Small regional FMCG players are staging a comeback, significantly impacting the market shares of major companies, including HUL, Godrej Consumer Products Ltd. (GCPL), Marico, Britannia, and Tata Consumer Products Ltd. (TCPL). The resurgence of these smaller players, following a period of inflation cooling, is intensifying competition and prompting larger companies to reconsider pricing strategies in segments such as soaps, tea, detergent, and biscuits.
During the September quarter earning calls, several listed FMCG companies acknowledged the rising competition from these smaller players, forcing them to undertake price revisions to stay competitive in the market. Varun Berry, Vice Chairman and Managing Director of Britannia Industries, highlighted the cyclical nature of smaller players, stating, “When inflation is high, smaller players just go out of business because they cannot compete with the cost structures.”
TCPL, the FMCG arm of the Tata Group, reported an upswing in local regional brands in the tea segment, acknowledging the impact of trading down in the rural market. However, TCPL Group CFO L. Krishnakumar noted that this phenomenon is not new for tea, unlike some other categories.
Marico MD & CEO Saugata Gupta emphasized the heightened competitive intensity in the market, particularly from smaller players, while expressing optimism about recovery and volume growth in the coming quarters due to pricing cuts taken by frontline FMCG companies.
GCPL, known for brands like Godrej No. 1 and Cinthol, noted the comeback of local players in the soap category, with Managing Director Sudhir Sitapati suggesting that these players may be affecting volumes in certain regions, though not significantly in major states.
HUL Chief Executive Officer and Managing Director Rohit Jawa acknowledged the resurgence of small and regional players in select categories and price points, observing their significant growth ahead of larger players, particularly in tea and detergent bars.
According to a Nielsen IQ report for the September quarter, small manufacturers in the broader FMCG industry are experiencing faster growth rates in non-food categories compared to their larger counterparts. The overall FMCG industry in India recorded 8.6% volume growth in the September quarter, supported by increased consumption as inflationary pressures eased.