Companies & Sectors
FMCG companies reduce quantity in offerings, without lowering price

As input costs are constantly rising, consumer goods manufacturers are amending packaging and reducing quantities—so that they can keep their sales price constant. Unlike developed economies, the price per weight (any unit) is not displayed, only the MRP is imprinted on packages

Thanks to inflation, petrol price hikes and rice in prices of agricultural products, consumer goods are getting costlier. Nevertheless, inflating prices outright may not always be the best way to go about it, that’s what the FMCG (fast-moving consumer goods) companies seem to believe. They have opted for a less conspicuous route—package a reduced quantity, at the same price.

“Recently, I purchased a pack of potato chips manufactured and packed by a renowned multinational company in India. I was shocked to note that contents of the pack were reduced to just 63gm instead of the earlier 75gm with Maximum Retail Price (MRP) kept the same as earlier,” renowned RTI (Right to Information) activist Subhash Chandra Agarwal told Moneylife. According to him, this equals cheating the customer, and makes a strong case of bringing private companies and corporates under the RTI Act.

It is quite a common practice in India—and abroad—to reduce the quantity of products instead of increasing prices in case of inflation. In 2008, during the recession, an IMRB International (formerly Indian Market Research Bureau) representative had explained why sales volumes have gone down for washing detergent powders, to a business publication, “In household care, categories like laundry-care (detergent powder) showed a decline mainly due to reduction in the quantity done by many washing-powder brands. Companies kept the price constant but to tackle the rising input costs, they reduced the quantity of powder in the same pack.”

In developed countries, bread is a product which is noted for being marketed at the same price but in a reduced quantity. Other products which are most likely to follow are wine, canned foods and biscuits.

One can easily manipulate quantities packaged in products like cereals, beverages and powdered items, because it is difficult to spot a difference in weight on the spot. Other products like soap and shampoos have also started following this trend. A leading brand of shampoo earlier used to come in a stout, broad bottle. After an ‘image makeover’, now the product comes in a sleek and narrower tube, though it is slightly taller. However, the weight of the product is the same, but then, it is advertised as ‘30% more’.

A very common thing to do in such a case is to change the packaging; to hide the fact that the amount inside is reduced slightly—and then charge the same price. There are a few soaps which have become wider and bigger in girth, and have become more expensive. But, they have also become thinner, which keeps their weight approximately the same.

The cure, as Mr Agarwal said, is to have the ‘unit price’ being printed on each unit sold—like pills, cough drops, etc which are sold in strips. Otherwise, one should read the weight written on packets. It may not be easy to find substitutes, but it is good to be aware of this fact.

User

COMMENTS

Prakash Bhate

5 years ago

Why blame only companies? Dosas, uttapas and chapatis served in restaurants have become smaller, 'katoris' in 'thalis' have become smaller, the upward curve at the bottom of ice cream cups have started becoming bigger. Even 5 Re, 2 Re coins have become smaller. 100 Rs shares have almost disappeared. 10 Rs shares have started becoming 2 Rs and 1 Re shares. At this rate we shouldn't be surprised if a new currency is introduced - 1 Mohur = 100 Rs and the paisa becomes extinct.

mahesh

5 years ago

How many of you know that great political warrior who looks after the ministry concerned got much money to frame guidelines suitable to manufacturers i.e. THE LEGAL METROLOGY (PACKAGED COMMODITIES)(Amendment)RULES,2011 dated 30.09.2011.

a v moorthi

5 years ago

Cadbury Eclairs package weighing 514.8 Gms used to hold 117 pieces costing Rs 100/- in Sept 2011. Now in October it seems the weight has been reduced to about 465 Gms but price has been maintained to Rs 100/-. Ony good point is Cadbury provides this information in the packets with clear visible printing so at least you get to know what you are getting for what you are paying.

Balaji

5 years ago

"Unlike developed economies, the price per weight (any unit) is not displayed," --> in developed economies there is no suggested mrp. It is the descretion of the shop to mark price. Pls also mention this.

Nagesh Kini FCA

5 years ago

If I remember right there are some provisions in the Weights & Measures re. standardization of contents. They need to be invoked.

Deepak R Khemani

5 years ago

This sort of a thing is going on from the last 2-3 years . That was when the Govt allowed manufacturers to have non-standard packaging of products, ie products available in 100gm 200gm 400gm 1Kg packages were allowed to be marketed in non standard weights.
Why should a biscuit pack weigh 89.3 gms instead of 100 gms?
Why should a washing powder weigh 895 gms instead of 1 Kg?
Try buying a Cadbury chocolate nowadays, its has no less than 3 packings, one outer , one inner and one more inside, for a pack of 30gms, almost 5 gms is the packaging weight, though Cadbury may want us to believe that it is for freshness and maybe they are more careful after their controversy over insects found in their chocolates a few years ago.
Bread is the only item which is still available in 400gms packing, though a smaller version is also now available.
Same is the case with soft drink bottles where you have 250ml, 600ml 1.25 ltrs, 2.25 ltrs and so on. Almost every product by every company be it soaps, detergents, biscuits, shampoo or chips every thing is now available in a NON STANDARD PACK!

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Royal Life, an MLM company, used Kerala CM’s photograph to lure people

The company had a typical MLM business model and claimed income after one became a distributor; it used Oommen Chandy’s picture, taken during a casual meet, to attract prospects

Money-chain and multi-level marketing (MLM) schemes keep coming up, and all of these fraudulent schemes sport some unique model to gain legitimacy. But all of them have a typical MLM business model, which is not sustainable in the long run. Take the case of Royal Life, an MLM company based in Kerala (it has shut shop now). But potential ‘investors’ were lucky—Royal Life was operating in a state where investigating agencies have banned many such similar companies, and this one was no exception.

Moneylife has learnt that Royal Life had used the picture of Kerala chief minister Oommen Chandy to promote its MLM scheme, ostensibly to try to exhibit its political clout. But in reality the story was different.

According to a source based in Kerala, who spoke to Moneylife preferring anonymity, “The company officials met Oommen Chandy with the help of a local Congress leader. They (the officials) posed for a photo; this was being used to lure innocent people who ultimately became victims to the chain fraud of Royal Life.”

Royal Life claimed to be a promotional arm of ALGA Marketing Pvt Ltd, which it said was a “unique and innovative marketing plan.”

It is also reliably learnt that the company shut down after police action. Moneylife has earlier reported on how investigating agencies in Kerala were coming down heavily on money chain schemes mushrooming in the state. (Kerala gets tough with money swindlers and MLM companies ).
 
The business plan of the company was an MLM business model. One had to become a distributor of its products and earn income under various heads. The company claimed, “When you become a Royal Life Distributor, you can share this business opportunity with your friends or relatives, for which Royal Life rewards you with five streams of income (such) as Binary Income, Referral Income, Royalty Income, Royal Performance Bonus and Residual Income.”

In its product range, it displayed various products ranging from facial creams, energy pendants, balms and bracelets. The cost ranged from Rs1,000 to Rs12,800. On getting two more people to become distributors, the company was to pay binary income of Rs1,000 for each pair. This would have increased as more people join. Similarly, 10% of the ‘pair’ income was supposed to be earned by every distributor as ‘referral’ income, which also had no ceiling or capping. Then there was a Royal Performance Bonus to top it all, after 15 pairs were enrolled in three weeks coupled with ‘residual income’.

Of course, Royal Life had a huge product portfolio. It claimed to be operating in the e-commerce business, mainly selling medicines for cholesterol, diabetes and obesity—among other ailments. Now thanks to the Kerala police authorities, Royal Life has got a royal boot. But what about the numerous other chain-marketing, MLM and Ponzi schemes which continue to thrive all across the country?

User

COMMENTS

Kishore

5 years ago

Government hand in glove with money chain companies.

India Vision TV breaking News:
Addl. Chief Secretary directed Director General of Police to stop all investigation against Amway.
Kerala Government subverted criminal Investigation against money chain companies.
The Direct Selling Guidelines issued by the government is to save Amway and RMP.

Vikas Gupta

5 years ago

Mr. Kishore has very rightly said that unless our Central Govt. takes some strict measures against these Fraud MLM Schemes, we would be flooded with these Ponzy schemes like INSTANT FOREX.

Sreedhar

5 years ago

Ponzi Schemes – Frequently Asked Questions

Who is Bernie Madoff?

What is a Ponzi scheme?

Why do Ponzi schemes collapse?

How did Ponzi schemes get their name?

What steps can I take to avoid Ponzi schemes and other investment frauds?



http://www.sec.gov/answers/ponzi.htm

Kishore

5 years ago

MLM and Ponzi schemes will continue to thrive all across the country unless the Central Government bring in a strong legislation to curb the chain marketing menace.

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