCG company and the margins they have on each product is quite high,especially when you express it as a percentage.The volumes of these products are enormous,and HUL/ITC/whatever will still reap profits after offering these 'cosmetic discounts'

Ashwinikumar Patil (Pune, Maharashtra) 1 Follower 1 Day ago Silver: 1449

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with more than 1000% margins what is big deal if they offer 20-70% off. Even after offering so much discount they are minting money by getting higher, quicker turnover. Nice Marketing strategies ....

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Aeidal20 (Gurgaon) 5 Followers 1 Day ago Silver: 2099

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Alarming situation.......Consumer spending power is decreasing and this will spell trouble for the economy..........

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Offensive 44 Whywhy (Usa) 1 Day ago

90% of consumer products can be reduced in price by half only if mamools and bribes paid to the scumbag politicians and their goons are eliminated..why should soap or toothpaste cost more than in the usa (after conversion)??stuff made with cheaper labour and local materials???

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Mahendra Gaur (Jaipur) 164 Followers 1 Day ago Gold: 21.8K

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Consumer is the KING.

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COLRANBIRLAMBA Lamba (PTA) Replies To Mahendra Gaur 335 Followers 1 Day ago Platinum: 55.6K

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CONSUMER IS A CUSTOMER >>CUSTOMER MEANS << KASHT SE MUR>> DIE WITH AGONY>>CUST IS KING GOOD IN BOOKS

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Sharma (India) Replies To COLRANBIRLAMBA Lamba 9 Hours ago

Col hey ke bhand marasi

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Kapsy (Melbourne) Replies To COLRANBIRLAMBA Lamba 36 Followers 1 Day ago Gold: 12.3K

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what awesome bakwas!!

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FMCG biggies such as Cadbury, HUL, ITC, P&G offer big discounts to push premium products on... http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/fmcg-biggies-s...

TJ123 (USA) 11 Followers 1 Day ago Gold: 5803

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Clearly a shows that Indian economy has slowed down considerably and the cost of things have gone out of the reach of common man, hence consumption has slowed leading to price cut. Industry should reduce the MRP's as temperory cuts are not going to help the common man.

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