Talking about sachets is unlikely to cause any surprise. After all, the FMCG sector has been talking sachets for a long time and other segments like food and beverages have followed suit with varied degree of success. So why are we talking about these mini packs again? Because the products in question are OTC (over the counter) products and for the first time, the brand is taking the sachet route to make further inroads using a particular price point.
Brands like Moov, Itchguard and Ringuard have since inception acquired a recall among users, particularly in the metros. But recently into his role as GM marketing of healthcare brands at Paras Pharmaceuticals, is looking to make Moov a Rs 100 crore brand by end of the current financial year. To reach the milestone, the GM knows he needs to generate more off take by pushing the brand further into the market. Moov along with Itchguard and Ring Guard have become urban centric brands and the penetration of bigger packs in semi urban/rural markets is very low. The current price point of the bigger packs makes it an unviable proposition, particularly when the intention is to generate new user trials. Thus the company zeroed in on a lower price SKU, but the toss up was between small bottles and tubes. They looked at balms in small bottles, but they looked unattractive and unhygienic. That is when they decided to go with sachets.
In the last three months, the company has rolled out 12 tube sachets strings across 200 cities and small towns in India. While the focus is on new markets like South and East, even within metros like Mumbai, pockets like Dharavi are being carpet bombed with sachets to generate trials. The 5 gm tube at Rs 10 price point hung right in front inside a chemist shop also takes care of another challenge any brand faces while entering a new territory — visibility. Visibility earlier was zero and the chemist would only bring it out of the shelf when asked. However in semi urban and rural markets, upfront visibility for brands is very critical. It may be too early to gauge the impact of the move, but the results indicate that in the past quarter, nearly 25% of contribution in units sold has come from sachets. However issues remains for brands like Moov in its attempt to penetrate further. First, brands like Moov and Itchguard are up against home remedies and local brands well entrenched in these markets at a price point lower than the mark up of Rs 10. A Brand consultant believes that Rs 10 is a tough price point and the company will definitely have to do a re-think soon. Here’s where the real squeeze lies for the company because the price points, cannot be lowered because of high input costs. It’s a trade off. Between looking at costs and reaching out to more number of people even at a lower margin. So clearly, it’s a thin margin spread that the company is treading on with the new initiative. The current price point can become an impediment given the fact that the sachet market operates at price points as low as 50 paise. There is cough syrup available at 50 paise sachet, so the particular brand has shown it’s possible to break the packaging paradigm.
Another danger is cannibalisation where the smaller SKUs eat into the share of larger packs particularly in metros. It’s an issue but look at cannibalisation positively. If it helps generate more demand and increase consumer base, they are fine with it. While that may be the thought coming from the company, a closer scrutiny of the markets is necessary while introducing sachet packs. low unit packs work well when one is seeding a nascent market. Doing it in matured markets is a cardinal sin as it will affect larger pack sizes. Typically large SKUs gets wasted at home and when consumers notice it, they will quickly switch to the low unit packs.
Thus a beginning has been made, but issues remain. Now it remains to be seen whether sachets become the balm that eases growth pangs or whether it becomes one big pain to manage for Paras in times to come?