How do you visualize the impact of coronavirus on the FMCG and consumer durable sector and do you think by 2021 the demand will start reviving?
The key shift we have seen is purchase format. We have witnessed growth in e-commerce which will likely persist, with social distancing becoming the new norm. Consumers are shifting to online purchasing for groceries and daily needs, along with their neighbourhood ‘kirana’ stores, and we have seen the consequent growth of consumer service channels such as e-commerce, backed by digital payments and delivery infrastructure. Uniquely for Indian consumers, one of the key shifts has occurred is a new comfort level to embrace packaged foods.
While the coronavirus has certainly impacted out-of-home consumption occasions for the sector, with the new consumption occasion being in-house, consumers are looking for ways to treat themselves. We are seeing changing perceptions towards food.
Being in lockdown has also created new moments and rituals of closeness as people find ways to connect and spend more time with their families.
This presents an opportunity for food companies like us to help bring joy and familiarity to our consumers in an uncertain period.
We are still too close to the pandemic to determine permanent impact, but we think the consumer landscape will surely undergo changes. Some impacts which we foresee will last beyond the pandemic, for example – an acceleration in the adoption of technology and adopting various cost-effective means to reach consumers.
We believe demand will continue to pick up, and for FMCG companies like ours, agility is the key focus – we have to reach consumers fast with innovative solutions to keep them engaged.
As a result of restricted economic activity that has cast uncertainty over household finances and future employment, do you think consumers will be more careful while spending on the brands they love?
In the past few months, Indian consumers have become increasingly discerning due to changes in needs, priorities and spending. But at the same time, we believe that people continue to look for connection and celebration. People are coming to categories like ours in search of treats, and moments of joy, in times such as these.
We have seen this translate to purchasing across multiple platforms. Our share and multi- packs have received more attention, for example, and we are continuing to innovate to make sure that we are providing consumers value-for-money and variety. Snickers continues to be a snacking option for families as sharing packs become a compelling proposition.
Similarly, although out -of -home consumption has reduced, gums and mints is seeing growth at price points which were right for the consumer, such as at the INR 1 price point, especially in rural markets.
Owing to the COVID-19 outbreak, FMCG & consumer goods companies have been facing multiple challenges to get goods to reach consumers. Manufacturing, supply chain breakdowns and labour challenges have been some key issues that the companies have been facing for a long time and this forced organizations to remodel their strategies. Are these strategies short term or long term?
Temporary factors did have an impact on production and distribution, as can be expected in the maintenance of public safety, and we worked closely with local authorities to ensure product availability. As a food company, we have always focused ourselves on serving consumer needs, learning new ways to pre-empt and optimize supply capabilities, to set us up for growth.
For us, a long-term sustainable business is of utmost importance. This is a decisive, long-term push. For 2021 and beyond, we need to continue to be agile in shifting strategies to address changes. Further, we believe in adapting to changing consumer needs. For example, we know consumers will continue shifting toward digital touchpoints, so we continue to build an omnichannel presence – both in stores and online – to effectively meet consumers wherever they are. This includes increasing online availability of our products through various e-commerce platforms and strengthening partnerships with delivery providers.
At the same time, we need to focus on recovery plans that help those that will be the most vulnerable to the lingering impact of the pandemic in our extended supply chain, in addition to the continued adoption of practices that keep in mind the clean, resilient and low carbon world we want tomorrow.
Will rural India revive better than urban India?
More than a third of FMCG expenditure in India can be attributed to rural markets, and rural consumption is set grow further.
While COVID-19 has definitely been a factor, the FCMG sector has seen a marked focus on the rural segment, backed by good monsoons driving rural demand as well. We expect an upward trend to continue into the coming year. The best way the FMCG sector can serve consumers here is through innovation, and SKUs at affordable price points. The FMCG sector has definitely catered to rural markets which are driving growth through tailored assortments and price points at the entry level.
What are the 5 things you would suggest brands to adopt to evolve out of this pandemic?
- People first: Companies should continue to keep their associates’ well-being on top priority. Apart from implementing safety measures and protocols, providing associates with timely information, guidance, and resources to support their wellbeing is important.
- Consumer centricity through agility: With evolving consumer choices, brands would do well to introduce a more compelling portfolio, unique innovations and an evolving strategy to reach consumers wherever they are – whether online channels or neighbourhood stores.
- Growth mindset and continuing to keep the bar high: The crisis has accelerated changes in how we work that would be good for us to carry forward. Keeping the momentum into the next year and also identifying new growth areas would continue.
- Supporting supply chains: Future-proofing supply chains to absorb shocks by diversifying distribution mix – between traditional and modern trade channels to Digital Commerce marketplaces and other innovations.
- Sustainability and planet consciousness: Brands should recognize their duty to address global challenges that touch their business – from poverty and hunger to climate change and water scarcity and make lasting commitments to ensure growth in ways that are good for business, people and the planet.