Consumer products industry outlook
By Krishnarao Buddha, Senior Category Head, Parle Products
The overall performance of the FMCG industry in India has built growth momentum with trends defining the direction of the consumer products industry today. While the fight against COVID-19 sew up some challenges on the way especially during the second wave in the March-May 2021 period, but we kept our feet on the ground, to sense the tremors that would shake up operations. We understood the expectations of our consumers, stakeholders and our responsibility to learn and improve operations.
2022 will be the year of transition and FMCG will continue to be an important sector when it comes to reviving the economy. It is time to shape up our future rather than pondering over existing in these tough times. Hence, our market responsiveness, forecast and understanding of consumer expectations will enable us to shape up the outlook and scenario of the industry. Here’s my advice on the FMCG industry with 5 Focus Points for 2022:
Accelerating the shift to digital: 5G and Media Consumption
5G technologies is known for delivering faster speeds, more reliability and improved performance in many other ways. It may not have been seen as a beneficial feature earlier, but due to the work-from-home situation being a prominent part of our corporate culture today, better connectivity and bandwidth has become a necessity for all.
The most anticipated 5G rollout in the second quarter of 2022 will give rise to increased digital transactions as a lot of the consumers will be going online due to convenience. We are also expecting a magnitude of innovative and fresh content on digital platforms due to this reason, and further audience shift to digital medium for content as opposed to television. The move towards digital also includes other areas such as reshaping internal capabilities and creating efficiencies with technology.
Portfolio restructure and expansion
When it comes to the FMCG sector in general and the foods category in particular, the year 2021 itself witnessed significant expansion. It is true that many companies or brands did not take risks in terms of new product launches during this time but at the same time, quite a few did go ahead with expansion. We have seen a growth in the salty snacks segment due to the work-from-home mandate that many companies followed due to the drastic change in consumer eating habits. People started craving mid-day or even mid-night snacks more than before. We expect this trend to continue further as many companies are offering permanent work-from-home or a hybrid working model to their employees. Salty snacks had a relatively low penetration in the market to the tune of 70-75% and we are expecting this percentage to grow significantly in 2022. Likewise, as schools have begun to re-open we are expecting growth in the impulse buy section such as confectionery, salty snacks and chocolates.
Taking away the stigma: What’s your policy?
The last two years have brought about a lot of changes in people’s lives. It is impossible for people or even organizations to maintain the same status quo when it comes to their work-life when something of the magnitude of the COVID-19 pandemic happens. Organizations adopted in a lot of ways – the most significant among these being the work-from-home policy. While it was hailed as a good measure by a lot of employees, even this change came with its own set of challenges. Previously, work ended for most people when they left their office premises, but now a lot of sectors are seeing employees working round the clock and at irregular timings.
This has led to employees feeling burnt out, to say the least, and developing mental disorders such as anxiety and depression at the very worst. Consequently, companies are coming up with initiatives for their employees such as an in-house counsellor, mental health toolkits, trying to understand what works better for different types of people, etc. I think this will continue full-fledged this year as well as in the years to come as people have started taking note of their mental health which was and to some extent still continues to be a taboo subject. We will see brands being more invested in the employees’ mental well-being and we may also see them coming up with initiatives for their consumers.
A Greater shift towards E-Commerce
The industry is building towards the resilience of supply-chain to gain agility and scalability to power new go-to-market approaches and innovative business models. Traditional firms are opting for Direct-to-Consumer (D2C) strategies as they jump on the bandwagon of the alternate sales channel to reach customers who are increasingly buying online. While brick and mortar trade will continue to grow and consolidate, we are expecting a lot more to happen in the online space as well. Adding to this, I believe consumption or buying behaviour is going to be even more skewed towards e-commerce because they have really stepped up during the pandemic in terms of speed of delivery and other facilities, and people have gotten used to buying from the comfort and convenience of their homes. This was made possible due to players like Swiggy and Zomato also entering segments like grocery delivery during this period.
Connecting purpose to profitability
The pandemic forced both brands and individual consumers alike to stop and evaluate what direction they would like things to be headed in the post-pandemic world. Consumers have become increasingly aware of their buying decisions, they want to be more conscious, sustainable and I believe this trend will certainly continue in the near future. ‘Sustainability’ in the case of brands is about keeping consumers’ preferences in mind in order to sustain themselves. We recently tied up with IBM to leverage their hybrid cloud, security, business consulting, and AI capabilities in order to better understand the ever-evolving consumer preferences and be ready to cater to the need-gap in the market.
In today’s rapidly evolving marketplace environment, it is important to reinvest in self after reviewing key business issues, trends, statistics and consumer behaviour or firms might get left behind.