Amid consumers’ continuous struggle to survive under rising costs of living and unaffordable utility bills, essential goods makers must be upbeat about robust sales and profits in 2023.

Manufacturers’ shining results usually highlight sales, profit and loss, inventory losses, finance costs, gross profit, etc., but the volumes of their various products remain missing from their balance sheets. Product-wise volumes can give a clear picture of whether the companies are actually feeling the pinch of squeezing the purchasing power of consumers who are continuously limiting their purchases as per their requirements or the brisk sales figures are being achieved based on the increase in goods’ prices.

However, consumer goods manufacturers reckon high inflation and rupee-dollar parity are biting their financial health, compelling consumers to curtail non-compulsory expenses.

One clear example of shrinking sales in terms of quantity is the rising presence of small sachets or packs that contain fewer grams of goods. For example, a branded tea company has unveiled Rs20, Rs50 and Rs100 packs just to keep its business rolling. It also means that the manufacturer knows the market reality and financial crunch being faced by consumers.

Companies have reduced product quantity and jacked up prices amid diminishing consumer purchasing power

Shops are stuffed with tiny packs of shampoos, biscuits, chips, confectionary and bakery items, washing powders, pickles, ketchup, mayonnaise, powdered juices, spices, etc.

One must appreciate the impressive packaging of goods, signalling huge diversification in the packaging industry, but these shiny packs also shock many consumers for their meagre quantity and hefty prices.

Buyers find it hard to get a quality biscuit pack carrying a price tag of Rs5, and it is even more painful for them to get fewer biscuits at Rs10-40 only slightly thicker than potato chips.

A retailer explains that branded tea packers have reduced the weight of 190-gram and 95-gram packs to 170-gram and 70-gram packs in the last few years while rates have been crawling up.

According to a manufacturer, the weight of different sizes of bread has been curtailed by 12 to 13 per cent in the last four to five years. In this period, bread prices have been jacked up by 70pc as against a 100pc jump in raw material prices.

As many consumers find it hard to manage the education fees of their children, monthly utility bills, and daily food consumption bills, watching a number of people come out of superstores with overloaded trolleys filled with foodstuff nullifies the impression of the soaring cost of living that has hit a particular segment other than the elite or rich to some extent.

The Chief Executive of Top Line Securities, Mohammad Sohail, shares that most companies were able to pass on the price rise due to inflation and other cost factors. Many companies saw volumes declining due to the economic slowdown and lower purchasing power of consumers, he added.

Nestle Pakistan Limited (NPL) ‘s sales increased by 23.4pc to Rs200.6 billion in 2023 from Rs162.5bn in 2022, while profit after tax marginally climbed to Rs 16.5bn from Rs 15bn in this period.

NPL said that despite several external challenges, a focus on innovation and renovation, ensuring product availability and support from investments behind the brands helped boost revenue. Growth was broad-based across the product portfolio.

The company’s operating profit also improved due to an emphasis on localising raw and packaging materials, increasing its exports to 18 countries, and tighter control on fixed costs.

NPL maintains a cautiously optimistic outlook for 2024 despite continuing challenges with input costs. Its focus on resilience and contribution to the national economy will continue.

Revenue from contracts with customers of FrieslandCampina Engro Pakistan Limited swelled to Rs100bn during 2023 from Rs73.4bn in 2022, while after-tax profit fell to Rs 1.5bn from Rs2.46bn in the same period.

The turnover of Colgate Palmolive Pakistan Limited (CPPL) increased to Rs72bn during July–December 2023 from Rs55bn in the same period 2022 — up by 32pc — while profit-after-tax rose by 75pc to Rs7.37bn from Rs4.2bn in the same period.

On the future outlook, CPPL said it continues to face challenges as the economy struggles. The future outlook, including the geopolitical situation, remains subdued with marginal growth projections. Consistent inflationary pressures pose significant checks on consumer spending and demand.

The sale of Unilever Pakistan Foods Limited (UPFL) soared to Rs34.5bn during the 12 months ended December 31, 2023, from Rs28.3bn in the same period in 2022, while profit surged to Rs 9.7bn from Rs 8 billion.

In a stock filing, UPFL said Pakistan’s economic and operating environment is expected to remain challenging due to sustained high level of inflation and pressure on foreign reserves owing to upcoming foreign debt servicing. This may continue to affect the purchasing power of consumers.

Despite the above, Unilever Pakistan said its management team remains committed to overcoming the challenges by driving value for its stakeholders and staying connected to consumers by harnessing the strength of its brand, innovating, continuously striving for value-for-money offerings, and driving cost efficiencies throughout the value chain.

In its January-September 2023 results, Unilever said sales were recorded at Rs26.4bn compared to Rs19.7bn in the same period in 2022.

Sales of National Foods Limited (NFL) climbed to Rs40bn during July-December 2023 from Rs26.6bn in the same period 2022, while profit after tax inched up to Rs1.5bn from Rs1.22bn. Ismail Industries Limited sales reached Rs68bn during July-December 2023 from Rs47bn, up 44pc, while profit went up by 41pc to Rs3.89bn from Rs2.75bn.

Ismail Industries said its revenue growth momentum primarily results from additional volumes and cost-push price adjustments across all businesses due to inflationary and devaluation-led price adjustments. Consistent inflationary pressures pose significant checks on consumers’ spending and demand.

Fauji Foods Limited (FFL) ‘s sales revenue grew by 60pc to Rs19.8bn in 2023 from Rs12.3bn in 2022, while profit closed at Rs605 million versus a loss of Rs2.169bn in 2022.

Published in Dawn, The Business and Finance Weekly, March 11th, 2024