branded commodities: Increasing shift from loose staples to branded commodities amid hygiene concerns

MUMBAI/NEW DELHI: Branded commodities sold by ITC, Cargill, Adani and Kohinoor surged as consumers shifted from buying loose staple products such as rice, wheat, atta and oil amid heightened health and hygiene concerns after the Covid-19 outbreak.

“People now want products that have minimum human touch and even millers who were not into packaging may go for it, looking at the demand,” said Gurnam Arora, joint MD at Kohinoor Foods, which sells packaged rice.

Loose and unbranded products accounted for 30-80% of sales because they are cheaper than packaged and branded products. Taxation also favours loose products.

“There is GST on packaged brands, while it is exempted for companies selling loose products. While the obvious difference is in packaging, a lot of investment goes into safety measures and automation to ensure quality,” said Angshu Mallick, deputy chief executive of Adani Wilmar, which sells edible oil, atta and rice.

The trend is visible across trade channels – both supermarkets as well as kirana shops. Sales of branded pulses and staples are growing at over 12% at modern stores, while loose products have expanded by 2%, said industry executives.

“Economy formalising acts as a catalyst for the shift, but Covid-19 has given a new boost to make this transition faster, given the lifestyle changes in favour of health,” said Devendra Chawla, managing director of Spencer’s Retail and Nature’s Basket, adding that branded products – even non-vegetarian food – command a certain element of trust and allow traceability.

About half a dozen companies have launched products to clean vegetables and fruits, cashing in on increased consumer awareness and demand due to Covid-19 fears.

Sales of essential products have been unprecedented over the past two months, helped by rising at-home consumption. Piyush Patnaik, managing director of Cargill’s oil business, said atta and cooking oil are basic necessities of every Indian household.

“We are looking at an upstream growth of the packaged food industry,” he added.

“While there was an unprecedented surge in demand for staples during the lockdown due to panic buying and pantry loading, the demand has moderated over time to pre-lockdown days with availability of wheat expanding, shops reopening as well as supply chain disruptions getting resolved,” said Hemant Malik, divisional chief executive, foods division, ITC.

Large companies also have managed supply chains better than local ones.

“For retailers that had less staff, it was also a matter of conveyance. This trend will continue in the coming months,” said Atul Chaturvedi, president of the Solvent Extractors’ Association of India.

Some loose product companies may enter the packaged business if the trend continues.

“It will not be difficult for pulse millers to invest in automatic packaging lines in their existing facilities if the demand increases,” said Jitu Bheda, chairman of the India Pulses and Grains Association.

[Source – Economic Times]


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