Two waves of the pandemic have seen the FMCG business evolving rapidly!
However, in this wave (Pandemic 2.0), we see economic activity getting back on its feet within a quarter.
Modern trade suffered the brunt of the pandemic as consumers started to avoid high footfall stores to prevent possibilities of infection from the virus. As a result, the share of sales from these organized modern trade stores have dropped in the last two waves.
This has led to a faster evolution of traditional kiranas (Mom & Pop) into standalone modern trade stores for the additional benefits presented to both store owners as well as consumers. E-commerce has also got a shot in the arm, as the contribution of FMCG sales from this channel continues to rise as more consumers look for convenience.
Traditional trade (kiranas) drive over 80% of sales in Indian FMCG. Their share have held firm even after two waves of the pandemic. They’ve helped the industry get back on its feet much faster than the first time. Kiranas are the true pillars of Indian consumers and we lean on them whenever faced with a crisis.
In August 2021, we saw the highest levels of active kiranas for the year & it’s heartening to see that these stores continue to grow in India because that indicates that the business is viable and can continue to help provide for the family.
As India builds up to the festival season, it’s also important to understand that monsoons will also play a key role in agri income that could directly impact consumption.
Most parts of India have received normal or above normal rainfall. However, there seems to be a real risk for agri income being affected in some key rainfall affected states such as
Gujarat (-41% below normal); Odisha (-29% below normal); Punjab (-24% below normal); Kerala (-20% below normal) (Source: IMD, as on 6th September 2021)
Some good rainfall in September 2021 could see this impact minimized in these affected states.