Local dishwash brands Supremo 51 (Madhya Pradesh) and Reflect (Maharashtra) have seen over 100% growth in households over one year, while Balaji Gippi noodles in Gujarat has grown 58%, a report by Kantar showed.
“The mix of purchases that are made by a household keeps shifting depending upon inflation or uncertainties. During Covid, we had a very poor presence of local brands for two reasons. One, in a situation of uncertainty consumers tend to gravitate towards familiar or known brands. Local brands suffered on account of that. Second, they faced logistical issues because of the lockdown,” K Ramakrishnan, MD, south Asia, worldpanel division at Kantar, told TOI.
The advantage for national brands is that they become the preferred choice for consumers during a crisis like the pandemic, and they continue to grow even during inflationary times. On the flip side, local brands are unable to cope with the pricing pressures during inflation.
“Local brands as they couldn’t take price increases when raw materials became expensive. After two years of suffering, local brands have grown more than the national brands. It’s cyclical and this is the year in which we are seeing a resurgence of the local brands,” Ramakrishnan said.
Teju masala in Karnataka, which has a 37% penetration, is growing at 65%, and Challenge detergent bar, which has a 20% penetration, is seeing 42% growth, the data showed. ‘1to3 Noodle’ in Karnataka, with a 35% penetration, is growing at 113%.
Local brands have surpassed the growth of national brands by a significant margin. Their volume share has been rising over the last few years to reach 28% in MAT (moving annual total) April 2023, the data showed.
When compared to the year-ago period, volume growth in local brands is 12.7%, which is ahead of the 8.5% growth clocked by national brands, while regional and unbranded players de-grew. Volume growth among local brands was 2.6% in MAT April 2021. Although local brands are said to be gaining from regional and unbranded players, national brands are conversant with the prevailing trend.
Hindustan Unilever’s CFO Ritesh Tiwari recently noted that local players gaining ground. “When high inflation happens, we know there are players who vacate the market. We also know when commodity deflation happens, more players participate in the market at the local, regional level. That’s the reality of the industry and we have to live with it. Small players are growing ahead of the large players as we look at the data for the latest quarter,” said Tiwari.
While national brands would benefit by straddling the pyramid on packs and prices as also launching region-specific strategies, the challenge for local brands is to drive innovation at a faster pace and explore cross-category entries.
