Stories
FMCG Brands Boost Festive Promotions Amid Sluggish Demand
- •FMCG companies are ramping up trade promotions and retailer incentives ahead of Diwali to push products into distribution channels.
- •Retailers and distributors remain cautious about demand due to inflation, stagnant urban wages, and rural distress affecting purchasing power.
- •Data shows a shift toward more frequent, targeted incentives and shelf-blocking strategies to secure visibility and drive sales.
- •Experts warn that weak consumer offtake could lead to inventory pile-ups and prevent double-digit volume growth in the third quarter.
Key Questions Answered
FMCG companies are stepping up trade promotions and retailer incentives ahead of Diwali to push more products into distribution channels as sluggish demand raises concerns of inventory build-up and margin pressures.
Consumer demand remains subdued due to retail inflation squeezing household budgets, with retail inflation climbing to 5.54 percent in September and food inflation reaching 7.74 percent. In urban areas, stagnant wages have curbed discretionary spending, while rural consumption has suffered from deficient rainfall, weak farm incomes, and drought-like conditions.
Data shows that while the number of trade promotions increased by 16 percent, total promotional spending rose by just 6.2 percent, reflecting a shift away from broad-based schemes toward more frequent, targeted incentives for specific outlets, products, and regions. Additionally, companies are engaging in 'shelf blocking' to create prominent billboard-style displays and secure maximum product visibility.
