Distributors seek standardisation of packs; say smaller, lower unit price packages create confusion

Smaller, lower unit-priced packages introduced by several consumer goods makers to expand their addressable market have placed an extra burden on existing infrastructure and resources within the distribution network, an industry body has said while suggesting standardisation of pack sizes into four main categories.

To tackle the issue, the All India Consumer Products Distributors Federation (AICPDF) has suggested the government standardisation of pack sizes and categorizing products into four distinct classes - entry pack, small pack, medium pack, and large pack.

Recently, several companies introduced various new SKUs (Stock Keeping Units) with lower unit prices aimed at catering to the rural market, which in turn is creating "price confusion" among the consumer and is posing "inventory management challenges," AICPDF said in a statement.

"The difference in per-gram pricing among the numerous SKUs within the same price bracket has become a significant issue, as it often leads to consumer confusion," AICPDF President Dhairyashil Patil said.

The rapid launch of new SKUs by companies has made it increasingly challenging to manage inventory effectively.

"This is particularly challenging given the limited storage space available," said AICPDF adding retailers are showing reluctance to keep an added number of SKUs due to increased complexity and potential confusion among consumers.

The association, through a delegation, has suggested standardisation of the pack sizes to the Ministry of Public Distribution.

"By categorizing products into these standardised packaging sizes, it is expected to simplify inventory management, reduce complexity for retailers, and eliminate consumer confusion arising from multiple SKUs within the same price range under a single brand," it said.

This move toward standardisation seeks to strike a balance between market expansion and ensuring the smooth operation of the distribution network.

"AICPDF encourages companies to support these efforts and work collectively towards a more organized and consumer-friendly market," he added.

AICPDF represents dealerships/ distributors & the stockiest of all FMCG Companies. The association represents approximately 4 lakh members across the country.

After the pandemic, the Indian FMCG faced volume degrowth and low consumer sentiments. Rural sales faced degrowth and according to data analytics firm Nielsen IQ (NIQ), rural India has experienced positive growth in consumption during the January-March 2023 quarter, after a gap of six straight quarters.