Why Do Sachets Sell So Well in India?

Why tiny single-use packs of shampoo, ketchup and detergent cost more per gram yet dominate sales among lower-income households.

Walk into a small kirana shop and you will see strips of sachets: shampoo, detergent, coffee, ketchup, even hair oil. Sachets often cost more per gram than larger bottles. So why are they so popular?

Liquidity constraints

For households with low or daily incomes, the problem is not the price per gram but the total amount of cash needed at one time. A large bottle of shampoo might cost 200 rupees, which is hard to spend in one go on a day’s wage. A sachet for 2 or 3 rupees fits the daily budget.

Economists call this a liquidity constraint: people may prefer the cheaper unit price, but they cannot spare the larger lump sum.

Other advantages

Trying new products: sachets let people try a brand with little risk.
Portion control: single uses prevent waste or sharing too quickly.
Storage: small homes have little space.
Variety: people can switch between products or flavours.

The history

In the 1980s, the Indian company CavinKare, with its Chik shampoo, popularised very cheap shampoo sachets aimed at rural and lower-income consumers. Large multinational companies followed. The idea became a model for selling to low-income consumers worldwide, promoted by business writer C.K. Prahalad in his work on the “bottom of the pyramid”.

The downside

Higher unit cost: poorer households may pay more per gram, sometimes called a poverty premium.
Plastic waste: sachets are hard to recycle and contribute heavily to plastic pollution. India’s plastic waste management rules put responsibility on producers to collect and manage packaging waste.

Beyond shampoo

The sachet idea has spread to services: small mobile recharge packs, pay-per-use apps and small-ticket insurance and investments.

The daily wage budget

A construction worker earns 600 rupees a day. Buying a 200 rupee bottle of shampoo would take a third of the day's wage. A 2 rupee sachet costs almost nothing. Over a month, he pays more per gram with sachets, but he never has to find a large sum at once.

Thinking people who buy sachets are making bad choices

Sachets solve a real problem of limited cash. The choice is often rational given liquidity constraints.

Key takeaways

Sachets often cost more per gram but fit tight daily budgets.
Liquidity constraints explain much of their popularity.
CavinKare's Chik shampoo helped popularise sachets in India.
Sachets create a poverty premium and plastic waste problems.