Packaging seen as key differentiator by Indian FMCG players: study

MUMBAI: Indian FMCG marketers are looking at differentiated packaging to attract consumer attention, reveals the latest study by Datamonitor.

Food packaging across the globe has seen a shift over the past 30 years. Consumers‘ tastes and preferences are changing rapidly, whilst consumption patterns are seeing a radical shift. This results in marketers having to respond to this changing environment, states the study.
"Innovation in product packaging is central as they offer benefits beyond just being a medium to withstand storage and distribution challenges. Riding on the rapid shift in consumer graphics and spectrum in India, food packaging emerged as the new value differentiator for the FMCG companies in India," says Datamonitor lead consumer consultant Pinaki Mukherjee.

The study points out that in the last couple of years, Indian FMCG sector has been marked with receding margins on the back of steep increase in the input prices as well as aggressive price competition at the retailing front. Favoured by highly positive income elasticity, international brands have intensified the competition at every segment of the industry and made the task at hand for the home-grown manufacturers more challenging.
Additionally, the consumer graphics and spectrum in India in the last five years have undergone a sea change. Consumers have become more informed, discerning and price sensitive. Their lifestyle transformed and lifestages have become much more complex and overlapping. As consumers have become more mobile and crunched for time, they have started seeking a number of auxiliary benefits such as convenience of consumption and usage.

The Datamonitor study revealed that consumer packaged good industry has had many reasons to celebrate this revolution as packaged food rapidly replaced loose staples and locally-produced eatables. The advent of organized retailing has also brought about the ‘shelf war‘ amongst the FMCG manufacturers. They are having to plan and optimize the usage of increasingly costlier shelf spaces at the organized retail destinations.

Mukherjee predicts that the role of packaging in food merchandising will undergo a lot of changes in the years to come. India is seen somewhere at the middle of the evolution stage in terms of food packaging when compared with the developed economies such as Japan, Germany and the US. And also the sophistication of packaging in India heavily varies across different food categories.

Although Indian manufacturers have brought about a number of innovations in food packaging, such as sachet, micro-packaging, etc., it has largely taken inspirations from the more developed Western economies to find out opportunities to differentiate their merchandise from the competitors through packaging.
Datamonitor analysis revealed four prominent trends driving the packaging innovations, namely convenience of usage, freshness and improved shelf life, sustainable and environment-friendly and packaging as a tool to position and promote the brand.

Datamonitor predicts a multi-dimensional shift in food packaging in India in the next five years. Advanced packaging techniques and concepts such as aseptic packaging and retort-able packages, although coming into existence, are yet to make a mark in India.

"Traditionally, product packaging has not been seen as a vehicle to promote the brand while it is changing now. For example Kissan Jams, targeted at the kids segment, is now using tube packages with catchy graphics to appeal the target audience, BRU Coffee‘s aroma-lock packaging appeals to the staunch coffee lovers, who worried about retaining the aroma upon multiple usage from a single pack. In the coming years we could see lot many such examples," avers Mukherjee.

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