NewKerala.com

Key Points

FMCG companies are facing a backlash as consumers increasingly associate heavy discounts with compromised product quality. The Emkay Global report reveals that persistent price hikes paired with frequent discounts are eroding brand trust. Unlike general merchandise, FMCG buyers prefer appropriately priced, value-driven products over discounted ones. The sector also faces challenges from quick commerce growth and weakening urban demand.

Key Points: FMCG Discounts Hurt Brand Quality Perception Says Emkay Report

  • Consumers prefer value-driven FMCG products over discounted ones
  • Frequent price hikes paired with discounts damage brand trust
  • Quick commerce boosts private label sales over traditional FMCG brands
  • Urban market slowdown impacts FMCG sector growth in FY25
2 min read

Aggressive discounting by FMCG firms hurting brand perception as consumers doubt product quality: Report

Heavy discounting in FMCG sector backfires as consumers link price cuts to poor quality, warns Emkay Global report.

"Aggressive discounting has a bearing on brand perception - Emkay Global Report"

New Delhi, June 25

Aggressive discounting in the FMCG sector is beginning to backfire, with consumers increasingly associating heavy price cuts with compromised product quality, according to a report by financial management firm Emkay Global.

The report points out that, unlike general merchandise, where high-priced items often rely on discounts to drive sales, FMCG buyers are showing a clear preference for appropriately priced, value-driven products.

The observation noted that persistent price hikes paired with frequent discounts are damaging brand perception and creating hygiene issues, even as companies attempt to boost retail margins.

FMCG, which stands for Fast-Moving Consumer Goods, is a term for products sold quickly and at relatively low prices. These products typically have a short consumption period. Examples of FMCG products include food items, beverages, toiletries, and household cleaning products.

"FMCG companies have been hiking prices regularly and have developed the practice of offering discounts. This trend has been different from high-priced SKUs in the general merchandise business, where consumers seek discounts," the report added.

"In FMCG, given the lower price point, this trend is turning negative as consumers believe sub-par products (with lower value) are being pushed. Consumer preference is for aptly priced products," the report added.

"Aggressive discounting has a bearing on brand perception. As a practice, large FMCG companies have increased product pricing where retail margins are enhanced. This has led to a hygiene issue," the report added.

FMCG companies reported a muted performance in the fourth quarter of FY25 due to continued weakness in the urban market. Sluggish demand, higher competitive pressure, and broader economic challenges have weighed on the sector's growth during the quarter.

Going further, the report observes that quick commerce drives better sales in private labels, as the channel has better control over consumers.

In Hyderabad, modern trade and general trade channels have seen impacts from consumers using quick commerce, the report's observation added.

As per the report, as FMCG companies continue to focus on efficiency benefits, personal connections have diluted, impacting them in the market.

- ANI

Share this article:

Reader Comments

Here are 6 authentic Indian perspective comments on the FMCG discounting issue:
P
Priya K.
This is so true! I've stopped buying discounted shampoos and face washes because they feel watered down. Companies think we don't notice, but middle-class housewives like me track every rupee's worth! Better to pay full price for quality.
R
Rahul S.
Big FMCG companies are playing with fire. First they increase prices citing inflation, then offer fake discounts. Meanwhile local brands like Patanjali are gaining trust by maintaining stable pricing. Wake up HUL & Nestle! 🇮🇳
A
Anjali M.
As someone who worked in FMCG sales, I can confirm companies deliberately reduce product quality for discount batches. The worst part? Retailers mix these with regular stock. Consumers get cheated either way 😔
V
Vikram P.
Interesting report but misses the kirana store angle. My local shopkeeper tells me these discounts actually hurt small retailers most. Companies force them to buy discounted stock that sits unsold when customers doubt quality.
S
Sunita R.
The solution is simple - be like Amul! Consistent quality, transparent pricing. No gimmicks. Why can't other brands learn? These marketing tricks might work short-term but erode decades of trust. #MakeInIndia should mean quality first!
K
Karan D.
Not all discounts are bad though. During festivals, genuine offers help middle-class families. Problem is when discounts become routine. Maybe govt should regulate how often FMCG can discount? Just a thought 🤔

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50