Amid rising consumer awareness about products and nutrition thanks to Internet penetration, fast moving consumer goods companies are looking at premiumisation to spur sales. Top execs at these firms who spoke at the CII FMCG Summit 2018 in Mumbai said that growth of e-commerce and modern trade has fuelled demand for premium brands.
ITC’s executive director B. Sumant said that the Internet revolution has democratised expectation and aspiration. Recounting an experience he had when he was visiting a village in Kendrapara district of Odisha to study consumer buying patterns, Sumant said that he was surprised to find people living in houses made of mud or thatch bought premium products. “The challenge for companies like ours is to take these niche products and convert them truly into mass scale products where you can generate revenues,” he said. And so, “we decided to go mass—go with small packs of even our premium portfolio. So today, we have a Dark Fantasy Choco Fills in packs of Rs 10…shower gels in refill pouches.”
Nitin Paranjape, president, foods and refreshment division, Unilever, said the biggest benefit of technology is the platform it is providing to mobilise people: People now not only have a choice, but they also have a voice.
Consumers are also becoming conscious about the nutritional offerings of food products. Tarun Arora, COO and director, Zydus Wellness, said that personalisation of food products will make a big difference in the way FMCG firms serve consumers. “The whole nutrition space has segmented and every person in the family has a different nutrition need. There will be different nutritional products instead of one common product for everyone.” Zydus acquired Kraft Heinz’s India portfolio in October 2018, which includes nutrition-drink Complan, Glucon-D, Nycil and Sampriti brands.
FMCG majors are trying to capitalise on rising consumer demand by making products more affordable. However, several new-age small and regional players are giving tough competition to traditional players, which have responded by either collaborating with them, or taking them on. For instance, Marico, which owns a 45% stake in men’s grooming brand Beardo, is using the latter’s agility to its favour. “Beardo’s innovation cycle time is 60 days, ours takes eight months. The challenge for consumer packaged goods companies would be to manage this polarity and have an agile structure,” says Saugata Gupta, managing director and chief executive of Marico.
ITC has a different proposition: Sumant says traditional FMCG majors need to think like regional players. ITC has integrated food manufacturing and logistics facilities to quickly service markets within the 300 km range, which helps them shrink supply chain cost, be close to the market, and scale efficiencies as they make multiple products under one roof at these facilities. “You are trying to think and act like a small local warrior,” Sumant says.
Market Research firm Nielsen maintained its growth estimate for FMCG industry for 2018 at approximately 13%, slightly lower than the 14.1% in 2017.
