Come Diwali, neighbourhood kirana stores across the country overflow with gift hampers of dry fruits, mithais and home-made chocolates. These hampers are put together by the store owner himself and it helps him garner almost 20-25 per cent of his yearly revenue. Not just local residents but also the nearby cloth shops or the white goods dealers are more than happy about buying these hampers to gift their loyal clientele. The kirana store owner invests 30-60 per cent of his working capital on these assortments, which give him a handsome 30-40 per cent margin.
Diwali this year may not be lacklustre for the kirana stores, but it certainly won't be as lucrative as it has been all these years. Most of them have not invested in creating gift hampers and have instead opted for branded products. Dry fruits and mithais have given way to branded biscuits, chocolates and juices, which means that the kirana retailers would have to take a hit in margins. "Branded gift hampers will not give margins of over 10-12 per cent and this will have an impact on their profits," explains Prem Kumar, Founder and CEO of retail tech company, Snapbizz. The reason why the kirana store owners are lapping up branded gift options is due to the average consumer's skepticism towards unbranded products. The hygiene concerns created by the coronavirus pandemic has forced consumers to opt for trustworthy brands.
The consumers are also not too eager to loosen their purse strings in the current economic environment, as many have taken pay-cuts or even lost their jobs. "A gift pack of biscuits or chocolates is available at Rs 100-200, while even a small pack of dry-fruits could cost Rs 400-500, therefore, there are more takers for the former. Kirana merchants don't want to take the risk of investing in dry fruits or mithais as they are not able to forecast the demand," says Kumar. Indian consumers are also opting for home-made Diwali goodies and this has also resulted in a spike in demand for sugar, ghee and maida.
Samarth Agarwal, Co-Founder, MaxWholesale, a cash and carry retail chain, says that there has been a 30 per cent jump in sales in branded chocolates, biscuits and juices. "Consumers prefers buying brands and that too the established ones. The demand for Dabur, Britannia, Cadbury, Bikano and Haldiram products are particularly high." Agarwal says that lot of the branded players were actually not prepared for this surge in demand. Mayank Shah, Category Head, Parle Products admits that the surge in demand for biscuit gift packs came as a surprise. "The gift pack demand has seen a 25 per cent growth over last year. Biscuits are more daily consumption items therefore we hadn't anticipated this kind of demand." The biscuit major has had to ramp up its production by 25 per cent in order to meet demand.
On the other hand, ITC has launched gift packs of its most premium offering, Dark Fantasy at an affordable price point of Rs 120. "There is a likely reduction of gifting ticket size this year which makes biscuits even more attractive as a category. We at Sunfeast are maximising the opportunity this year and are seeing encouraging results," points out Ali Harris Shere, COO (Biscuits and Cakes), ITC.
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