FMCG companies need to press the ‘reset’ button after lockdown

The Covid-19 pandemic is likely to trigger a “complete reset button” among FMCG companies, particularly those in the food business. The possibility of a massive shift in consumer behaviour, driven largely by an increased adoption of technology and a rise in home consumption of products rather than that on the go, are likely to be the key drivers for change in the industry.

According to Mayank Jalan, CMD, Keventer Agro, the FMCG industry has been largely driven by ‘single serve on the go consumption’ but that is something which is likely to undergo a change following a shift in consumer’s buying pattern.

“After this lockdown, it is not probably going to be business as usual. It is actually not going to be a restart but more likely a reset for FMCG companies, particularly those in the food business,” Jalan told BusinessLine .

Changing consumer behaviour

While it is still early to estimate the impact of the current crisis on the industry, it is however likely that e-commerce and home delivery will take precedence in the buying pattern of consumers, moving forward. This is also likely to prompt FMCG companies, which have typically been catering to on the go customers, to focus more on home consumption.

Apart from this, consumers who have been largely dependent on buying vegetables and meat from the unorganised wet markets are likely to move towards organised players where quality and hygiene parameters are adhered to.

Another important shift that is likely to happen in the coming days is the increased acceptance of and demand for food centred on health and wellness. In India, demand for health and wellness products has so far been latent and limited to high-end urban population.

Nimble and lean companies

In the current situation, it is important for companies to be “nimble and lean” and take into account changes that are likely to emerge on an ongoing basis.

Indian corporates usually work on a medium to long-term plans and are not too adept at responding quickly to changes. However, the current situation warrants very short-term plans to be able to respond to emerging situations, Jalan said.

“We (at Keventer Agro) generally work on two-to-three-year plans, but now we are working on one-week, four-week and 12-week plans ... taking one week at a time,” he said.

Keventer Agro, which is into pouch and UHT milk, beverages, frozen food and banana, had recorded a growth of around 26 per cent between January and March 15 this year. However, for the full year, it is likely to report a degrowth across both staple and non-staple categories.

New initiatives

The company has accelerated the rollout of several technological initiatives, including online delivery of products through Zomato, direct delivery to residential complexes and setting up store locators to know the availability of products across various outlets in a given area, in the last ten days. The company is also in the process of rolling out an e-commerce based subscription model in the next 15-30 days.

Moving forward, it plans invest on its UHT milk and frozen food businesses. It is also planning to launch lassi and milkshakes during this summer, once the lockdown is over.

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