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.

FMCG companies take direct route to customer homes

Source: ETRetail.com, Apr 29, 2020

Bengaluru | Mumbai: More than a dozen consumer goods companies including Hindustan Unilever, ITC, Mondelez, Procter & Gamble, Dabur and Colgate have started selling products directly to consumers. That’s circumventing traditional trade and distributor networks in areas where last-mile delivery has been disrupted due to Covid-19 restrictions.

Their latest direct-to-home initiatives involve partnering startups such as Dunzo, Scootsy and Swiggy by listing brand stores on their portals and even reaching out to resident welfare associations (RWAs) through their sales staff.

While retailers have been doing this for more than a month to implement physical-distancing norms after pantry loading led to increased footfalls, it is a first for fast-moving consumer goods (FMCG) companies.

“These partnerships are a vindication of the power of collaboration as no brand alone has answers to fulfil the needs of the nation during these unprecedented times,” said B Sumant, executive director at ITC Ltd, which is also selling products through its own portal.

As companies grapple with a shortage of staff with migrant workers having left for their homes, the supply chain has been thrown into disarray across the ecosystem — from sourcing raw materials to manufacturing and delivery of finished products.

“We are deploying new strategies and finding innovative solutions to ensure uninterrupted supply of essential products to our consumers,” said Mohit Malhotra, CEO, Dabur, which has tied up with online delivery service providers for retail outlets and households.

Storefronts on Delivery Platforms
“Our sales officials are reaching out to RWAs across the country and ensuring availability of our range of immunity boosters,” Malhotra said.

FMCG companies have set up storefronts on hyperlocal delivery platforms and are servicing orders from exclusive brand stores and directly from distribution centres, using delivery partners to get items to the doorstep.

Food ordering firm Swiggy has expanded its store network to more than 200 cities, allowing consumers to order groceries from neighbourhood shops.

“Through these partnerships, we are extending our hyperlocal delivery offering to unlock a new dimension of convenience for our consumers as well as earnings for our delivery partners,” said a Swiggy spokesperson. “Considering the present situation, our primary focus has been to address customer needs and pain points and their biggest ask has been to enable easy access to groceries and essentials.”

Companies aren’t sure whether such initiatives will become established as a regular part of their supply chain, which has traditionally depended on distributors and retailers while they focus on manufacturing and promoting brands.

“We will continue to evaluate and expand such opportunities with our partners to serve our consumers during this difficult time,” said a P&G spokesperson. “In addition, we continue to make interventions to strengthen our end to end supply chain to serve consumers with our products across different channels.”

Hyperlocal partners offer consumer goods makers easier access to customers amid the lockdown.

“Dunzo ensures demand density for these brands, and as long as we are able to maintain that, brands should continue to leverage the on-demand experience of Dunzo,” said Kartik Mishra, head of strategy and new initiatives at the startup. “Direct to consumer (D2C) just becomes an additional distribution channel for brands in addition to traditional retail and ecommerce that they already have.”

Experts feel single-brand stores on hyperlocal platforms will see low traction as consumers will prefer to get everything they need rather than stick to one label. “While we have cut out retailers from the equation now, we will have to wait and watch if these partnerships continue post the pandemic,” said an executive at a hyperlocal startup. “If demand drops post the lifting of the lockdown, neither us nor the brands might want to continue these partnerships.”

Consumer MNCs point to lockdown blues in India

Source: ETRetail.com, Apr 24, 2020

Mumbai | New Delhi: Chief executives of leading global consumer goods companies such as Unilever, Procter & Gamble, Coca-Cola and Kimberly-Clark said India’s Covid-19 lockdown protocols had led to severe supply chain disruptions and labour shortages, hurting business in a key market.

“When countries go through that initial government overreaction, we go and tell them, you don’t want to (cut) back on supplies of hygiene products—and then they are relaxed,” Unilever CEO Alan Jope told investors on an earnings call Thursday. “In northern Italy, there was a shutdown and within four hours, we got a relaxation order for the essential goods that we make. In India, it is taking us about four or five days to get that relaxation.”

Hindustan Unilever (HUL), the local unit of the Anglo-Dutch conglomerate, has seen production halts and transport holdups as have by most of its peers. India’s biggest consumer goods maker HUL is regarded as a proxy for consumer sentiment across the socio-economic spectrum.

Smaller Suppliers Hit Too
A three-week lockdown imposed across the country on March 25 was extended to May 3 to contain the spread of Covid-19.

“India is a big deal for us right now, which as a country (went) to a complete standstill in the last week of March. We are back selling and manufacturing in India, not at full strength, but at some good strength in a context where many are still unable to operate the business,” Jope said, echoing the sentiment of other consumer-facing firms in India that are struggling with the sporadic supply of raw materials and uncertainty over last-mile delivery.

Out of 157 units owned by listed fast-moving consumer goods (FMCG) companies, 68 facilities, or 43%, are in Covid-19 red zone districts, which means no activities barring essential services are allowed as they seek to curb the outbreak. This, in turn, has hurt smaller suppliers of products such as packaging materials and chemicals.

“In some markets like India, the severity of social distancing measures has negatively impacted consumption simply due to the significant reduction in shopping trips,” beverage maker Coca-Cola’s chief executive James Quincey said in a post-earnings call on Tuesday.

The maker of Coca-Cola, Thums Up and Minute Maid juices said unit case volume across its bottling investment ecosystem fell 5%, which it attributed to the lockdown in India. ET reported April 23 that Coca-Cola India, the country’s largest beverage maker, will write off the value of surplus inventory at bottling partners, with large quantities of soft drinks and juices left unsold during the lockdown as the company braces for its worst quarter ever.

“The more recent emphasis with Covid-19 now is making sure that we can maintain operational supply in India, and that’s been a big focus. We were down for a period of time, while we were getting the right permits to operate as an essential business,” said Michael Hsu, chairman of Kimberly-Clark, the maker of Kleenex tissues, on an analyst call on Wednesday.

While the situation has eased significantly after factories were closed in several places by law-enforcement authorities initially, many employees, especially at these units, refused to come to work for fear of catching the disease or have gone back home to their villages.

“Once we establish our ability to operate, we then have to source materials and we have to ensure that employees can get to work, which sounds simple, but is anything but,” Procter & Gamble vice chairman Jon Moeller told investors last week, referring to the Indian market.

FMCG companies stepping up production under eased norms but labour, supply chain issues impede

Source: Financial Express, Apr 21, 2020

Major FMCG players are trying to maximise production with the easing of regulations on opening of factories outside municipal limits by the government from Monday in the extended phase of lockdown despite continued constraints of manpower availability and supply chain issues.

Companies like Patanjali, Ruchi Soya, Dabur and Parle Products that have been operating their plants in a scaled down manner during the first phase of lockdown with limited workforce suggested giving manufacturing permission to their several suppliers, which are mostly MSMEs and fall within the city radius, as it is affecting smooth functioning of the supply chain.

“Factories of Patanjali and Ruchi Soya were operational even during the lockdown because we operate in food and essentials. However, there were issues regarding transportation and supply chain etc during lockdown, which I expect to ease out slowly,” Yoga Guru Ramdev told PTI.

According to him, Patanjali witnessed almost two to three fold jump in the demand of its several products and expected that supply of such products would be increased in the market going forward. Similarly, Dabur India Executive Director-Operations Shahrukh Khan said, “Almost all of Dabur’s factories are operational today, producing a range of ayurvedic medicines, hygiene products like hand sanitisers, hand wash and daily essentials, with strict implementation of SOPs for social distancing at offices, workplace, factories, proper sanitization of buildings, factories.”

He further said, “We are now trying to maximise production, given the supply chain constraints, and material and manpower availability. The recent guidelines issued by the Ministry of Home Affairs have definitely helped ease the situation as we go forward.” Khan also suggested manufacturing permission to its several suppliers, which are mostly MSMEs and fall within the city radius, as it is affecting smooth functioning of the supply chain.

“It is our request that companies that do not have any instances of COVID cases may be permitted to operate even if they fall within the radius of a hot spot, provided they adopt and implement all safety protocols and screening measures, and follow social distancing norms. This would ease the pressure on the supply chain and ensure timely production and delivery of essential goods and hygiene products to consumers,” he said.

“It is also encouraging that the government has recognised the importance of ensuring that key manufacturing and distribution activities ume given its impact on the economy and livelihoods,” an ITC Spokesperson said. It will continue to focus on manufacturing its essential items like food products, hygiene essentials as well as paperboards and packaging solutions in select factories.

“As a company which is currently manufacturing essential items like food and hygiene products, we have ramped up production across 100 factories which are now operational with the highest protocols of hygiene and safety. With the help of state authorities and local communities around our factories, we have been manufacturing such essential items and progressively endeavouring to service the growing demand,” the spokesperson said.

Parle Products Category Head Mayank Shah said that food was exempted and factories were open but at a reduced capacity of around 40-45 per cent following the restraint imposed by the government on the number of workforce. “There would not be much change on the production part but in the supply side and availability of workforce would improve further,” said Shah, adding that “even in the market as my distributor, whose labour was not coming, this would change because of this.

” He further said, “Now more people would go out to work and it would infuse certain confidence in those who were not willing to work. It would increase further availability of the workforce.” Capital Foods , the parent company of Ching’s Secret and Smith & Jones brands, said it has received permission to operate its plants.

“We have received the nod to operate all our plants and barring one, all are operational too. Our swift understanding of the challenges elaborated above made us move quickly. Within 48 hours of receiving nod, our first plant was operational and we are currently operating at around 60-70 per cent capacity across all our products,” said Capital Foods CEO Navin Tewari. However, he also raised concerns over availability of labour force, which has migrated after lockdown.

“Migration of workers and restrictions on the movement of people across cities or towns have created a dent on the availability of human resources,” he said, adding “to overcome labour availability challenges, we are housing some of them inside the plants taking care of their lodging, food, hygiene, and entertainment. That has eased some of our challenges yet a lot of ground needs to be covered.” CG Corp, which sells Wai Wai noodles, is also trying to resume production in all of its manufacturing plants across India.

“However we are running at reduced capacity currently as we are still trying to ensure better attendance at the plants. Truck availability will improve and distribution within cities will smoothen out, which will in turn help our teams replenish stocks and bridge the gap between demand and supply,” said CG Corp Executive Director Varun Chaudhary.

Comments from other major FMCG players such as HUL, Nestle and Emami could not be obtained as most of them are maintaining a silence period ahead of their quarterly results.

The FMCG industry has also assured adhering to the Standard Operating Procedure (SOP) issued by the government during the extended lockdown and abide by the restrictions such as number of workforce and take all safety measures.

“A series of safety measures have been reinforced at our units, which include thermal screening of employees during entry and exit at the Security Gate; ensuring that employees follow a queue, adhering to the social distance norms; fumigation of all areas with disinfectant on a weekly basis; and restricting the number of employees travelling together in elevators, to name a few,” said Khan of Dabur. In fresh guidelines issued on last Wednesday for enforcing the second phase of the coronavirus lockdown, the government barred all kinds of public transport and prohibited opening of public places till May 3. However, it allowed functioning of industrial units located in rural areas from April 20 while observing strict social distancing norms.

Top 12 FMCG companies sign up with govt’s Suraksha Stores

Source: LiveMint.com, Apr 16, 2020

NEW DELHI: India’s top 12 packaged consumer goods makers have signed up to work with the government for Suraksha Stores—an initiative in which companies will help neighbourhood stores ensure safety and hygiene practices.

Nestle India, Britannia Industries Ltd, Marico Ltd, J&J Consumer, Dabur India Ltd, Tata Consumer Products, Procter and Gamble Hygiene and Health Care Ltd, Mondelez India, Hindustan Unilever Ltd, Godrej Consumer Products Ltd, ITC Ltd, Colgate-Palmolive Co. (India) Ltd are on the initial list, said industry executives aware of the government’s plans. Initially, one million stores will be covered, as per the plans of the Union consumer affairs ministry.

The companies will adopt neighbourhood stores and help them with education and certification on safety and hygiene standards. They will do so by working through their network of distributors.Later, 40-50 more companies will join the initiative.

“The initiative called Suraksha Stores is a joint attempt by the government and leading FMCG companies to convert the neighbourhood kirana stores into sanitized retail outlets selling daily essentials, while adhering to safety norms such as social distancing and sanitization. This, I feel, will also go a long way in controlling the spread of covid-19 in India. We are also extending this to cover ayurveda outlets across India,” said Dabur India CEO Mohit Malhotra. Retailers can sign up on SurakshaStore.com for certification.

“Aarogya Setu-compliant Suraksha Store is a public-private initiative to ensure that we can create a safe and secure environment for our consumers and shop owners at our kirana stores. A Suraksha Store is a store (kirana, pharmacy, consumer touchpoint) that follows 100% Suraksha safety norms. These stores shall be educated, certified and validated to follow all common minimum health standards as well as safety checklists. Some companies have adopted states,” according to details listed on the Suraksha Stores website.

The store must sign up for certification, complete a training and pass an assessment, which will then be verified by a local distributor. The store staff will need to use sanitizers and masks, and follow social distancing norms. They will also be prompted to install the government’s contact tracing app, Aarogya Setu.

An ITC spokesperson welcomes the initiative.

India’s supply chain for essentials has remained disrupted as a 21-day lockdown prompted firms to temporarily suspend production at their facilities. Even as production has eased partially, companies say they are struggling with a shortage of workers, and restricted transportation.

However, fast moving consumer goods makers are now partnering online retailers, food aggregators, kiranas and large grocery stores to help ease last-mile delivery.

Sanitizers, hand wash, cooking oil shore up demand for FMCG goods

Source: LiveMint.com, Mar 26, 2020

NEW DELHI: Market researcher Nielsen on Thursday said a spike in the number of Covid-19 cases in the country led to huge surge in demand for hand sanitizers, masks, liquid hand washes, cooking oils, and pulses, especially online, as shoppers stocked up on personal hygiene goods, as well as basic staples, fearing an impending lockdown in the country.

In a presentation estimating the impact of the Covid-19 pandemic on Indian fast moving consumer goods (FMCG) and retailers, Nielsen said hygiene categories showed significant growth in February. In March, Indians swiftly moved to heavy buying of food staples such as packaged flour (atta) and packaged pulses, and indulgence foods categories like salty snacks.

Nielsen surveyed sales of such products across e-commerce retailers, grocery stores, and shoppers in the country. Its research tracked shopper behavior and sale of subsequent goods starting February till 21 March.

As number of Covid-19 cases have continued to rise in India, the hand sanitizers category witnessed a whopping 53% growth in February against an 11% increase during November-January.

Online sale of such goods was especially high. Average weekly orders of hand sanitizers jumped 1425% online–in the first two weeks of March compared with February–while growth in orders for face masks surged 408% and that of hand washes rose 88%.

Floor and toilet cleaners saw a 77% increase in online orders during the period.

In traditional trade, value sales of sanitizers between mid-February to mid-March were up 144% compared with a 72% jump in the year-ago period.

Nielsen also tracked purchase behavior of shoppers during March when states started announcing lockdowns. This, Nielsen said, showed “pantry preparation and quarantined living stages.”

“This included heavy buying of staple food categories such as packaged wheat flour (Aatta) and packaged pulses. Likewise we saw significant growth in indulgence foods categories as well,” Nielsen said.

In traditional trade, value sales of branded pulses grew 72% year-on-year during mid-Feb to mid-March. While, packaged flour saw a 25% year-on-year jump in sales (in value terms).

Online too, these categories saw a big surge in orders. Average weekly order growth for cooking oil surged 106% during mid-February to mid-March, while that of cooking essentials such as spices, salt, ghee was up 21%, wheat flour orders were up 16%. Online, sale of salty snacks rose 84%, while soft drinks saw a 68% jump in average weekly orders between February and March.

Now, as India has entered the 21-day lockdown, consumers told Nielsen they are highly likely to stock up on personal hygiene products such as hand wash, soaps, and sanitizers, with 91% respondents agreeing to buying these. About 74% of agreed to buy cleaning products, while 67% said they will stock up on grocery essentials such as atta, rice, lentils, oils, followed by other who said fruits and vegetables would be key.

India’s FMCG industry grew 6% year-on-year in November, and 5% in December, and January, but a spike in sales of personal hygiene products and basic staples pushed the value growth for fast moving consumer goods to 8% in February.

The country’s large fast moving consumer market had reported sluggish sales over the last 12-18 months, especially as rural markets slowed down. In January, Nielsen maintained its annual growth outlook for India’s FMCG sector to 9-10% for 2020. In 2019, the sector grew 9.7% by value, due to weak quarterly growth rates in rural India.

But Covid-19 is likely to see these estimates alter depending on future demand.

“Given Covid-19 we will have to revise our estimates on the sector and given that it is a once-in-a century situation, it is very difficult to call where growth will pan out,” Prasun Basu, president, South Asia for Nielsen, said in a call with journalists on Thursday. Basu said it is unlikely that things will come to a standstill, “Consumption is still ongoing…you will find high points and low sales points, and de-growth in some categories in the month of April,” he added.

FMCGs on toes to keep manufacturing on track

Source: Business Standard, Mar 24, 2020

Mumbai/Chennai: The lockdown in several Indian cities to tackle the COVID-19 outbreak has had an unintended consequence: Manufacturing of essential items has been hit hard.

State governments on Sunday and Monday had exempted makers of groceries and staples from its list of manufacturers included in the lockdown to ensure supply of essential goods and services wasn’t hampered.

But with people unable to move around and strict enforcement of section 144 in many places, chief executive officers of fast moving consumer goods (FMCG) companies admit that running factories has been a challenge.

Workforce is down to 25 per cent in many units. Some are even thinner at 15 per cent attendance only. While some others have had to shut their units down temporarily simply because workers have been unable to report to work as transportation grinds to a halt.

“We are thinly staffed across our plants due to the lockdown,” Mohit Malhotra, chief executive officer, Dabur India, said. “Some units like in Ghaziabad, Alwar and Kolkata are shut.This is a tough time. But having said that, the first priority for us is the safety of our people. The workers who are reporting for duty are doing so in batches and there is rotation of staff that is happening,” he said.

MR Jyothy, managing director, Jyothy Laboratories, said that only five of her company’s factories were operational on Monday out of a total of 25 units. “We will see how to get the twenty units up and running in the coming days. The situation is fairly unpredictable currently and we will have to wait and watch how it unfolds,” she said.

Given the uncertainty and the likelihood the lockdown stretching beyond March into the first week of April, CEOs said that they were in constant communication with their people to avoid confusion and panic on the factory floor.

“We are communicating closely with our team members across regions and functions to ensure business continuity and the movement of our products into the market. Our biggest priority is to ensure that sufficient supplies of high demand items like sanitisers, hand washes and soaps are replenished across channels,” Vivek Gambhir, managing director and chief executive officer, Godrej Consumer (GCPL) said.

Most hygiene makers including Hindustan Unilever, GCPL and ITC have ramped up production and distribution of hygiene products as demand surges. For this, they are talking to local authorities to allow production to continue at their factories, creating buffer stocks of inventory and managing staff movement around their plants.

“We have sought clearance from the authorities in the notified locations to continue manufacturing essential items like Savlon hygiene products and food products like Aashirvaad Atta,” an ITC spokesperson said.

Gambhir said that his company was working closely with raw and packaging material suppliers to facilitate their timely and uninterrupted supplies.

” To manage contingencies, we are building stocks to prepare for longer periods of disruption and are providing extra stock to our distributors, along with short term credit to help them during these uncertain times,” he said.

A V Anoop, managing director, AVA Group, which manufactures the Medimix brand of soaps, said it was impossible to match demand and supply given the strictures around the lockdown. “Soap making is a laborious and time-consuming process and we rely heavily on our workers, who’ve been with us for over 25 years. But with the stay-at-home directive, they are unable to make it to work,” he said.

FMCG companies ramp up manufacturing and distribution to meet demand for hygiene products

Source: The Hindu Business Line, Mar 04, 2020

New Delhi: FMCG companies are either ramping up production or doubling down on distribution efforts to ensure availability of hygiene products such as handwash and hand sanitisers on retail shelves to meet the massive spike in demand, as India begins reporting an increase in the number of coronavirus cases.

 

Consumers in certain regions took to social media to report shortage of products such as hand sanitisers. But key FMCG players on Wednesday stated they have adequate stocks available for such products.

FMCGs scale-up rural distribution networks to combat economic slowdown

Source: Business Standard, Jan 30, 2019

Kolkata: Fast-moving consumer goods (FMCG) majors like ITC and Emami are scaling up their direct reach in rural areas to combat subdued consumer sentiment in these pockets. They hope such a move — backed by consumer connect initiatives — can help push sales.

In view of the ongoing slowdown, which has impacted demand in rural India, ITC doubled its rural stockist network in the current financial year, with significant increase in coverage across low population group markets.

“We have actively increased our direct reach in rural India by adding more than 25 per cent new markets to the existing large serviced base,” said an ITC spokesperson.

ITC’s handler base currently stands at 6.2 million outlets and it continued to deploy resources to augment the outlet coverage aggressively, with nearly 80 per cent of new handlers added in the current year coming from a rural base.

In case of Emami, which has one of the highest exposures in rural areas among its peers, the company is banking on its Project Dhanush initiative, which it undertook three years ago.

In the past three years under this initiative, aimed at reaching the deepest and remotest of geographies, Emami expanded its footprint to more than 20,000 towns with a population of around 3,000.

“Van branding and visual merchandising at outlets through point-of-purchase visibility has proved to be an effective consumer influencer fuelling rural channel growth,” said Mohan Goenka, director at Emami.

With more than 3,000 distributors and 600,000-plus square feet of trade assets, which incidentally is the largest in store merchandising in the country, Hindustan Unilever (HUL) also has prioritised increasing its direct distribution reach.

According to an open access journal, International Journal of Research — Granthaalayah, over the decades since its launch in 1997, HUL has appointed 6,000 sub-stockists, because of which its distribution network directly covered about 50,000 villages and is reaching 250 million consumers. This translates into reaching 37 per cent of rural consumers directly. The rural distributor has a set of stockists attached to it that drives distribution in villages using unconventional transport like tractors, bullock carts and others.