FMCGs turn to ‘sachetisation’ as consumer wallet comes under intense pressure

An increasing number of consumer goods companies in the country have introduced smaller product units ‘sachetisation’ into the market at a lower retail price as consumers’ wallets come under immense pressure.

A visit by TheCable to some markets in Lagos showed that sachet packs are now becoming increasingly popular.

Also, smaller and cheaper brands have doubled down on their battle for market share with bigger brands, as competition in the consumer goods space becomes more intense. 

Products such as disinfectant and energy drinks now come in sachet packs in a bid to capture the growing value segment among consumers.

The beer makers are also not left out as players have introduced smaller units in 45cl sleek bottles to phase out the traditional 65cl bottles.

In today’s consumer market, affordability rather than the brand seems to the key factor in consumption decisions for most price-sensitive consumers. 

Since Nigeria’s emergence from an economic contraction in the second quarter of 2017, the purchasing power of most Nigerian consumers have continued to plummet, largely due to a double-digit inflation rate, worsened by sluggish economic growth. 

The inflation rate for the month of October as released by the National Bureau of Statistics (NBS) accelerated at 14.23 percent — the highest level since February 2018 — driven by surging prices of foodstuffs, while GDP figures for the second quarter contracted by 6.1 percent.

For companies, the tough operating environment, decrepit infrastructure, porous borders have further worsened their woes. This also means that companies cannot pass the surging input cost to consumers in terms of an increase in prices because of the shrinking disposable income of consumers.

Yinka Ademuwagun, a consumer analyst at United Capital, said the winning strategy for most companies is to play cheap considering the nature of the current economy where consumer wallet is depressed.

Consumers are, however, happy to find small unit products that are affordable for them to consume without too much pressure on their income.