OIL & GAS

Rising fuel prices- Small is big: How the ‘Chhotu’ LPG cylinder became a bestseller

When popular shampoo brands started selling sachets, they managed to rope in a consumer with small pockets but big aspirations. Small soon became big in the FMCG industry, with everything from coffee to chips and shampoo to cream being sold in single-use packing costing not more than Rs 5, thus reaching buyers who could never afford the larger packs.

With fuel costs spiraling, the LPG cylinder has also taken on a ‘Chhotu’ 5-kg avatar that is more in demand than the standard 14.2 kg version. Even if the small cylinder costs a bit more, it makes sense for many who can’t shell out Rs 900 in one go but would prefer to commit Rs 500 for the small one instead.

The uptake of small cylinders would probably grow further if the government’s plan to supply these through the network of fair price shops across the country kicks off. And with no subsidy in sight for LPG, more consumers would be forced to opt for the smaller ones.

State-run oil marketing companies are said to have appreciated the proposal of retailing through fair price shops, and have even committed their support. The consumer affairs ministry had requested the Union ministry of petroleum and natural gas for leveraging electronic point of sale (ePoS) devices for sale of 5 kg small cylinders from fair price shops. “We are looking into the business model and a pilot has been started in Kerala,” state-run Indian Oil Corporation Ltd (IOCL) told FE. “As per preliminary discussions and business model proposed, the retail sale price of small cylinder at FPS will be same as market price,” IOCL added.

As for IOCL, the 5 kg small cylinder is primarily marketed to cater to the needs of customers such as migrant labourers, students, food hawkers who were dependent on the grey market due to lack of address proof, etc. The sale of these small cylinders recorded a significant jump in FY20 after it was re-launched under the ‘Indane Chhotu’ brand name in December, 2020. Sales grew further in FY21 when subsidies on standard 14.2 kg domestic cylinders were stopped.

To encourage regular refill, a swap option from the standard 14.2 kg connections to 5 kg connections was offered to Pradhan Mantri Ujjwala Yojana (PMUY) consumers.

Source
financial express
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