Govt's rule on standardised packaging - A good or a bad move?

According to a leading newspaper, the govt. is planning to bring back standardised packing, which it had earlier liberalised for the companies. With this move, many companies manufacturing fast moving consumer goods (FMCGs) may face some headwinds, as they will have to pack their goods as per the standard weights that are issued by the Legal Metrology (Packaged Commodities) Rules, 2011. We, at DSIJ, feel that this move will neither benefit the consumers, nor the companies.

Earlier, the govt. had permitted companies the flexible packaging option, as they argued that this would help them to cater to various consumers across levels. However, in the face of serious problems with rampant inflation, the companies end up using this strategy in a manner that goes against the consumers' interests. The input costs (raw material prices) for companies is rising, and if they were to pass on the full effect to the consumers, they could see the demand for their products declining. Thus, to tackle the problem in a roundabout way, the companies reduce the product weights slightly (weight in grams), keeping the price unchanged. A marginal 5-7 gram  product weight reduction goes unseen by most consumers, while proving hugely beneficial for the companies. When the input prices cool off, they keep the price unchanged and increase the weight of their products, attracting more consumers.

We cannot say that the companies are fooling consumers; in fact, this reflects a lack of consumer awareness. We feel that companies should adopt methods that easily convey that the weight or price of the product has changed, and consumers in turn, should be fully aware before they buy a product.

The govt.'s move will help consumers to the extent that they can now compare the same products on the same grounds. On the other hand, the affordability of products, which is a major issue, may compel consumers to use unbranded and cheap products. This could impact consumer health, for they will not be able to use standard quality products.

Approximately 60% of the total revenues of FMCG companies comes from products worth Rs 10 or less. Standardised packs will destroy the low or small pack group, which in turn, can prove costly for consumers, who are unable to buy the products, as well as to companies, which will suffer reduced sales.

We feel that the weights and prices should be market-driven, and that the government should not interfere unduly in the industry. Increased transparency from the corporates' side and consumer awareness should be the key drivers, rather than imposing standardised product packaging.