India's fast-moving consumer goods companies are implementing a strategic approach to manage inflation pressures by reducing product sizes rather than raising prices. According to comments by Dabur India Chief Executive Officer Mohit Malhotra during the company's quarterly earnings call, all Rs 10 and Rs 20 packs are being reduced in grammage to maintain price points. As reported by NDTV Profit, Malhotra stated that companies cannot breach these price thresholds, leading to the implementation of shrinkflation strategies. The practice involves reducing the amount of product you get while keeping the price tag the same, allowing companies to avoid customer pushback that typically comes with price increases during inflation periods.
The strategy addresses significant inflationary pressures affecting the industry amid mounting currency challenges. According to Dabur's earnings call, inflation across several categories has increased after crude-linked packaging and raw material costs moved higher following geopolitical tensions in the Middle East. The company has already announced about 4% price increases across parts of its business to offset rising costs, but smaller packs remain harder to reprice due to consumer sensitivity to price changes. Recent analysis by Chartered Accountants highlights that fuel inflation is not just an operational challenge — it is a financial planning challenge, requiring better cost control mechanisms, efficient supply chain planning, and stronger inventory management. The situation has been compounded by the Indian rupee becoming Asia's worst-performing currency as rising crude oil prices and ongoing global conflicts continue to weaken the INR against the US dollar.
The approach reflects the critical impact of small price increases on consumer behavior at scale. As reported by NDTV Profit, Malhotra explained that the company prefers reducing quantity over crossing fixed low-price thresholds that consumers track closely during inflation periods. Low-unit-price packs contribute about 30% of Dabur's business and are expected to grow further as the company expands in rural markets, making these price points particularly sensitive to changes. Recent analysis confirms that a small increase in the price of daily essentials may seem manageable individually, but at scale, it changes purchasing patterns. Consumers begin shifting towards smaller packs, value products, or cheaper alternatives, directly affecting sales volume, working capital cycles, and profitability for FMCG businesses. Analysts warn that a weaker rupee could lead to costlier fuel, expensive imports, and higher international travel expenses in the coming months, adding another layer of pressure on consumer spending patterns.
Dabur's comments highlight a common industry strategy during rising input costs, with companies typically reducing pack sizes, trim weight or change product dimensions instead of raising prices on low-unit packs that drive high-volume sales. The strategy has become prevalent across India's consumer goods industry as companies navigate the challenging environment of roughly 10% inflation hitting several portfolios as reported by NDTV Profit. Recent analysis reveals that rising fuel prices are no longer just a transportation issue — they are quietly reshaping the economics of everyday businesses, especially the FMCG sector. From raw material movement to last-mile delivery, every stage of the FMCG supply chain depends heavily on fuel, making operational efficiency a critical competitive advantage in managing cost pressures. The currency weakness adds another dimension to these challenges, as India depends heavily on imported crude oil, making higher oil prices directly impact the economy and currency value.
