Cos offer deep discounts on beverages, snacks | Economic Times

Consumer goods, especially beverages and snacks, are being deeply discounted across ecommerce and supermarkets to clear out inventory that piled up in the past two months or so when sales fell sharply due to lockdowns amid the second Covid wave. Several items are being sold at a third of their price tags online, among the steepest cuts in the beverage and snack categories, according to industry executives.Discounts had fizzled out after beverage and snack companies saw a strong recovery in the last quarter and, in turn, built a strong inventory pipeline for summer just before states were forced to impose closures due to the second wave. “We lost this summer due to a lockdown and are hoping to compensate for it through discounts for the next few days before monsoon. The price-offs are supported by us as well as online partners,” said RS Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation Ltd, the maker of Amul chocolates and ice cream.All manufacturers had expected demand to go up after the sharp recovery in the previous quarter, said Krishnarao Buddha, senior category head at Parle Products, adding that snacks and beverages have a short shelf life. “Modern retail and general trade both were impacted in April-May due to limited store opening time, high infection rate amongst staff, whereby companies are routing the inventory to ecommerce, where it is getting highly discounted,” said Buddha.83297856Discounts of 30-70% have been applied on aerated drinks, juices and other cold beverages, potato chips, bridges and other snacks at online platforms such as BigBasket, Grofers, JioMart and Amazon as well as the apps and stores of food and grocery retail chains. Bridge categories refer to snacks such as Kurkure and Bingo.The June quarter contributes three-fourths to overall sales of the Rs 20,000-crore packaged beverages category, and out-of-home channels typically account for 75% of soft drink sales. A recent report by Crisil said India’s non-alcoholic beverages industry, led by cola giants Pepsi and Coca-Cola, is unlikely to reclaim pre-pandemic levels this fiscal, following on from an estimated decline by a fifth last year.HoReCa Channel Continues to be HitAn ITC spokesperson said current offers and discounts in ecommerce are marginally higher and temporary in nature.A senior executive with a leading retail chain, which also runs a widely used online app, said price reductions will continue until brands are able to clear out old inventory. “Discounts will eventually reduce as even manufacturers have reduced their production due to the stock pile-up and uncertainty in out-of-home consumption post the second wave,” he said.While the HoReCa (hotels, restaurants, catering) channel continues to be hit, summer products are also seeing tepid demand due to lockdowns amid supply chain constraints. Not all the discounts are funded by companies directly.“Most companies, especially packaged food and home care products, had significantly reduced promotions throughout last year after demand surged even during restrictions,” said the chief executive of a homegrown fast-moving consumer goods (FMCG) company.Holding steadyAir conditioner sales too have been a washout due to the summer season coinciding with the lockdown. However, retailers and companies said there won’t be large discounts as all companies are facing high input costs and had been forced to shut production due to the lockdown.Consumer offers such as EMI schemes and cashbacks will replace discounts as markets open up, said a spokesperson for India’s largest AC maker Voltas.Metro Cash & Carry said several FMCG categories that had witnessed growth due to panic buying and hoarding by consumers last year have seen a decline this year mainly due to availability and certainty. For instance, there was a 16% decline in biscuits while jams and ketchup declined 41% in May. There has been a dip of 14% in the frozen ready-to-eat segment.