As summer sets in, water bottling companies, beverage firms and sellers of packaged goods are facing the heat for their 'dual' MRP policy. More than half a dozen states have cracked down on companies that charge a higher MRP for their products in certain spaces like malls, airports and hotels.
While most of these states have served prosecution notices, Maharashtra legal metrology department has gone a step further and sought the state government's permission to take these companies to the consumer forum for unfair trade practices. It has also suggested fixing excise duty on the basis of highest MRP they charge for the same packaged item. Sources in the consumer affairs ministry said that states like Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh have issued challans against erring companies.
Most of the major manufacturers of bottled packaged water have sought some relief from the ministry on dual MRP.
A ministry official, said, "Our responsibility is to protect consumer interest. There cannot be two MRPs for two types of consumers. Charging more than the MRP is illegal."
Last year, they had issued circulars asking states to ensure compliance of single MRP of all packaged items and stop overcharging by vendors.
Euromonitor International which is a market research organisation on consumer products, commercial industries, demographics trends and consumer lifestyles in India, has said that the industries with low income elasticity, such as hot drinks, home care and packaged food etc are less likely to be impacted adversely due to the short-term cash crunch.
They further said irrespective of the change in the income of the consumer, the relative change to the growth in the industry will be less than when compared to industries such as beauty and personal care, alcoholic drinks and soft drinks, which require more discretionary spending.
However, there is a pain point for traditional grocery retailers as majority of them are yet to adapt to digital payment mode. As per insights shared by Euromonitor, traditional retail still account for more than 90 percent of packaged food value sales in India. Janaki Padmanabhan, Country Manager, Bengaluru division, Euromonitor, said, "Since a big part of these retailers are not well equipped with card payment machines, it is likely that sales during this period will have gone to modern/internet retailers, which offer consumers the convenience of paying by card."
Additionally, Padmanabhan said essentials with lower income elasticity such as rice, edible oils and dairy products will be impacted less when compared with products such as ready meals and processed fruits and vegetables. However, she said the impact felt will also depend on the frequency of purchase of packaged food through various retail channels.
Paperboat, the packaged drinks maker which started its operation in 2013 is looking to expand to 50 cities by the end of this year, reported PTI.
The company recently inaugurated its second manufacturing plant in Karnataka to cater the South and West region.
Paperboat which has invested around Rs 22 crore in its Mysore-based facility is also planning a branding/marketing campaign for its products targeting the youth.
"The company would start an advertising campaign soon. TV commercial of Paperboat would first time appear on Television screen. We are planning to spend around Rs 10 crore during this quarter," said Neeraj Kakkar, CEO and Co-Founder, Hector Beverages.
After the addition of Mysore plant, the company would have a production capacity of about 10 million packs a month.
"Till now, we were present in only six cities due to limited capacity. This new plant would provide us a chance to expand in new places," added Kakkar.
The company has aggressive growth plans and aims to build its brand through new product launches, exploring newer geographies, improving distribution and also by identifying new-age channels to make these products available anywhere.
Paperboat is also targeting to launch six new variants of packaged traditional drinks before August 2015.
Presently, Hector Beverages is exporting Paperboat drinks to countries including US, UK, France, Canada, Australia, Netherlands, UAE and Malaysia.
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