FMCG cos gear up as Bharat rises

Source: LiveMint.com, Nov 12, 2020

Consumer goods companies are ramping up distribution in India’s smaller towns and villages, where sales are rising thanks to reverse migration, increased minimum support prices, government stimulus measures for the rural economy and a normal monsoon.

Companies are trying out new pack sizes, leveraging online sales, and customizing products to expand their reach in the hinterland.

“We are appointing more distributors to enhance our rural reach. We are also appointing a lot of village-level entrepreneurs so that when the village sales scale up, we are able to convert them into sub-stockists and it becomes a part of our distribution network,” said Mohit Malhotra, chief executive officer, Dabur India Ltd. The company aims to reach 60,000 villages by the end of this fiscal, up from 52,000 in March 2020.

Jyothy Labs has rolled out ₹10 and ₹5 packs of its more urban-oriented dish cleaning brand Exo in villages and ensured last-mile supplies of its products. “Rural has been our strength from Day One. Now we’re putting more effort, appointing more sub-stockists, getting more distribution points and retail outlets and delivering at their doorsteps,” said Ullas Kamath, joint managing director, Jyothy Labs. Rural brings 40% of sales for the maker of Ujala fabric whitener and Pril utensil cleaners.

Growth in India’s villages, which account for over 36% sales for makers of fast-moving consumer goods, had slowed in 2018, pulling down overall growth for the entire industry.

Rural markets with their large population and consumer graduation from unbranded to branded and packaged goods have long been seen as a significant reservoir of growth for companies.

While the lockdown initially disrupted supplies for several companies, it also stoked demand for hygiene products and packaged foods in India’s villages. With the pandemic forcing people to return home —from big cities to smaller towns and villages—tier II, tier III towns and villages saw good traction for consumer goods.

Dabur’s Malhotra said rural demand trends will sustain for some more time, a commentary most large packaged consumer goods firms including Hindustan Unilever have maintained.

Packaged foods and beverage maker PepsiCo India has listed its products on Grameen e-store, a hyperlocal e-commerce platform for villages and enables last-mile delivery. For this, it partnered with common service centres (CSC) under the ministry of electronics and information technology (MeitY). Brands such as Lay’s, Kurkure and Uncle Chipps will be available on the Grameen e-store.

Raju Pullan, senior vice-president, consumer electronics business, Samsung India, said it is already seeing strong demand from tier-III cities as first-time buyers who typically travel to larger cities to buy big-ticket items purchase TV sets and washing machines locally. In response, Samsung has ensured availability in these markets.

“We will continue to focus on the nearby stores because consumers are willing to buy products from such stores,” said Pullan.

“Why we are seeing rural is growing is because one of the best harvests of wheat has been seen this year. Second, this is one of the best monsoon years. Third is government push towards rural—which is minimum support pricing and rural infrastructure. And fourth is efforts by organizations—whether it is rural-oriented packs or other distribution efforts by manufacturers,” said K. Ramakrishnan, managing director at Kantar Worldpanel, which tracks FMCG consumption.

Bharat spurs growth of FMCG companies, but Urban India not far behind

Source: Business Standard, Oct 25, 2020

Mumbai: Rural India has spurred the growth of fast-moving consumer goods (FMCG) companies, at a time when Urban India has been reeling under the impact of the coronavirus (Covid-19) pandemic. The September quarter results of most FMCG companies reflect this trend, with rural growth outpacing growth in urban areas by a wide margin.

While the sales momentum from rural areas is expected to last for another three to six months, urban growth could stage a comeback by the June quarter next year, said analysts, as people learn to live with the virus and economic activity gradually improves in cities.

Around 60-65 per cent of an FMCG company’s sales come from urban areas and 35-40 per cent sales come from rural areas, making the former a critical component of a firm’s topline. Therefore, the sooner the recovery in urban areas, the better it is, say sector experts.

“Rural areas have gained from the good monsoons this year, higher minimum support price in some states, reverse migration and the government’s overall welfare push in the villages,” says G Chokkalingam, founder, Equinomics Research and Advisory. “But as the economy unlocks and job uncertainty reduces in the cities, urban growth will improve. This could happen by the June quarter of the next financial year,” he says.

Sachin Bobade, vice-president, research at brokerage Dolat Capital, says that FMCG companies will benefit next year from a low base on the urban side of their business thereby optimally pushing up urban growth.

Ironically, rural FMCG growth this year has benefitted from a low base, since in the corresponding period last year rural India had grown at its slowest pace in 7 years. Rural areas, for the uninitiated, had witnessed much distress due to a liquidity crisis as well as floods, hitting sales, similar to the weakness that urban areas are seeing this year due to restricted living triggered by the coronavirus.

The segments most impacted in urban areas include discretionary and out-of-home categories, though companies say the scenario will improve in the months ahead as the economic outlook improves.

“Urban is looking a little uncertain at this point. While it is difficult to estimate market growth, we remain cautiously optimistic,” Sanjiv Mehta, chairman and managing director (MD), Hindustan Unilever (HUL), said in a post-results media briefing last week.

Suresh Narayanan, chairman and MD, Nestle India, said, “The rural-urban growth divide will narrow as we go forward with relative normalcy in urban centres.”

Market research agency Nielsen has said that the sales outlook for urban areas will get better as chances of finding a cure for the Covid-19 virus grow. The government has indicated that by the first quarter of the 2021 calendar year a vaccine should be available in the country, though some experts estimate it will take longer, rolling out by June of 2021.

Moreover, administering the vaccine to the masses will take time, they say. Yet, news of a vaccine discovery could bring a sigh of relief to consumers, especially in urban centres, who’ve been hit hard by surging Covid-19 cases.

Rural strategy

For now, companies are turning to the hinterlands, broad-basing their low-unit pack (LUP) strategy and expanding their rural distribution by adding more field force and rural distributors to improve penetration. Varun Berry, MD, Britannia Industries, said that his company was looking at taking its Rs 5 packs across its brand portfolio as it sought to push these products into rural areas. While Mondelez India’s sales director Parveen Dalal said that his company was closing monitoring the consumption index across villages. The purpose was to identify those places where demand was higher for its products in a bid to step up its sales and marketing effort in these areas.

Big FMCG brands overcome challenges, close gap with smaller players

Source: Business Standard, Oct 04, 2020

Mumbai: Racks at local grocery stores are, nowadays, packed with popular trademarks. However, this wasn’t the case a few months ago. At the height of the lockdown small and regional names in food and fast-moving consumer goods (FMCG) beckoned for attention, seeing a sharp spike in off-take.

The trend has now reversed. Market research agency Nielsen’s FMCG index shows that the gap has narrowed between national and regional brands to nine points in August, as big names tide over supply-chain issues, distribution challenges, and retailer woes.

Nielsen says national and regional brands have been fighting to make their presence felt in the past few months, with the gap at around 11 points in March-April, when big brands had to temporarily suspend operations due to the nationwide lockdown.

This gap narrowed to eight points in May, as national brands fought back to revive operations, but increased again to 11 points in July, when vertical lockdowns were introduced in various parts of the country, impacting key players.

“Despite the tug of war, the seminal trend is that big players are closing the gap with small brands. This comes as operations get back to normal after the disruptions witnessed earlier.

National brands have also increased distribution and visibility. Many are pushing their presence aggressively into rural areas to tap into the growth there,” said Sameer Shukla, executive director, retail intelligence, South Asia, Nielsen Global Connect. Small brands have limitations in expanding their reach and visibility, Shukla said, which is a clear advantage for large players.

Sumit Malhotra, director, Bajaj Consumer, also said: “Small players may not have the wherewithal to take their presence into newer areas. Some of them could also be facing liquidity issues, which limits their reach.”

FMCG executives and experts endorse this view. Mayank Shah, senior category head, Parle Products, said: “The past few months have seen fluctuations within the FMCG market. Big brands were hit due to the nationwide lockdown, but have bounced back strongly.” Shah said this trend would continue as big players not only push their presence into rural areas, but the emphasis on trusted brands also grows among consumers.

Kaustubh Pawaskar, associate vice-president, research at brokerage firm Sharekhan, said the tilt towards trusted labels is higher in times of crisis. “Consumers will gravitate towards brands that evoke strong recall and have high trust codes, especially during a health crisis.

The strategy for the national companies would be to keep these trust codes going by reinforcing quality standards and improving penetration,” Pawaskar said.

New brand launches in categories such as health and hygiene and in-home cooking have increased sharply already as consumers pivot towards essential products in comparison to discretionary items, choosing to rationalise their household budgets.

While biscuit majors such as Parle Products, Britannia, and even companies like Gujarat Co-operative Milk Marketing Federation (GCMMF, the makers of Amul) reported strong growth rates in the April-June period, led by in-home consumption and focus on essentials, experts said these players had to be disciplined in their approach to take advantage of the uptick in consumption.

R S Sodhi, managing director, GCMMF, said the shift towards branded and affordable products would increase. “People have become value seekers. Affordability is key in challenging times. The second point is that consumers do not want to let go of quality, which is why trustworthy brands are in demand,” he said. Mohit Malhotra, chief executive officer, Dabur India, said promotional intensity is growing as large players entice consumers with multiple offers. He said companies are launching low-unit packs in rural areas. At the same time, price and grammage offers are visible on large packs in urban areas. Nielsen said that retailers have pruned their assortments in August, reducing clutter and opting to stick with categories and products that are seeing greater traction. This is giving the large brands the room to flex their muscles.

Increased demand for groceries lifts household consumption to a two year high in April-June

Source: ETRetail.com, Aug 11, 2020

MUMBAI: Household consumption of groceries and home and personal care products surged to a two-year high during the April-June quarter, according to a research firm, as consumers stocked up on these products while hunkering down in their homes due to Covid-19-related restrictions.

The fast-moving consumer goods market expanded 4.3% in volume and more than 8.5% by value during the quarter, according to data from Kantar Worldpanel. Kantar’s numbers contrast with data from market researcher Nielsen, which showed the market declined 18%. This is likely because Nielsen mainly covers retail sales of packaged goods while Kantar tracks household consumption of both branded products and those from the unorganised segments.

“From a household purchase lens, FMCG overall seems fairly strong. While out of home consumption may have seen a sharp drop, the household view is one of positive growth,” said K Ramakrishnan, the South Asia managing director at the company owned by communications and advertising giant WPP.

At an overall level, most listed companies have either posted a decline or stagnant sales growth during the quarter, hurt by falling out-of-home consumption. Also, there is a lag effect with companies posting primary sales data which were impacted by supply-chain disruptions compared with Kantar’s numbers which show actual consumption.

“With people staying at home, both household consumption by volumes as well as frequency was higher across food and non-food products, which reflected in published results. Companies which have lower dependence on out-of-home categories posted good results,” FMCG company Marico’s managing director, Saugata Gupta, said.

For instance, Britannia, maker of Good Day and Tiger biscuits, expanded sales by 25%, while Hindustan Unilever said there was a big burst of demand for jams and ketchup as people were cocooned in homes. ITC, which makes Sunfeast biscuits and Bingo Chips, said staples, noodles, biscuits and dairy products saw healthy demand in the June quarter. Marico too said demand for its Saffola cooking oil grew 16% due to an increase in home cooking. It also reported higher in-home consumption of hair oils.

Kantar’s data are heavily skewed toward the food and beverages segment, which accounts for nearly 70% of the overall volume of products covered and has a higher proliferation of items from the unorganised end of the business. Within F&B, foods grew 5.7% but beverages dropped 19% largely because hotels, restaurants and caterers – popularly called HoReCa and account for almost a third of the overall business for beverages companies – were shut.

“Despite the fact that across the globe and across different states and cities in India, on-premise and out-of-home consumption is getting eased out, we still see a challenge which consumers are still very, very hesitant to step out,” Tata Consumer Products managing director Sunil D’Souza told investors last week.

FMCG stocks on a roll as household binge during lockdown drives valuations

Source: ETRetail.com, Aug 06, 2020

New Delhi : Stocks of fast-moving consumer goods (FMCG) companies are on a roll since the lockdown in March as increased consumption at home and lesser disruption in demand compared to other sectors have boosted valuations.

The FMCG Index grew 32 per cent from March 23 till now. Among the consumer stocks, several have seen massive rallies during the period with Tata Consumer Products up by 98 per cent, Britannia up by 80 per cent, Godrej Consumer by 56 per cent, Marico by 52 per cent, Colgate by 32 per cent, Dabur by 27 per cent, ITC by 25 per cent and HUL up by 18 per cent, according to Religare Broking.

Ajit Mishra, VP-Research, Religare Broking, said that with the easing of the lockdown measures, resumption of factories and easing of the supply chain of essential products, the companies present in the essential commodity segment as well as in the health and hygiene segment clocked significant revenue as they kept on picking up pace with higher demand.

Products such as biscuits, bread, milk, tea, coffee, food packets, detergents, floor cleaner and hygiene products (sanitisers, hand wash, soaps etc.) were in high demand.

Mishra said that companies such as Britannia, Dabur and Tata Consumers reported strong performance as a large part of their portfolio is present in the essential products segment while that of HUL, Marico, Godrej Consumers, ITC and Colgate reported mixed numbers.

Further, most of these FMCG companies benefitted from benign material prices as well as lower advertisement spends which led to improvement in margins.

The Covid-induced lockdown also impacted FMCG companies’ sales and demand initially as they faced disruption in distribution due to restrictions in the supply chain as well as closure of factories.

Notably, demand for essential commodities started to increase while that of premium products and discretionary items were adversely impacted as strict lockdown was imposed which restricted their movement.

Further, local kirana shops gained more as compared to branded stores as they had varieties of products available and were also able to deliver products on time. Besides, impulsive buying, bulk and economical options and move towards e-commerce and digitalisation was the new trend among the urban consumers during the lockdown period as consumers were afraid of contracting the virus.

As a result, FMCG companies tied up with delivery agents and also launched their own e-commerce apps for reaching out to the customers.

FMCG companies are continuing to focus on their core brands, managing distribution and supply chain and efforts towards growing digitalisation and e-commerce sales. These steps would help them overall the recent challenges and are expected to post decent numbers in the coming quarter.

Nielsen expects FMCG sector growth to be flat in 2020

Source: The Hindu Business Line, Jul 30, 2020

New Delhi: Nielsen has slashed its growth forecast for the FMCG sector in the country and expects it to be nearly flat in the range of 1 per cent to -1 per cent for the full year 2020.

The markets research and insights firm had in April said it expected the FMCG value growth to be in the range of 5-6 per cent for the calendar year.

In the April-June period (Q2), the FMCG sector’s value growth declined by about 17 per cent, due to the strict lockdown imposed to curb the spread of Covid-19 pandemic adversely impacted supply chain and consumer demand, it added.

While in the April-May period, value growth for the sector was down by 27.7 per cent, as the country gradually began unlocking economic activities in June, the FMCG sector saw some recovery with a value growth of about 4.5 per cent. The insights firm said that this was fuelled by recovery in rural demand and added that growth in rural markets outpaced urban markets.

Nielsen expects consumer spends in the second half of the year to revive due to the festival season besides other macro-economic factors such as good monsoon. However, this will also depend on Covid-19 infection cases and the strategy the country adops in further unlocking of economic activities.

“We expect to see some recovery in the July-December period.We are expecting to see some growth in Q3 but we expect to see even better growth in Q4 due to the festival season.” said Prasun Basu, South Asia Zone President, Nielsen Connect

FMCG sales in fast lane in rural areas; hygiene, immunity products in demand

Source: The Economic Times, Jul 12, 2020

New Delhi: Leading FMCG players such as ITC, Godrej, Dabur, Emami and Marico are witnessing robust sales in rural and semi-urban markets, bolstering hopes of a speedy recovery from the impact of the COVID-19 crisis. Interestingly, the companies are also reporting a spike in sales of health and wellness, hygiene and immunity-boosting products in these markets, apart from the food products category.

The firms have started to offer these items in value packs and are also expanding their network in rural and semi-urban markets.

“Rural has been growing much ahead of urban and it’s actually performing better than the pre-COVID days,” Godrej Consumer Products (GCPL) CEO India and SAARC Sunil Kataria said.

This is largely due to the fact that the lockdown has been less intense in rural India than in urban areas, he added.

Dabur India Chief Executive Officer Mohit Malhotra said his company has also witnessed a similar trend where rural demand has been growing ahead of urban demand.

“Going forward too, I think rural demand will continue to outpace urban demand. With migrant workers shifting back to their hometowns and the government announcing additional spend on MNREGA and higher MSPs, rural consumption would surely see an uptick,” he said.

Moreover, expectations of normal monsoon this year would further improve sentiments in the hinterland, he said.

According to a recent report from Edelweiss Research, several government initiatives and a good monsoon will supplement farmers’ incomes, which should prop up rural growth from Q2 FY21.

“Overall, with supply chains restored and a likely rural recovery, we expect the sector to record positive growth beginning Q2 FY21,” it said.

Homegrown FMCG firm Emami is seeing stable growth in rural demand post-March, which is overall at par with last year. It expects to clock double-digit growth in these markets this year.

“Smaller packs across our brand portfolio are growth drivers for the rural market. New launches like sanitisers and soaps from our personal hygiene range are showing early signs of good demand,” Emami Director Harsha V Agarwal said.

The Kolkata-based company has launched initiatives like loyalty programs in these markets.

“We are also investing in digital marketing to connect with our rural consumers,” said Agarwal.

According to ITC, in terms of food consumption, it has been witnessing encouraging demand for Sunfeast biscuits, Bingo! range of snacks and Yippee! noodles in the rural markets.

Besides food, health and wellness, hygiene and immunity-boosting products are now at the forefront of consumer demand even in the rural markets, it said.

“Awareness amongst consumers on health and hygiene has got heightened across both urban and rural India. Hand hygiene and specifically handwashes have seen an exponential rise across India and penetration has increased significantly,” an ITC spokesperson said.

ITC has launched its hand sanitiser pack priced at just 50 paise to target these markets.

Marico is also extending its network in rural areas.

“At present, sales from rural India contribute to about 31 per cent of our domestic sales, and we reach approximately 58,000 villages through our stockist network.

“As the rural demand continues to grow, we aim to drive direct distribution and value to consumers, as they will be the key growth drivers in rural markets, while continuing to focus on increasing market share and maintaining volume growth which is independent of category growth,” a Marico spokesperson said.

Dabur is also investing to expand its rural coverage and expects to connect with 60,000 villages by the end of this fiscal.

“We had invested ahead of the curve in building our rural footprint with our sub-stockist network going up significantly. This investment paid off as rural demand continued to grow ahead of urban for Dabur,” Malhotra said, adding its rural network has grown from 44,000 villages in March 2019 to a little over 52,000 villages in March 2020.

“With the lockdown easing now, we are restarting the expansion of our rural footprint and will take it up to 60,000 villages by the end of 2020-21,” he added.

However, experts said the urban markets will bounce back once the situation normalises.

“With the prediction of a normal monsoon, the rural market should do well in the future. However the urban markets should bounce back once the COVID cases are under control in the urban markets, lockdowns are eased and uncertainty levels reduce,” EY Partner and National leader, Consumer Products and Retail, Pinakiranjan Mishra said.

In April, market insights firm Nielsen had slashed the growth forecast for FMCG sector by almost half to 5 to 6 per cent for 2020, citing impact of the coronavirus pandemic and subsequent lockdowns.

FMCG firms report sales growth in June as supply chains stabilise

Source: ETRetail.com, Jul 08, 2020

New Delhi: Several FMCG companies have reported sales growth in June and expect the momentum to continue in Unlock 2.0, though some challenges persist.

Firms such as Godrej Consumer Products Ltd (GCPL) and Marico expect overall growth in the April-June quarter, which was severely impacted due to the coronavirus lockdown.

GCPL expects a “mid-single-digit, volume-driven sales growth” in April-June, the company said recently in its quarterly update for Q1 FY21.

The Godrej group firm has seen a “strong recovery” from mid-May and June across most of the markets where it operates.

It is witnessing robust demand in the household insecticide category, while the hygiene segment too saw strong traction, GCPL said.

The company has a range of brands across personal and home care segment, such as Cinthol, Protekt, Ezee, Godrej No 1, Hit and Good Knight.

Another homegrown FMCG firm Marico, sharing its quarterly update, said it witnessed significant disruptions during the first fortnight of April but since then, has been able to steadily scale up operations to near-normal levels in June.

While edible oils and foods businesses resumed operations in early April as per government guidelines, hair oils and personal care segments could only commence in late April and early-May, it added.

“With the Q1 top line translating into a single digit growth over the annual run rate of FY20, the company expects to bounce back to posting volume and value growth during the rest of the year,” said Marico, which owns brand like Parachute, Saffola, Hair & Care, Nihar and Livon

According to experts, FMCG companies have seen an improvement as production and supply chains have stabilised.

“Several FMCG companies have seen a marked improvement in the last month as production and supply chain is stabilised and lockdown restrictions are lowered across states,” EY Partner and National Leader – Consumer Products and Retail Pinakiranjan Mishra said.

Some consumer durables companies have also reported growth in sales of refrigerators, vacuum cleaners, microwave ovens and washing machines.

According to Panasonic India Divisional Head – CSD Suguru Takamatsu, people confined within their homes have developed greater regard for appliances that help them multitask and make their lives easier.

“Since easing of the lockdown, and allowing sale of consumer electronics, we at Panasonic India, are starting to inch towards steady sales,” Takamatsu said.

Fuelled largely by rural demand, “y-o-y for month of June, our refrigerators (sales) grew by 40 per cent, vacuum cleaners by 20 per cent, microwave and washing machines (top-load) too saw an uptake of 44 per cent and 24 per cent respectively”, he added.

Consumers are opting for large-screen TVs to binge on entertainment which is driving the growth across markets, he said.

“Grooming products, especially the trimmers have seen a 5X growth during this period, as consumers are depending less on salons to ensure safety and hygiene. We are quite hopeful that the festive season will help us recover some of the losses incurred during lockdown,” he said.

FMCG revenue to fall 2-3 per cent this fiscal: CRISIL

Source: The Hindu Business Line, Jun 02, 2020

Mumbai: Revenue of the fast-moving consumer goods (FMCG) sector is expected to de-grow 2 to 3 per cent this fiscal, a drastic change from its estimate of 8-10 per cent growth made before the pandemic struck, CRISIL Ratings said on Tuesday.

While the demand and supply shock induced by the Covid-19 pandemic have derailed sales, CRISIL said that softer input prices and pruned ad spends will cushion the impact of the sharp revenue drop on operating profitability, which will still remain healthy at 18-19 per cent (estimated at ~20 per cent in fiscal 2020).

That, along with well-capitalised balance sheets, the limited need to add capacity, and the largely negative working capital nature of the business will ensure credit profiles of FMCG companies remain stable in the current fiscal, the credit rating agency noted.

The assessment is based on an analysis of 57 CRISIL-rated FMCG companies that account for ~50 per cent of the sector’s revenues. It assumes staggered relaxation of lockdown from June 2020 onwards, gradual recovery in sales thereafter, and normalcy in operations from the second half of the current fiscal.

Rural India

Rural India should fare better than urban areas because of higher proportion of essential products consumed, government doles, eased restrictions on agriculture activities, and likelihood of a normal monsoon, it said.

What also augurs well is that prices of key inputs used in packaging, as well as sugar, wheat and palm oil have softened recently on lower demand, it said. Besides, selling and ad spends are likely to be kept under check, with lower discounts and innovative use of cost effective digital advertising. Firms are also focusing on streamlining operations and distribution channels to rein in costs, it noted.

Hence, despite a sharp decline in revenues, operating profitability for the sample set is still expected to remain healthy at 18-19 per cent in fiscal 2021 with marginal moderation of 70-100 bps, said CRISIL.

FMCG sector

The sector has been one of the most resilient among consumer-oriented sectors in terms of credit quality, found CRISIL. “Despite declining revenues, credit profiles of large FMCG companies are likely to remain stable, supported by well-capitalised balance sheets and healthy, liquid surplus. Small firms with lower liquid surplus may resort to higher dependence on external funds to manage additional working capital requirements arising out of the crisis, and their credit metrics are expected to moderate,” said Gautam Shahi, Director, CRISIL Ratings.

Revenue impact

The impact on revenue will vary across FMCG product segments. The proportion of essential products in a segment (foods and beverages, personal care and home care), downtrading, and supply disruptions will determine the extent of decline in revenue, said CRISIL.

“Growth in the food and beverage segment (accounting for ~50 per cent of revenue) will mirror the overall sector’s performance,” said Anuj Sethi, Senior Director, CRISIL Ratings.

Some segments such as ice cream and beverages would see a steeper fall because of revenue loss for the major part of summer, said Sethi.

“The personal care segment (~25% of sector’s revenue), which has the highest proportion of discretionary products, will witness the steepest decline, while the home care segment (~20% of sector’s revenue) will be the least-affected because of its high essentials quotient, and rising hygiene awareness,” he added.

FMCG companies open links with retailers to ensure supply

Source: LiveMint.com, May 06, 2020

NEW DELHI: Several fast-moving consumer goods (FMCG) companies have stepped up deliveries of their products to neighbourhood grocery stores that are struggling with supplies of essential goods.

Marico has launched telephone services for retailers and even rolled out a dedicated app that lets shopkeepers place orders. Dabur, too is reaching directly to retailers. The companies said this will help ensure supplies do not run out at a time when distributors and wholesalers, key suppliers of packaged goods to retailers, have been immobile because of lockdown restrictions.

“We have commenced tele-servicing and introduced an app for retailers. This enables retail partners to feed in their requirement and place orders digitally or through a phone call at their convenience,” said Sanjay Mishra, chief operating officer, India sales and Bangladesh business, Marico Limited. The facility is available for 80,000 top retailers of the company, which makes the popular Saffola cooking oil and oats.

“In some cases, retailers are picking up stocks, but we have gone ahead and extended the services of our third-party logistics partners to distributors also to ensure smooth movement of goods to the retailers,” Mishra said. This includes tie-ups with logistics companies such as Delhivery, Shadowfax, Lalamove and Zoomcar “to ensure products are delivered from factories to depots and thereafter to distributors”, he said.

The move, said Mishra, helped resolve problems at different levels in the distribution ecosystem and helped multiple distributors across regions to restart their business. Marico’s Saffola oils portfolio benefited in the three months ended 31 March as shoppers across India cooked more at home and stocked up on cooking oils. The company’s edible oils portfolio saw a 25% year-on-year volume, even as its personal care portfolio gave a weak performance.

“We are deploying new strategies and finding innovative solutions to ensure uninterrupted supply of essential products to our retail partners during these unprecedented times. We have tied up with online delivery service providers, besides establishing a direct contact with retailers and leveraging technology to drive sales and service demand,” said Mohit Malhotra, Chief Executive Officer, Dabur India Ltd. Constraints in replenishment of stock, disruptions in the movement of distributors that are key suppliers of goods to retail stores, and lack of retail staff had dented supplies of essential goods in phase 1 of lockdown, market researcher Nielsen said in its update on India’s FMCG sector in April.