The festive season is upon us. Retailers, food brands, and consumers are getting ready for a vibrant and unforgettable peak festive season ahead. The festive season this year is going to be more exciting than the previous ones. In India, the second half of the year is the prime festive sales period, with October to December accounting for 20-30% of annual sales for many businesses. During these months, mithai shops in cities see a 25-30% surge in sales, while dry fruit vendors experience a 60% increase in average sales.
Traditionally, consumers use the festive season for bulk and premium purchases. Sometime ago, industry body Assocham came out with a report that said consumers are expected to splurge in excess of Rs. 50,000 crore on shopping during the festive season. The report also mentioned that middle and lower-middle income families in India spend an average of 29 per cent of their salary during the festive season.
How Festive Spending Shapes India’s Retail Landscape
Gifting is a cornerstone of the festive season, reflecting its deep significance in our lives. During this time, many consumers allocate a substantial portion of their budget to buy gifts for family, friends, and themselves. The festive months are a prime opportunity to express affection and celebrate relationships through thoughtful presents.
Given the surge in gifting during the festive season, brands and retailers are gearing up with new promotional campaigns, product lines, appealing assortments, and enticing sales strategies to capitalize on the festive spirit.
During the festive season, brands and retailers look at new launches and exclusive product launches. Brands, particularly in food retail, sign up for significant retail display space within stores during the festive season. Retailers plan for promotional events to capitalize on the festive season and they partner with brands in offering consumers a buffet of products, discounts, and promotional offers. They pay a certain fee as mutually agreed upon with the retailer. The products can come as a part of a gift hamper or as a single SKU gifting range of the same brand.
From Classics to New Options Transforming Festive Gifting
Though the festive season continues to be strongly dominated by sweets, chocolates, dry fruits and snacks, sales of non-traditional products like tortilla packs, exotic teas, coffee and fruits, jams, honey, saffron, marshmallows, crackers, sauces, wines, etc., have picked up sharply in recent years. Flavorful and exotic drinks are popular with health-conscious and well-traveled consumers.
In fact, gift hampers have come to acquire a special place and remain a popular highlight of the festive season. Most brands and retailers go the extra mile to introduce celebratory gift packs and hampers and consumers love opening their wallets to buy them. Gift hampers help brands and retailers to establish a special connection with their consumers and they have become a favorite feature across all food product categories.
The concept behind such innovative gift hampers is to have the customer be able to use every element of the basket. “Every item is carefully selected so that the customer can make everyday use of it. Even the baskets themselves are reusable and offer an additional product attribute,” points out Arora. This concept also reduces disposable trash and is an eco-friendly approach.
Exotic beverages and bakery items, along with dry fruits, have long been popular gift choices. Recently, the trend towards healthier eating has influenced the sweets category, and seed and nut baskets have become popular as well, appealing to consumers with their health benefits.
Packaged foods’ contribution during all big events and occasions is 29% but during Diwali, it goes up to 35%. Categories like ghee, salty snacks and chocolates peak in sales during Diwali, though, according to Nielsen, this increased contribution does not completely hinge on price promotions.
According to market surveys, shoppers resort to higher spending in almost all key categories – a 25% increase in average monthly spend on staples and packaged foods during the three months of the festive season (October-December), compared to the average monthly spend in the previous six months till September. It is estimated that there is a 12% increase in spends on groceries and a 50% increase in spends on apparel in the October to December period compared to the three months ending September.
Past and Current Trends in Gifting
In the past, the focus on gifting was predominantly around traditional Indian sweets. Even today, mithai gift packs still rule close to 65% of the gifting market and sales are close to 40 per cent during festivities. It is still an auspicious gesture for many Indians to carry a mithai/nuts gift pack on every celebrated occasion.
In general, the sales of sweets increase during the festive season. However, some signature products such as kaju katli, motichur ladoo, kalakand, rosagullas and rasmalai bring in better sales. In traditional Indian sweets, it’s usually the sugar- free range of sweets and Bengali sweets that see higher demand.
While the traditional festive gifting categories of Sweets/Dry Fruits/Chocolates/Perfumes/Clothes/Accessories will continue, this year may see an increase in the share of brands/products that espouse a cause – environmental or social. Consumers, especially Gen Z is inclined towards brands that are perceived as inclusive, ethical and support causes that matter to them. Healthy gifting as a category has gained noticeable traction among today’s consumers.
More and more brands and new categories like olive oils, fruits, namkeens, dry fruits, etc, have joined the healthy snacking and gifting bandwagon over the years. Gift-ready packs, high on health, hygiene and variety are successfully engaging the consumers, and helping F&B companies gain a bigger market share during the festive season.
Chocolates, snacks, dry fruits, tea and coffee will continue to remain all time favorites for gifting. But in our format, there will be a health quotient for all the above categories. Premium offerings aligned with experiential gifting trends, foster deeper consumer connections.
To meet the growing consumer expectations, brands are also introducing differentiators in the form of attractive packaging and combinations of exciting flavors and products that offer delightful munching moments in tune with the effervescent mood of the festive season. Most decisions about food gifting items take place in stores and packaging plays a key role in these fast, split-second decisions.
Companies are also elevating their packaging to emphasize premium quality, safety, and occasion spirit. To boost sales, they enlist top design teams and artists to craft concepts where design, color, and imagery are crucial. Packaging design and aesthetics play a big role in the choices consumers make when it comes to festive gifting and that is why brands lay great emphasis on eye-catching pack design.
Conclusion
Like every year, the festive season presents a prime opportunity for FMCG companies and retailers to launch new products, refresh collections, and introduce innovative SKUs and packaging. Retailers can capitalize on this by strategically curating their offerings, enhancing in-store experiences, and leveraging data to tailor promotions. On the other hand, by leveraging collaborations, brands can drive higher volumes and sales and accelerate their inventory turnover. With the right strategies, they can not only boost their festive sales but also strengthen customer loyalty and set the stage for sustained growth.
