admin
November 3, 2026
Pritha Pahari, The Core
3 November 2026
India’s packaged food and soap makers are running out of easy choices. Input costs have continued to rise since late February, when the Middle East conflict began disrupting supply chains and pushing up crude-linked costs.
A visible price hike, however, risks sending shoppers to a rival. To offset this, companies have reduced package sizes. However, scope for how much these packs can be reduced is limited, especially for products already sold at low price points. Take the example of a Rs 10 pack of Parle-G biscuits.
At this price, there is little room to reduce the quantity further without risking consumer dissatisfaction. Cutting the pack size could make the product less attractive, while increasing the price may discourage price-sensitive buyers.
India’s FMCG giants have squeezed pack sizes about as far as they can go. With input costs still climbing and shoppers watching every rupee, the choice between eating the cost and raising prices is coming, likely right after Diwali.
The Hikes Are In
Britannia, Hindustan Unilever (HUL), Dabur and Godrej Consumer had already raised prices by around 2-5% in the June quarter, and were weighing more for the September quarter. FMCG companies have continued to raise prices to offset higher input costs.
FMCG companies have continued to raise prices to offset higher input costs.
Tata Consumer Products increased tea prices by 8-10% between the June and September quarters, while it raised the price of its Rs 30 salt pack to Rs 32 in May and again to Rs 34 in October.
Hindustan Unilever also took price increases of around 7.5% during the September quarter, according to media reports.
Godrej Consumer Products said it would continue calibrated price increases, particularly in soaps and liquid detergents, to manage cost pressures.
Dabur has also confirmed taking pricing actions in its October business update, while Britannia had indicated a further 1.5-2% increase, largely through smaller packs. However, the latter two companies’ September-quarter results were still awaited.
Experts said that lower-income households face greater pressure because everyday essentials take up a larger share of their budgets. Affordable products such as biscuits, noodles, soaps, detergents and cooking oils are particularly sensitive to price changes.
According to experts, some manufacturers are weighing selective price increases after Diwali, possibly from December.
Shoppers haven’t walked away yet
So far, demand is holding up. Nestlé India’s sales rose 20.5 per cent to Rs 6,782 crore in the September quarter, with double-digit volume growth.
At HUL, June-quarter underlying sales growth of 10 per cent came equally from volume and price.
The market is still nervous.
Nestlé India shares closed 7.7% lower on results day after management flagged rising input costs, especially packaging, edible oils and farm commodities.
Business Standard quoted chairman Manish Tiwary as saying, “Rising inflation, particularly food inflation, is a reality.”
India’s FMCG volume growth remains mixed, although several companies continue to report resilient demand. Tata Consumer Products’ India branded volume growth eased from 16% in Q4 FY26 to 13% in Q1 FY27 and 11% in Q2 FY27.
Marico reported that India volume growth reached near double digits in Q2 FY27, following 11% in Q1.
Dabur India recorded 5% underlying volume growth in Q1 FY27, while its October update indicated double-digit revenue growth for Q2 but did not disclose a confirmed volume figure.
Overall, demand remains resilient, but revenue growth should not be confused with volume growth, particularly as companies raise prices to offset higher input costs.
Why Smaller Packs?
Satish Meena, founder of research firm Datum Intelligence, said that companies try to absorb costs first. “They can do it for one quarter, they can do it for two quarters, but at a certain point they have to pass it on to the customer,” he said. He expects much of that to happen after the festive season.
Discounts are not an option either, since margins are thin. That leaves pack sizes. “Instead of 150 grams, we are doing 120 grams, keeping the price the same,” Meena said, describing the move.
A visible price rise carries a risk of its own.
“Your positioning in the shop will change, and customers will also perceive you as an expensive product and look for other brands,” he said. Once a rival takes the shelf space, it is hard to win it back.
Devangshu Dutta, founder of research firm Third Eyesight, says price points are hard to move. “Price points are often anchored either in the consumer’s mind or by competitive benchmark pricing, making them difficult to change,” he said.
He also said the practice now carries a reputation risk. “The shrinkflation phenomenon isn’t new, but social media has given it viral visibility, which can potentially damage brand reputation.”
Pricing Pecking Order
Meena said companies will follow a set order. First they improve buying and supply chains, then trim ad spending. Next they raise prices on premium products, where buyers are more willing to pay. Raising prices across all products comes last, so they don’t lose share.
Dutta says companies are “caught in a vice” because input costs are rising while core shoppers are cautious about spending. Companies have “no option but to cut brand-level advertising and also review overheads deeply.”
Indian FMCG companies are facing rising input costs across several product categories.
In October 2026, plastic packaging costs were reported to have increased by 30–40%, putting pressure on snack makers and household-product manufacturers.
Palm oil prices rose 21% year-on-year in September, while sunflower oil increased 14%, soybean oil 9% and mustard oil 8%.
Sugar prices climbed 18% year-on-year, adding pressure on confectionery and packaged-food producers.
Tea prices rose 10% over the same period. Coffee and cocoa also recorded increases, with Arabica coffee up 19% quarter-on-quarter and cocoa rising 48%. These increases affect biscuits, noodles, chocolates, soaps, shampoos and detergents differently.
Now What?
The next test is HUL’s September-quarter results, due after its board meets on 28 October. Meena does not expect much to change in the next one to two quarters.
He says the pressure is not seasonal. “It’s because of the war happening in the Middle East… it’s a much longer issue for them,” and he points to RBI data showing some impact on demand.
Input-cost pressures could persist into early 2027.
S&P Global’s September outlook projected elevated manufacturing costs through 2027, while October data showed plastic packaging costs 30–40% higher and key polymer prices more than 50% above pre-conflict levels.
Although prices may ease if supply routes improve, these figures suggest FMCG companies could face continued cost pressure over the next two quarters.
Dutta said only a few brands will come through easily. “Few brands or products are able to build longer-term loyalty consistently and whose value to the consumer is stickier than the resistance to price movement.”
For everyone else, the room to raise prices or shrink packs is running out.
(Published in The Core)
admin
October 19, 2026
Vaeshnavi Kasthuril, MINT
19 October 2026
India’s quick-commerce boom is turning up the heat on grab-and-go convenience stores, leaving these chains struggling to stay relevant as doorstep deliveries become faster and easier. Caught between neighbourhood kiranas, large supermarkets and quick-commerce apps, these outlets face a tough battle for customers, with high rents and staffing costs leading to an existential squeeze.
The closure of all 31 remaining 7-Eleven stores in India on 30 September, following the end of its franchise arrangement with Reliance Retail, underscores the challenges of scaling the format. The chain entered India in 2021 and expanded to around 60 outlets at its peak. Its Japanese parent, Seven & i Holdings, said it would explore options for a long-term presence in India. The exit follows Godfrey Phillips India’s decision in April 2024 to exit its 24Seven convenience-store business.
The appeal of convenience stores lies in easy access to daily essentials, grab-and-go food and extended operating hours. But in India, kiranas and quick-commerce platforms offer many of the same products, making it harder for organized chains to justify the cost of branded outlets, staff and commercial rents.
“Convenience stores have only started really struggling after the launch of quick commerce,” said Devangshu Dutta, founder of retail consultancy Third Eyesight. Delivery platforms offer everyday products at customers’ doorsteps within minutes, reducing the need to visit a nearby store, he said.
A Redseer Strategy Consultants-Google report of 7 October found that quick commerce captures less than 5% of spending on monthly grocery stock-ups among occasional users, compared with 15-20% of spending on daily or immediate needs.
Convenience stores occupy an awkward position between large retailers and neighbourhood kiranas, Dutta said. Supermarkets can offer wider assortments and higher-margin products, while kiranas benefit from lower operating costs and can adapt quickly to local demand. Smaller outlets have limited space for products and higher operating costs per square foot than supermarkets, while average transaction values are lower.
For operators, the challenge is to find a model that can expand without allowing costs to erode margins. Aastha Alamast, co-founder of convenience-store chain The New Shop, said franchising is key to making the economics work.
“One of the key covenants of convenience retail that we know and understand is that it’s a franchise-led industry,” Alamast said. The New Shop initially ran 60-70 company-operated stores before a franchise-first model shift in 2022.
Setting up a new store costs less than ₹20 lakh, including capital expenditure and inventory, she said. The regular outlets typically span 600-800 sq. ft, while its Bengaluru flagship is about 2,000 sq. ft.
The company became profitable after opening about 110 stores and has remained profitable for three years, Alamast said. But raising capital has been difficult. Discussions with Indian venture capital firms often turned into questions about why the company wanted to franchise its stores. “Nobody really understood convenience retail,” she said, adding that the firm had raised money largely from American and Korean investors.
It is also trying to make its outlets destinations for beyond everyday shopping. “It’s a hangout spot. It’s a lifestyle store,” Alamast said. They also offer services such as courier pick-up, ticket booking and electric vehicle charging.
AMPM, another convenience-store chain, is taking a different approach after encountering problems with franchises. Founder Shubham Gupta said some franchisees skipped operating procedures, while other arrangements led to payment disputes.
“We are converting all our existing stores to company-owned, company-operated outlets only,” Gupta said. AMPM has 12 operational stores, with others under construction and more than 18 store pacts signed, he said.
The company plans to add local deliveries within 10-30 minutes once it reaches 50-100 stores. Licencing has also slowed expansion. He began researching the concept in 2012 and opened his first outlet in 2017 after working through regulatory hurdles.
Wellness Forever, a chemist chain, is betting on specialist service, rather than convenience alone. The pharmacy chain remains “pharmacy first”, said co-founder Ashraf Brian.
“Now, it is almost 60-65% would be coming from pharma. Thirty-five to 40% would be coming from non-pharma,” he said.
Quick commerce has prompted the chain to trim its food assortment after sales of products such as cold drinks, ice cream and ready-to-eat food fell. “Slowly, slowly, if you see the food items in our stores have been drastically reduced due to quick commerce,” he said.
Wellness Forever has expanded categories such as skincare, vitamins and supplements, where access to product advice can help differentiate a physical store from an online delivery platform.
Location and assortment will be critical to the format’s prospects, Dutta said. “Smaller formats can work depending on location and the kind of customers you cater to. Metro stations, for instance, are suitable for grab-and-go retail because people are in a hurry and are looking for products they can consume immediately. You have to get the assortment and location right, while keeping costs under control.”
The challenges have not deterred international players.
Japan’s Lawson plans to open five directly managed stores in Mumbai in 2027 and expand to about 100 outlets in India by 2030. This will test whether a different operating model can succeed where 7-Eleven struggled.
(Published in MINT)
admin
October 7, 2026
Vidya Sathyapriyan, ET Brand Equity
7 October 2026
Every single month, leather-goods brand Hidesign changes the storefront of its airport stores. The reason: “You can’t bore the man or woman who’s coming to the airport every week,” says founder Dilip Kapur.
But then what makes the airport shopper any different from someone walking into a high-street or mall store? Affluent? Sure. Willing to spend? Mostly. Time-poor and seeking convenience? Definitely.
That mix presents a particular challenge for brands: understanding what and why travellers will buy, and how quickly they can buy it.
Some have learnt to make the often lopsided economics work. Others are running an expensive billboard with a billing counter attached.
Crunching Numbers
The economics are punishing.
Airport rents, minimum guarantees, revenue-share, staffing and operating costs can make them significantly more expensive than conventional retail. For example, a good mall in Chennai charges roughly Rs. 350-800 per sq ft monthly in retail rent, compared with Rs. 150-200 per sq. ft. on the high street. Airport rentals can rise to as much as Rs. 6,000 per sq. ft. Similar differentials play out in other major cities.
Yet brands keep signing on because the alternative would be an advertising site with no retail attached. “A hoarding is for all and sundry and 1D,” says S. Shriram, founder of Miles2Go Consulting Services. “In the airport, captive audience, engagement is 3D and sometimes even 4D – touch and feel, trial, buy, and even return elsewhere.”
For deep-pocketed brands, spending on airport visibility can be justified even when store-level profitability is modest or even non-existent. Others gotta move on.
Go Colors, for instance, is rationalising stores at airports where the economics are not working. “The opportunity remains strong, but the location must justify the cost of access to the consumer,” says CMO Vatsal Koolwal. “As a broad benchmark, rentals in the range of 15-20% of revenue can work, provided the rest of the cost structure is managed effectively.”
The right sell
Six of Hidesign’s top-10 stores in India are at airports, says Kapur. The average Hidesign airport store generates roughly twice the turnover of an average mall store, while its smaller footprint pushes sales per square foot even higher.
A key reason is the skew in merchandise mix towards gifting.
Around 40% of the products sold in Hidesign’s airport stores are gifts. “If you have a product which can be gifted, can be purchased quickly and is work-oriented, you’ve covered most of the problematic variables.”
An overwhelming majority of domestic air travellers are men, who may not spend two hours browsing a mall, but can quickly buy a premium handbag for someone back home. Time is their scarcest resource, not money.
“Those are breaks (from routine). These are things that they would normally not have time to do,” adds Forest Essentials executive director Samrath Bedi on why premium skincare too commands attention in an airport environment.
But categories such as perfumes, cosmetics, watches, sunglasses, travel accessories and bags have an obvious advantage – they can be bought quickly and generally don’t require fitting rooms or extensive trial. As Pravat Paikray, VP-Commercial, Bangalore International Airport, says, these “one-size-fits-all” categories perform well.
Right-Sizing
Apparel, jewellery and other categories involving multiple sizes, fits or lengthy considerations have a harder job.
“Standalone apparel and niche lifestyle stores would typically be loss-making,” says founder, Third Eyesight, Devangshu Dutta.
Shriram believes even these categories are being held back by conventional merchandising assumptions. He points out that a business traveller does not necessarily need another blazer simply because they are at an airport. What they may need is a pair of track pants for an overnight trip, a gift for someone at home, or a product they discover while waiting for a flight.
For instance, Ramraj Cotton’s proposition works partly because of its local-brand resonance and partly because of its gifting-driven merchandising. “There are a lot of combos which work very well for gifting,” says Radhakrishnan. He says passengers are usually concerned about weight restrictions, so the store even repackages the items as per requirement. The brand declined Brand Equity’s interview request.
Airport merchandise can carry a 20-40% premium, he says, because the customer is paying partly for convenience. The traveller does not necessarily want to step out into the city just to save a few hundred rupees.
Front of the Queue
Paikray says Bengaluru airport explicitly designs its retail proposition around this time constraint. Brands are expected to adapt their store design, assortment, staffing, service and operations rather than simply transplanting their city format. “If a brand has 100 stores, don’t come and open 101st store in an airport, ” he says.
For Forest Essentials, what changes is also the reason the consumer is being shown the product, says Bedi. Hydration for flying, sleep on long journeys, stress relief, gifting, replenishment, etc. “It’s just about how you angle it.”
Bengaluru airport is also lowering the barriers for brands to test the market by using pop-up stores to let newer brands test travel retail without committing to long-term contracts.
Paikray says challenger and D2C brands are increasingly considering airports earlier in their expansion journeys.
But the opportunity is not on auto-pilot. Only those who adapt can turn the minutes before boarding into something more valuable than visibility – a sale.
(Published in ET Brand Equity)
admin
October 5, 2026
Sagar Malviya, Economic Times
5 October 2026
Reliance Retail and 7-Eleven are ending their five-year franchisee deal in India, closing most of the nearly 60 convenience stores they operated under the partnership, after struggling to make the format profitable, people familiar with the matter said.
A handful of outlets are clearing the inventory before shutting, they said. 7-Eleven may look for another Indian partner to keep a foothold in the market, although no decision has been made, the people said.
The exit highlights an unusual squeeze that convenience stores are facing in India, with millions of small kirana stores that have long served consumers’ immediate needs on one side and quick-commerce companies that are bringing the same snacks, groceries and daily essentials to doorsteps within minutes on the other.
Reliance and 7-Eleven did not respond to ET’s queries.
The partnership, struck in 2021, was intended to bring the world’s largest convenience-store chain to India through Reliance’s retail network. But the business struggled to achieve the scale needed to offset the relatively high costs of running branded stores.
The 7-India Convenience Retail venture reported revenue of about ₹92 crore ($10.6 million) and a net loss of nearly ₹90 crore in the year ended March 2026, according to its financial statements.
“Reliance wants to reach consumers across every channel, but sustainability ultimately matters. Convenience stores have faced increasing pressure from quick commerce since the pandemic, with both formats offering similar assortments and serving the same immediate-needs occasions,” said Devangshu Dutta, founder and CEO of Third Eyesight, a consumer-sector consultancy.
“Kiranas operate with far lower overheads and different margin expectations than corporate-run convenience stores. Reliance’s exit could therefore signal a broader rethink of the format, particularly in markets where quick commerce has become a strong alternative.”
Globally convenience stores have become powerful retail businesses in several markets despite the expansion of supermarkets and hypermarkets. 7-Eleven in Japan, Taiwan, Thailand and Singapore; Lawson in Japan and Oxxo in Mexico are among the largest retailers in their respective markets.
7-Eleven’s Japanese parent, Seven & i Holdings, operates more than 85,000 stores globally, making it one of the world’s largest retail networks. Yet the company has been restructuring its overseas operations and closing stores in North America as consumer behaviour and store economics change.
In India, however, organised convenience retail has struggled to replicate the success seen in other Asian and emerging markets. EasyDay, More and Spencer’s have either shut stores or shrank their smaller-format networks over the years, underscoring the difficulty of building profitable neighbourhood stores at scale.
Packaged consumer goods companies continue to derive roughly three-fourths of their sales from small neighbourhood stores, underlining the strength of the traditional distribution network. Quick commerce platforms are, meanwhile, expanding rapidly.
That makes it difficult for organised convenience stores to charge a premium or generate sufficient sales density to cover higher rents, staffing, inventory and logistics costs.
Convenience retail works best when operators achieve high store density and productivity, supported by strong supply chains and differentiated offerings such as fresh food and private labels.
Reliance initially expanded the 7-Eleven network in Mumbai and other markets, but the footprint remained small compared with the company’s wider retail operations.
(Published in Economic Times)
admin
July 13, 2026
Viveat Susan Pinto, S Shanthi (Financial Express)
13 July 2026
India’s new-age coffee chains are accelerating expansion despite continuing losses, as investors bet that the country’s under-penetrated branded cafe market can deliver long-term growth.
Third Wave Coffee plans to open 100 cafes this financial year while targeting company-wide break-even. Blue Tokai aims to expand from 240 outlets to 800 by FY30 and is preparing for an eventual public listing. Nothing Before Coffee (NBC), which has grown to 114 cafes across 45 cities, plans to more than double its network over the next two years.
The expansion comes even as profitability remains elusive. Investors, however, are increasingly prioritising store-level economics over headline profits, arguing that India’s cafe market is still in its early stages of growth.
“The earlier failures in the cafe segment were largely capital-discipline failures, not failures of the category itself,” said Vish Narain, managing partner at Pulsar Capital, which is backing Blue Tokai’s international expansion.
“Chains expanded store count before proving unit economics. Investors today understand that India’s per-capita coffee consumption is still in its early stages. They are reading past shutdowns as wrong execution, not wrong thesis,” he said.
Dissecting the Balance Sheets
The numbers highlight the challenge.
Heissette Beverages, the parent of Third Wave Coffee, accumulated losses of Rs 320 crore between FY21 and FY25, while total assets stood at Rs 538 crore at the end of FY25, according to Tracxn. Muhavra Enterprises, Blue Tokai’s parent, reported accumulated losses of Rs 175 crore over the same period, with total assets of nearly Rs 370 crore. Financials for FY26 are not yet available with Tracxn.
NBC accumulated losses of nearly Rs 3 crore over FY24 and FY25 against total assets of Rs 18 crore. Mumbai-based premium chain Subko Coffee, with 16 outlets in India and one in Dubai, posted losses of Rs 45 crore over five years, while total assets stood at Rs 61 crore at the end of FY25.
Third Wave Coffee said around 90% of its outlets are Ebitda-positive and expects to achieve company-wide break-even during FY27. Blue Tokai, backed by Verlinvest, is targeting profitability by March 2028.
NBC declined to specify a profitability timeline but said it has adopted a franchisee-invested, company-operated (FICO) model to reduce cash burn while retaining operational control.
“FICO lets us expand quickly with franchisee capital while keeping operational control,” said Ankesh Jain, co-founder and chief executive officer, Nothing Before Coffee.
Structural Shifts
Experts attribute the investor interest partly to improving outlet economics as operators shift from large dine-in formats to compact grab-and-go and cloud-kitchen models.
“These formats materially cut capex per outlet and shrink payback timelines, making the category venture-fundable rather than just a slow-and-steady, self-funded business,” said Krishna Dev Pathak, investment banker and advisor to early-stage startups.
Lower capital requirements have strengthened unit economics, reinforcing investor confidence despite delayed company-level profitability.
Investors are also betting on a broader shift in consumer behaviour. Anuj Kejriwal, chief executive officer and managing director of Anarock Retail, said rising incomes, urbanisation and changing preferences are gradually moving India from “a tea economy to a coffee economy”. The shift is widening the addressable market for organised coffee chains beyond the metros into smaller cities.
Consumers increasingly use cafes as workspaces, meeting points and all-day dining destinations, prompting chains to diversify into food, desserts, packaged coffee, vending solutions and merchandise.
“The cafe model is now well established as part of consumers’ lifestyles,” said Devangshu Dutta, founder and chief executive of retail consultancy Third Eyesight.
Challenges remain. Rentals in premium locations have surged, coffee prices remain volatile, and labour and supply-chain costs continue to pressure margins.
For now, investors appear willing to fund rapid expansion, betting that disciplined execution and improving unit economics will eventually turn India’s cafe boom into a profitable business.
(Published in Financial Express)
