Your ‘healthy’ diet is making the Indian economy leaner ⁠— but it’s not for you to change

  • A CARE report did a deep dive into FMCG production decline. It revealed that 22 out of 36 products witnessed a declined in spite of low prices.

  • As per the report, items like fruit juices, butter, breads and buns, besan , sauces etc belong to the low-inflation and low-production category.

  • Several factors including change in tastes and preferences of the consumers, the report said.
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Finance Minister Nirmala Sitharaman made the country roar with laughter when she blamed auto slump on millennial love for Ola and Uber. While she may have exaggerated the example, it is true Indian consumption patterns are changing and they are affecting the economy.

Even as the country is slowing down, it is also transforming and the latter part is shrouded. The index of industrial production is at its lowest in five years, growing at 4% as opposed to last year’s 10.5%. Several factors are influencing it and not just slowing incomes and consumer confidence, according to a study by rating agency CARE.

Indians shun fruit juices

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Some of the non-durable goods which showed a massive decline in production were butter, jams, pickles, cakes and pastries and ghee. Consumption and subsequent production of these products remained low in spite of the fact that their prices remained unchanged. Fruit juice production fell by over a massive 50,000 tonnes and spirits by over 60,000.

“Lifestyle changes, increased health concerns have prompted consumers to avoid aerated drinks, alcoholic drinks, butter, jam, sauces, fruit juices, resulting in lower production of these products. One can come to a conclusion that price levels alone do not determine the production/demand of any product,” said the CARE report which took a deep dive into FMCG production story.

The agency did an average production decline between FY16 and FY17 and FY18 and FY20. As per the study, 22 out of 36 products witnessed a decline in production levels. What’s interesting is that of these 22 items, production/demand of 18 products have declined, despite inflation being low, the agency said.

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Lifestyle changes affect sales of sauces and pickles

As per the report, items like besan (gram flour), sauces etc belong to the low-inflation and low-production category. In the non-foods segment, Indians also seem to be shunning detergent power and cake, toilet soaps and toothpastes – probably for better alternatives. For one, most Indians now use liquid washing soap which is clearly taking over the market from detergent powder.

Yet another victim of the changing country is purchase of newspapers and periodicals. Their production is affected by digitisation which is now the preferred mode for news consumption amongst millennials and others.

“Several factors including change in tastes and preferences of the consumers, increased awareness among consumers, income levels, changes in the prices of substitutes and complementary goods and consumers’ inflationary expectations in future also affect the demand/production of any good,” the report said.
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This has been a continuing trend in India over the last few years. Firms like Nestle, Pepsi and Brittania etc have adapted to the growing health consciousness in India by introducing brands and products like Maggi Oats, fruit juices by Pepsi and Coke, and flourless and sugarless versions of biscuits and other snacks.

It seems, Indians need more convincing of the benefits that these products offer. If not, the companies will have to adapt further, for the sake of their own health.


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