Brands Streamline Product Lines Amid Rising Input Costs
Brands focus on leaner product lines amid surging input costs
The Economic TimesImage: The Economic Times
Smartphone, television, and fast-moving consumer goods (FMCG) companies in India are reducing their product lines by 5-20% due to surging input costs driven by the Iran war. This shift focuses on high-demand, high-margin products to sustain profitability amidst rising prices for key components and packaging materials.
- 01Companies are trimming product portfolios by 5-20% to focus on profitability.
- 02Rising costs of memory chips and packaging materials are major factors behind this trend.
- 03Smartphone and TV manufacturers are prioritizing fewer, high-impact models.
- 04The number of new product launches is expected to decline significantly.
- 05Cost pressures are likely to continue affecting the industry in the coming quarters.
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In response to escalating input costs due to the ongoing Iran war, smartphone, television, and fast-moving consumer goods (FMCG) companies in India are streamlining their product portfolios. According to Counterpoint Research, smartphone manufacturers are reducing their offerings by 5-7%, focusing on high-demand and high-margin products. Similarly, TV manufacturers are scaling back their model line-ups, especially in the 32-43 inch segment, as price increases of up to 20% have rendered many models unviable. The costs of memory chips have surged by 50-90% over the past few months, while crude oil prices have risen 15-25%. This has led companies to rationalize stock keeping units (SKUs) by up to 20% in the FMCG sector. Executives from various companies, including Parle Products and Super Plastronics, have noted that pruning low-rotation SKUs optimizes supply chains and improves production efficiency. As cost pressures persist, brands are expected to adopt more selective strategies for product launches, potentially leading to a significant drop in new model introductions.
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This trend may lead to fewer choices for consumers in the smartphone and TV markets, potentially affecting prices and availability of products.
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