Friday, December 2, 2011


Does the inflationary pressure on foods affect all the consumers equally? If the present trend in the buying habits of consumers is any indication, many buyers are willing to spend double or triple the price of standard products if there are USPs with them. It is understandable that many young professionals with large amounts of money in their hands rarely look at the MRP printed on the label and their concern is only the quality of the product they are buying. Unlike the average middle class consumers of yesteryear who used to spend 40-50% of their income for buying groceries and food, to day's average consumers spend only about 20-25% of their income on these daily needs because  of high salaries drawn by them. Especially in cities like Bangalore, Pune, Hyderabad, Chennai, Trivandrum etc where there is a considerable concentration of IT professionals with high monthly income, price of a product is never the critical factor that influences the buying decision. Under such a splurging environment consumers in general are "infected" with a desire to buy high priced products, generating more demand for new products with distinct personality and foot print. Is this going to be the drive engine for the growth of food industry in India in future? In all probability this may be true.  

Inflation is all around us. Every visit to the market brings shock at newly raised prices. So would you then voluntarily pay Rs 75 for a litre of milk when you can get a packet for Rs 25 or a tetrapak for Rs 44? Or Rs 60 for a loaf of sliced bread when you can get one for Rs 16? How about Rs 50 for six eggs that might cost Rs 24 otherwise? Or Rs 50 for a bottle of water that might otherwise cost around Rs 15 - and not for imported brands like Evian, whose prices might soar due to excise duties and the falling rupee. All these prices are for shudh'Indian products only. Of course, they are hardly run-of-the- mill products. The Rs 75 milk comes from a herd of Holstein cows at a farm at the foot of the Sahyadri mountains not far from Pune. It is packed under absolutely hygienic conditions and rushed to Mumbai, reaching the city just 8-10 hours after milking (regular milk takes 36-48 hours). And no time is spent on shop shelves because the bottles are delivered direct to the doorsteps of consumers who have subscribed to the service, which currently operates in south Mumbai only. DANZ bread also goes direct to consumer. The product, now being test marketed in Mumbai, claims to be made from a mix of five wholegrains and seeds, with no potentially-harmful chemical additives, and will reach you two hours from being packed. Keggs is the brand name for eggs with distinctive light brown shells that come from special chickens raised by low-income farmers, who let the birds range around and eat a mixed diet, the exact opposite of the cramped, unhealthy battery farms that produce most eggs. Keggs are not home delivered, but are sold at gourmet food stores in Delhi and Mumbai". 

Recent news reports that more than 40% of the food manufacturers in the organized sector are poised to increase the consumer prices of their products to avoid slipping into red due to all round escalation in input costs during the last two years, are not surprising. Some of them have used the "optical illusion" to lower the contents of a food packet without reducing the over all size of the pack and retaining the price, giving an impression to the consumer that they have maintained the price level, in spite of inflation! Take a simple case like the Glucose Biscuit where unit packs of Rs 2, 3 and 4 are very popular and in the lat two years the contents in these popular packs have come down by almost 25% with the biscuit size also reduced while the price is maintained at the same level. Probably such price manipulations may eventually make the middle class accept the inevitability of spending  higher percentage of their income on the daily needs to keep their body and soul together.


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