Two waves of the pandemic have seen the FMCG business evolving rapidly!
There are strong tailwinds for FMCG products with mobility improving, COVID cases in the country dropping continually and agri cultivation looking decent, despite the erratic nature of rains. Still, price inflation and the new Omicron variant remain risks as we enter into the end of this year. It also doesn’t help that many consumer companies have seen profitability decline in the last quarter.
In November 2021, we’ve seen some positive response to price inflation in the form of edible oil product prices starting to ease off, as import duty cuts lower the input costs. This should help reduce the cost structure of many products and help improve profitability, while also preventing more price hikes.
Overall the consumer sentiment is also looking upbeat with increasing travel and mall visits.
Do check out this panel discussion where industry experts, Sunil Suresh – Group CMO at MakeMyTrip, Pushpa Bector – ED at DLF Malls & I discuss indicators on consumption.
This was more in preparation for Diwali stocking. This cooled off in November 2021, with FMCG sales dropping as kiranas were overstocked. These store owners and FMCG brands are looking at ways to reduce stocking by offering schemes to ensure consumers lap these up quickly.
While we’ve seen that business impact to Pandemic 2.0 was significantly lesser than the previous one, it’s crucial to ensure that we are able to manage this new variant much better and try to prevent any outbreak that will set us back again. For businesses, the alarm bells have rung to start managing any future disruptions.
For steady supply, additional stocking of raw materials and increased workforce testing could be important. At the same time, on the demand side, it’s time to implement Direct to Retailer models via digital to prevent disruptions in orders being taken from kiranas.