Crisis brings opportunities. This could not have been truer for the FMCG industry in 2020 even as the world grappled with the impact of the COVID-19 pandemic. The sector is learning, innovating and rising from disruptions to put the worst behind and looking forward to the new year with optimism and a new-found confidence.
With food, personal care items, especially hand sanitisers and disinfectants — the hero products of the pandemic — managing to push the industry to post positive growth amid the crisis, in 2021, the FMCG industry is looking forward to carry on with the momentum and sustained revival across categories in rural and urban markets of India.
With lessons learnt on how to navigate through the hurdles and uncertainties thrown up by the once-in-a-lifetime occurence, the sector is more confident going into 2021, having fast-tracked adoption of digital medium for distribution and realigned product portfolio, such as ayurvedic preventive healthcare items tailored for the new normal.
"2020 has been a year of disruption and learning at the highest level for one and all. As a business and (as a) team, we have come closer, are more aligned, and continue to innovate to meet our consumers' needs while ensuring the well-being of our people and their families," PepsiCo India President Ahmed ElSheikh told PTI.
As potential COVID-19 vaccine candidates are expected to hit the market soon, he said, "we are cautiously optimistic that 2021 will witness sustained revival and eventually growth. Our focus areas remain on prioritising profitable channels, diligently managing SKUs (Stock-Keeping Units), further investing in digitisation and driving execution to meet the ever-evolving consumer demand".
In 2021, companies would continue to align their product portfolio in line with the 'new normal' and work on increasing penetration. Sounding bullish, Parle Products Senior Category Head Mayank Shah said, "the worst is behind for the FMCG sector. We are expecting next year to be a great one for the entire FMCG industry".
Besides learning lessons in terms of navigating challenging and uncertain times, he said the pandemic also made the FMCG sector carve opportunities out of the crisis. Expressing similar views, a HUL spokesperson said, "looking forward, we are cautiously optimistic that the worst is behind us, we are confident of the medium to long-term growth prospects of the FMCG sector".
HUL will focus on competitive volume-led growth, absolute profit and cash delivery, said the spokesperson, adding that the company remains committed to "further strengthen its portfolio of brands through bigger and better innovations and unblinking defence of a strong market leadership position". As the coronavirus pandemic brought to the fore the need for preventive healthcare, FMCG companies also focussed on meeting heightened demand for ayurvedic products.
"Ayurveda-based preventive healthcare and hygiene — both personal and household — are gaining prominence in the consumer mind space. People are now more inclined to prophylactic health remedies, especially immunity-boosting products. This trend would sustain, going forward," Dabur India CEO Mohit Malhotra said. Echoing similar sentiments, Patanjali Ayurved MD Acharya Balkrishna said, "this pandemic has helped to create faith in Ayurveda and Yoga among the section which does not believe in it.
This is an opportunity for us as people are now having faith in Ayurveda and traditional system." One of the biggest outcomes of the COVID-19 pandemic is the acceleration in the adoption of digital medium by FMCG companies, not just for distribution but also for marketing and advertising, Mayank Shah said.
Earlier, the estimation was that the contribution of digital channel in the total FMCG market would be around 10 per cent in the next ten years but it could now be achieved in the next three to four years, he added. Deloitte India Partner and Consumer Leader Porus Doctor said, "one significant feature of this lockdown and post lockdown scenario was a tectonic shift towards online and e-commerce, a trend that is here to stay".
According to EY Partner and National Leader (Consumer Products and Retail) Pinakiranjan Mishra, companies would accelerate their adoption of digital medium to improve internal efficiency and connect with their business partners and consumers. Even as the FMCG sector heaves a sigh of relief for being able to overcome the challenges of the disruptions of the pandemic, it will be grateful to the Indian rural market for driving growth in the difficult times.
"In these unprecedented times of the coronavirus pandemic, rural India has offered that much-needed beacon of hope. And Bharat will continue to be the big growth engine in the coming year too," Mohit Malhotra said. The mass reverse migration of labour from big cities to villages following the nationwide lockdown coupled with good monsoon and a plethora of fiscal stimuli offered by the government resulted in a marked uptick, he added.
Another development that is working in favour of the FMCG sector going forward is the recovery of the urban market. Marico CFO Pawan Agrawal said demand is continuing to recover with improved urban consumer sentiment and rural continues to fare well.
In 2020, personal care and hygiene products gained market share and the FMCG companies plan to continue to invest in the segment by introducing more nature-based products in their personal care and food segment. "We will continue to align our product portfolio in line with the 'new normal'. Going forward, the packaged food market in India which is about USD 35 billion is expected to be about USD 70 billion by 2025.
"This is possible with increasing penetration, increasing proclivity of consumers towards more credible, more transparent, trustworthy, and scientifically better modulated brands," a Nestl India spokesperson said. According to Edelweiss Financial Services Executive Vice President Abneesh Roy, companies would look up for more automation in factories or in distribution.
"This kind of challenge has really taught them to be future-ready for such challenges," Roy added.