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<ul><li>Local brands are making a comeback after their pandemic lows, and are now competing with national brands in categories like detergents, noodles, masalas and more.</li><li>HUL CEO said in an earnings concall that they have seen a market share dip in certain mass categories.</li><li>The number of homes that buy over 4-5 brands of the same product are growing, says a Kantar report. </li></ul>In Karnataka, many stores now have ‘1 To 3 Noodles’ on display along with Nestle’s 2-minute Maggi, the category leader. Apart from a stellar 35% penetration in the state, this local brand is catering to local tastes with a desi twist to instant noodles that comes with more masala. Similarly, North India-based Vasant Masala is catering the specific spice needs with its Awadh Garam Masala. There are more such examples of local brands that concentrate only on specific states — that are making a headway into the retail shelf space as well as the consumer’s homes, if not hearts. “Local brands live up to the local tastes better,” K Ramamkrishan, MD South Asia of Kantar tells Business Insider India. Moreover, these brands are bringing value onto the table beyond price points by capturing the specific preferences of the states and relationships with retailers. So much so, now they’re threatening the national brands sold by FMCG behemoths. “Local brands are no more brands that have basic packaging with a brand name. They are innovating, have brand ambassadors. Today local brands are only limited by their presence not their ambition,” said Ramamkrishan. He says the speed of decision making in local brands is high, and their agility allows them to capture dynamic trends in shopping habits faster. Back from pandemic lows Kantar’s Consumer Connections 2023 report says that there has been a resurgence in local brands that had faced troubles during the pandemic. Curtailed by their inability to raise prices, over 12 brands have shut shop during the pandemic. Many more couldn’t source raw material during the high inflationary period, or bear the costs, Ramamkrishan explains. With the pandemic over, the troubles have decreased and local brands are back with a vengeance. FMCG major HUL also admitted in its recent quarterly announcement that regional brands have curtailed the price growth in the sector. Rohit Jawa, CEO of HUL said that it has seen dips in market share in the mass segment due to small and regional players. “There has been a resurgence of small and regional players in select categories due to softening commodity prices – many of whom had vacated the market during the peak of inflation,” he said in an earnings concall. Most of the local brands tend to categories that are already high in penetration such as food and beverage, detergents, spices, washing powders, hair oils etc. “For example they won't be in face washes where the penetration is low,” Ramkrishnan explains. Kantar has picked a few brands like — Reflect Dishwash in Maharashtra, Saras Detergent Bar in Gujarat, Challenge Detergent Bar in Tamil Nadu, Sastry Balms in Andhra Pradesh, Supreme51 in Madhya Pradesh as some of the single-state brands that have exhibited double or even triple digit growth in the last one year, along with extensive penetration in the state of their choice. Flirting with many brands While consumers are pivoting towards local brands, they’re not shedding their loyalty to national brands either. The complex Indian consumers are more tuned to experimenting more. Ramkrishnan calls it ‘flirting with multiple brands’. The number of shopping trips or purchase occasions for Indians are growing at a rapid pace, says Kantar. An Indian makes 152 shopping trips in a year – which breaks it down to one in every 58 hours. This also includes e-commerce shopping. It indicates that people are buying only as much as required, and household consumption levels are not back to normal in spite of signs of revival. But a few others also prefer frequent shopping for reasons like freshness, accessibility and more. More shopping trips means more experimenting. The homes that buy over eight brands of biscuits/cookies rose to 34% in 2023 from 24% in 2022. The percentage of homes that buy over three brands of washing powders and liquids came in at 47%, going up by 6% in a year. And, 43% of homes bought over six brands of soap bars in 2023, rising by over 5%. Experimenting Indians are also giving a fillip to direct-to-consumer brands that have national ambitions buoyed by PE and VC investors who are betting big on them — all indicating rising competition in the sector.

Local brands rise as Indians flirt with newbies

<ul><li>Price cuts taken in mass segments will erase pricing-led growth seen in FMCG companies.</li><li>Few analysts are confident that price cuts will add to volume growth in Q2.</li><li>Without a meaningful rural recovery, volume growth will remain slow. </li></ul>It might be a slow second quarter for FMCG companies with hazy volume recovery and tapering raw material effects. The rise of new and local players have been eating into the business of top FMCG players. And, they chose to <a href="https://www.businessinsider.in/business/news/soap-opera-fmcg-players-kick-off-price-war-to-bring-back-whats-lost/articleshow/103657469.cms">take price cuts in mass categories </a> during the quarter. Analysts are divided on how much price cuts will add to volume growth. A report by Centrum said that price cuts pushing are primary volumes but off-take lags. The demand for packaged foods is rising but hair oils, toothpaste categories saw falling volumes. “Selling prices have been rationalised given the drop in commodity costs but there has not been a commensurate increase in volumes yet,” said J M Financial. The pricing-led growth in FMCG companies is now a thing of the past. Without significant volume recovery, revenues are ecpected to remain subdued this quarter. “We expect low single digit volume growth and low-to-mid single-digit value growth for most FMCG companies, with the tapering of pricing growth due to price cuts and/or anniversarization of price hikes. The underlying rural demand remains subdued. Uptick, if any, would be optical off a low base,” said a report by Kotak Institutional Equities. Analysts believe that without a meaningful recovery in rural demand which is yet to pick up, volume recovery will remain slow. Even tapering inflation during the quarter has not improved the rural consumer sentiment due to unseasonal rains. Moreso, the festive consumption of discretionary items also comes with a lag this year due to the ‘Adhik Mas’ effect. Raw material benefits slip On the other hand, the margin growth seen last quarter due to lower raw materials will also taper off. The raw material index has moved up by 8-9% over the last three months. Between July and September, crude oil prices rallied by 20%, and commodities will not be as benign as they were in Q1. On a year-on-year basis however their costs will be lower, adding to margins due a favourable basis. “A favourable base would still drive strong year on year gross profit margin expansion and earnings for September quarter, but some of the margin gains would be in the base soon especially given the recent uptick in raw material prices,” said J M Financial. The stress of rising competition will also eat into margins in more ways than price cuts. Players will continue to ‘normalise’ brand-building investments that were run down during the hyper-inflationary phase in FY23. “Most companies have indicated that a large part of gross margin savings will be invested behind brands. Hence, operating margin expansion will be lower compared to gross margin expansion,” said Sharekhan. Investors will watch out for management commentary on how volume uptick in the second half of the year. And a picture on when rural India will see a full-fledged recovery. <div type="javascript" title="Custom" contenttype="Text"><cdata><![CDATA[]]></cdata></div>

Price cuts might not bring in volume growth for FMCG majors in Q2 say analysts

<ul><li>FMCG companies are expected to register strong margins in Q1 as they will see the full effect of earlier-taken price hikes playing out. Cooling raw material prices will help. </li><li>Demand for staples have been stable, but the beauty and personal care category has not yet recovered fully. </li><li>The summer has seen a decline or low growth in ice creams and juices due to unseasonal rains. </li></ul>With cooling raw material costs, the FMCG sector is expected to kick in the first quarter of FY24 with ‘good quality’ profits, backed by improvement in margins. Input costs have been cooling over the last few quarters and have either remained stable or seen mild moderation, and companies have not been passing them off very generously in the form of price cuts. “We expect most of the companies to register stronger sequential gross profit margin (GPM) improvement in 1Q24F with input cost inflation cooling down further, high-priced inventory getting consumed and the full effect of earlier-taken price hikes playing out,” said a research report by Nomura. Certain categories such as hair oils, edible oils and soaps had witnessed price cuts in earlier quarters, which will flow through in the first quarter, as per BNP Paribas. Also, new price cuts and promotions were seen in laundry, edible oils and other home care categories during the quarter but no major price cuts were seen in biscuits and salts. Double digit revenue growth expected Price cuts and volume growth for the sector are directly proportional for the sector, and as of now most of growth seen in the sector was pricing-led. But that’s changing, analysts say. Demand from urban areas has been stable, with slight sequential improvement in rural demand as well. Also, the demand for staples have been stable, but the beauty and personal care category has not yet recovered though improving due to the price cuts. All in all, the sector should be able to present a good revenue growth for the quarter – notwithstanding the cooler summer this April-June with unseasonal rains that affected sales of juices and ice creams. “We estimate staples/discretionary (ex-ITC) pack to register 10.2%/8.8% revenue growth. We expect a good quarter from Nestle, Godrej Consumers and ITC and a weak print from Marico,” says a report by Kotak. Antique Stock Broking also expects the FMCG sector (not including ITC) to report early double digit revenue growth with moderation in pricing led growth. ITC is expected to see a fall in revenue as its agri business is expected to see a drop due to high-base effects. Nomura expects Nestle, Tata Consumers and Dabur to report the highest revenue growth YoY, and with ITC and Marico to post lower value growth. FMCG sector revenue growth projections YoY <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nomura </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Institutional Equities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Antique Stock Broking </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HUL </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.6%* </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Marico </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dabur </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Godrej Consumer </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Consumer Products </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11.3% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nestle India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.6% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16% </td></tr></tbody></table>Source: Research reports *Kotak has considered standalone results for ITC Price cuts &amp; rising competition The street will closely watch management commentary on pricing, as analysts believe that the sector is poised for a good show in the first half of FY24 with a raw material cost tailwind. “However, in the second half of FY24 we expect revenue growth to moderate as pricing benefits should fade and growth would have to be volume-led,” said a report by BNP Paribas. There has been no aggressive price war as of now in the sector as of now, but if price cuts are not taken by large players in the segment, it might lead to unorganized players gaining market share. In the last one year, many consumers have ‘downtraded’ to unbranded products or local brands during periods of high inflation. “Prices of most stock keeping units (SKUs) have increased sharply over the last two years. Soap and detergent prices have risen 40-50% over that period. So far the price cuts have been limited and largely confined to the value segment. We believe price cuts might be needed to drive volumes,” said BNP Paribas. Without pricing strategies laid out, most FMCG players might see revenue growth challenges re-emerge this year, especially in the second half. SEE ALSO <a href="https://www.businessinsider.in/business/corporates/news/it-companies-like-tcs-infosys-wipro-hcl-tech-q1-2023-24-earnings-preview/articleshow/101482733.cms">IT sector Q1 earnings preview: All eyes on deal wins, revenue guidance cuts</a> <a href="https://www.businessinsider.in/thelife/news/want-your-veggies-to-taste-like-chocolate-a-vr-glass-may-help-trick-your-mind/articleshow/101487079.cms">Want your veggies to taste like chocolate? A VR glass may help trick your mind</a>

FMCG sector Q1 preview — Caught between price cuts and volume growth

<ul><li>Earlier this week, the government reduced the base import prices of crude palm oil and soy oil.</li><li>Following this, edible oil companies have slashed prices of <keyword id="44868" type="General" weightage="20" keywordseo="cooking-oil" source="Orion">cooking oil</keyword>.</li><li>Additionally, prices of household products like soaps, biscuits, noodles and even shampoo, lipsticks and detergents will also fall as palm oil is one basic ingredient here.</li></ul>One of India’s top FMCG companies, Adani Wilmar reduced the prices of one of the priciest of groceries in recent times – cooking oil. "We are passing on the benefit of the reduced cost to our customers. We are confident the lower prices will also boost demand," said Angshu Mallick, MD and CEO at Adani Wilmar after reducing the price of Fortune refined Sunflower oil's one-litre pack by ₹10 to ₹210. This comes after Hyderabad-based Gemini Edibles &amp; Fats and Mother Dairy both cut prices of cooking oil by ₹15 on one-litre pack – bringing relief to this household essential which has been on the receiving end of inflation for months now. This sentiment could spread across more packaged products, by more FMCG majors. “We expect consumer and retail companies to pause taking further price increases though sector valuations appear rich, with improving out‐of‐home consumption,” said a report by Centrum Broking firm. In the last few months as input costs rose, <keyword id="160413" type="General" weightage="20" keywordseo="fmcg-players" source="Orion">FMCG players</keyword> have been resorting to reducing pack sizes while increasing pack prices. A reduction in base import of crude palm oil, soy oil could be passed on to other products in which it is used like — soaps, biscuits, noodles and even shampoo, lipsticks and detergents. It would mean a sharp reduction in household grocery bills, which have only been on the rise for consumers. Normal monsoon can aid the sector to remain green Lower prices would also mean the tapering demand for packaged products would also improve. Also, there are expectations that rural demand may recover on the back of higher government spending and normal monsoon. Rural demand has been hit after consumers <a href="https://www.businessinsider.in/india/news/life-in-rural-india-hit-by-a-wilted-rabi-crop/articleshow/92333426.cms">traded down to cheaper and smaller packets </a>after inflation hit their doorsteps much harder than it did for urban consumers. If and when consumers shift to smaller pack sizes, most FMCG players tend to lose market share to local and regional players who cater more variety at those price points. However, if pack prices improve, FMCG majors’ volumes will improve – which have been losing revenue for the last eight months. Rural economy is key for FMCG players as a cool off in agricultural commodities inflation will also help reduce their own costs and improve margins. “If commodity prices witness correction from the current level, margins of consumer goods companies might witness a sequential improvement from Q3 FY2023. Commentary of most consumer goods companies suggests recovery in sales volume from Q2/Q3 of FY2023, if the inflation environment stabilizes in the coming months,” said analysts at Sharekhan. An FMCG bull run The optimism around the sector picking up soon is reflected in companies share prices as well. In a weak market sentiment, shares of FMCG players were among the biggest gainers as their fortunes will improve irrespective of worries about global interest rates and a possible recession in the US. “We are very bullish on the FMCG sector from here because we believe costs are coming down from previous highs and they are in a position to pass on incremental costs to consumers, which will help to increase these companies' margins,” said Ravi Singhal, vice chairman at GCL Securities. An FMCG bull run in a market would actually buck the trend of an overall lack of enthusiasm in stocks — proving the theory that no matter what happens, people will keep buying essentials albeit at the right price. <div type="image" title="color fmcg" height="900" width="1200" msid="92336486" hostid="261"></div> <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/life-in-rural-india-hit-by-a-wilted-rabi-crop/articleshow/92333426.cms">Vanished savings, trading down to cheaper essentials – life in rural India hit by a wilted Rabi crop</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/environment/news/india-heads-into-the-thunderstorm-zone-right-after-the-heatwave-orange-alerts-issued/articleshow/92333863.cms">India heads into the thunderstorm zone right after the heatwave, orange alerts issued</a>

Cooking oil prices drop - soaps, noodles and detergents might follow suit

<ul><li>Retailers can be served better by multi-category platforms as they seek competitive rates, says <keyword id="3359665" type="General" weightage="80" keywordseo="redseer" source="Orion">Redseer</keyword> report. </li><li>Multi-category platforms like <keyword id="6357316" type="General" weightage="100" keywordseo="udaan" source="Orion">Udaan</keyword> have gained market share to reach 55-60% of the retailer-led eB2B market. </li><li>India’s eB2B market is projected to grow from $5-6 billion in 2022 to $90-$100 billion by 2030. </li></ul>India’s vast retail system comprises a variety of sizes – from the local general stores or kiranas to the organised big players. This whole system is supported by a large, haphazard and unorganised system of wholesalers largely. However, in order to grow to its true potential, the retail system will have to bank on organised electronic business-to-business (eB2B) players going forward, according to a report by advisory firm Redseer. The rationale for the argument is that India is a potential $950 billion retail market and thus will do better if served by multi-category platforms, which in turn will smoothen processes for the front end player. Multi-category platforms offer products across groceries - both staples and <keyword id="34523" type="General" weightage="50" keywordseo="fmcg" source="Orion">FMCG</keyword>, electronics and accessories, general merchandise, fashion, and others. Current picture As per the Redseer report, there are few such big eB2B platforms which have a <keyword id="106831" type="General" weightage="20" keywordseo="pan-india" source="Orion">pan-India</keyword> play currently. Most are eB2B platforms that operate in fewer categories or verticals and access regional and national levels. “Over the last few months, many of these vertical platforms have been struggling, and across categories have shown limited growth/ been flat or declined due to challenging unit economics and prevailing macro-economic conditions, while multi-category platforms like Udaan have gained market share to reach 55-60% of the retailer-led eB2B market,” said <keyword id="4436374" type="General" weightage="50" keywordseo="mrigank-gutgutia" source="Orion">Mrigank Gutgutia</keyword>, partner at Redseer. Udaan is a B2B trade platform, designed specifically for small and medium businesses. Why multicategory platforms? Retailers are dogged by many issues that come with an unorganised market, and there is a case for new-age eB2B platforms that can solve these issues. “The fragmented market puts retailers at a disadvantage procuring from traditional channels owing to price opacity, slow/no deliveries, stockouts, and inconsistent product quality, among other challenges,” says a Redseer report. Retailers who decide to take their business online from the traditional channels, seek competitive rates across categories, and might have to resort to multiple B2B suppliers. “For instance, a retailer might procure rice from a particular eB2B platform and choose a different one for detergent. Unless the same platform can offer both at competitive rates, the retailer would buy from different platforms based on their margins,” Redseer said. Enabling this competitiveness requires cross-leveraging capabilities and costs, and multi-category first-party (1P) platforms with inventory-based models have a distinct advantage, the consulting firm says. While grocery and staples provide them with volumes, discretionary items might be able to drive margins — both which are needed to be in this large market. Growth path and way forward According to Redseer, India’s eB2B market is projected to grow at a compound annual growth rate or CAGR of 40-45% – i.e. from $5-6 billion in 2022 to $90-$100 billion by 2030. “Growth in this market will be led by deepening penetration among retailers across categories and geographies, and a higher wallet share for eB2B platforms. Retailers will get habituated and reap the benefits offered by these platforms, such as cheaper procurement, faster deliveries, higher fill rates, and consistency in product quality,” said Mrigank.

India’s retail system needs more Udaan-like models for the unorganised market

<keyword id="91324" type="ORGANIZATION" weightage="20" keywordseo="availability">Availability</keyword> of workers at <keyword id="6509181" type="UNKNOWN" weightage="20" keywordseo="factories">factories</keyword> and trucks for transportation remain key challenges to meet demand for essential items, according to FMCG majors ITC and Dabur India. The companies, however, said the approvals for plant operations and transportation of goods have eased difficulties in movement of raw materials and finished products. Addressing of local issues in many states that have hindered movement of goods would certainly help in kick-starting the functioning of the supply chain, they said. "But, the key issue that still remains is the availability of manpower and workers to run these operations. With most workers either leaving for their hometowns or staying at home during the lockdown, it would be a challenge to ensure smooth functioning," Dabur India Executive Director (Operations) <keyword id="6357753" type="PERSON" weightage="20" keywordseo="Shahrukh-Khan">Shahrukh Khan</keyword> told . Sharing similar experience, an ITC <keyword id="6357308" type="UNKNOWN" weightage="20" keywordseo="Spokesperson">spokesperson</keyword> said, "While we have progressively obtained permissions in some states, availability of trucks continues to be the biggest challenge at the moment. Interstate and local truck movement has been severely impacted together with the challenge of shortage of manpower in factories." The spokesperson further said, "We believe it will take a few more days for the entire ecosystem and processes to be streamlined for movement of essential goods." On movement of goods, Khan said the situation has eased a bit with approvals for plant operations and movement of trucks coming in. "These have eased some of the big bottlenecks that the industry was facing for movement of raw materials, packing materials and finished products. It would certainly help in kick-starting the functioning of the supply chain," Khan added. When specifically asked about stock situation, the ITC spokesperson said, "In these trying times, it is critical to ensure adequate availability of essential food and hygiene products in the country. We have been working closely with state authorities and local administration to ensure that manufacturing and distribution activities continue uninterrupted with minimum people." The company's effort is to ensure that consumers during these trying times are not inconvenienced on account of shortages and unavailability of <keyword id="3511062" type="PERSON" weightage="20" keywordseo="Essential-Products">essential products</keyword>, the spokesperson added. "We have redoubled our efforts to ensure a heightened level of precaution and have implemented strict protocols for safety, personal hygiene and sanitation in these select factories and for our salesmen and value chain partners," the ITC spokesperson added. KRH RKL HRS

FMCG players complain of lack of workers and trucks to meet demand

(Eds: Adding inputs from Parle Products ) New Delhi, Mar 30 () Availability of workers at factories and trucks for transportation remain key challenges to meet demand for essential items during the lockdown due to coronavirus pandemic, according to FMCG majors ITC, Dabur India and Parle Products. The companies, however, said the approvals for plant operations and transportation of goods have eased difficulties in movement of raw materials and finished products, assuring steady supply of essential items. Addressing of local issues in many states that have hindered movement of goods would certainly help in kick-starting the functioning of the supply chain, they said. "But, the key issue that still remains is the availability of manpower and workers to run these operations. With most workers either leaving for their hometowns or staying at home during the lockdown, it would be a challenge to ensure smooth functioning," Dabur India Executive Director (Operations) Shahrukh Khan told . Sharing similar experience, an ITC spokesperson said, "While we have progressively obtained permissions in some states, availability of trucks continues to be the biggest challenge at the moment. Interstate and local truck movement has been severely impacted together with the challenge of shortage of manpower in factories." Expressing similar views, Parle Products Senior Senior Category Head Mayank Shah said, "The biggest challenge today is manpower... The new challenge facing the companies now is how to continue running their plants in absence of labour." Most of the labours in manufacturing plant are migrant workers. With they moving back to native places, there is going to be a huge challenge, he added. On the ability of companies to produce to meet demand, Shah said that with 50 per cent of workers allowed, production is being managed through shift systems. "Quantum of production would go down substantially but the idea is to ensure that at least there is food available on the shelves and at no point in time there should be any panic in the market," he said adding that there would not be complete absence of food for 5-6 days, even if any shop runs out of stick it would be available the next day. Commenting on how soon the situation is likely to stabilise, the ITC spokesperson said, "We believe it will take a few more days for the entire ecosystem and processes to be streamlined for movement of essential goods." On the movement of goods, Khan said the situation has eased a bit with approvals for plant operations and movement of trucks coming in. "These have eased some of the big bottlenecks that the industry was facing for movement of raw materials, packing materials and finished products. It would certainly help in kick-starting the functioning of the supply chain," Khan added. When specifically asked about stock situation, the ITC spokesperson said, "In these trying times, it is critical to ensure adequate availability of essential food and hygiene products in the country. We have been working closely with state authorities and local administration to ensure that manufacturing and distribution activities continue uninterrupted with minimum people." The company's effort is to ensure that consumers during these trying times are not inconvenienced on account of shortages and unavailability of essential products, the spokesperson added. "We have redoubled our efforts to ensure a heightened level of precaution and have implemented strict protocols for safety, personal hygiene and sanitation in these select factories and for our salesmen and value chain partners," the ITC spokesperson added. KRH RKL HRS

Lockdown: Availability of transportation trucks, workers remain key challenges, say FMCG players

<ul><li><keyword id="6888422" type="General" weightage="20" keywordseo="sebamed" source="Orion">Sebamed</keyword>'s comparative advertising last year against <keyword id="44863" type="General" weightage="20" keywordseo="hul" source="Orion">HUL</keyword> soap brands including <keyword id="119472" type="General" weightage="20" keywordseo="lux" source="Orion">Lux</keyword>, Pears and <keyword id="94301" type="General" weightage="20" keywordseo="dove" source="Orion">Dove</keyword> got it noticed by consumers.</li><li>We speak to <keyword id="17535" type="General" weightage="20" keywordseo="shashi-ranjan" source="Orion">Shashi Ranjan</keyword>, Country Head, Sebamed to understand how its strategy of targeting other brands in the category has worked for it.</li><li> Ranjan tells us the brand's campaigns have helped it win the trust of huge number of consumers who are looking for 'highly efficacious and scientifically superior products'.</li></ul>When it aired its campaign targeting some of HUL’s market leading soap brands including Lux, Pears and Dove in January 2021, German personal care brand Sebamed made quite a splash. It had taken on the biggest soap manufacturer in the country, to demonstrate the ‘superior benefit of Sebamed’s cleansing bar over market leaders in the soap category’, a claim that had later been rebutted by HUL. Following the launch of the campaigns, HUL had filed a commercial suit in the Bombay High Court, and alleged that Sebamed’s campaigns were ‘misleading consumers on soap efficacy during these difficult times, and further denigrating and disparaging well-known brands like Lux, Dove, Pears and Rin’. The Bombay High Court later permitted Sebamed to continue with its campaign for its cleansing bar. Despite the legal backlash, the brand and its comparative advertising was written about by numerous media outlets, which turned out to be great PR for the brand. It had the desired effect, getting a relatively new brand noticed by consumers. Later in the year, Sebamed released another campaign, this time drawing consumers’ attention towards misleading advertising by various hair care brands titled #NoConditionsApply. A year since the launch of its talked-about campaign, we caught up with Shashi Ranjan, Country Head, Sebamed, to understand how its strategy worked for the brand and how it has been educating consumers about the benefits of using its products and building a market for itself. Excerpts: Q) Sebamed has had a very different advertising approach. How do you think that has helped in its brand building in India? We are a purpose-driven organization, and we strive to transform the Indian <keyword id="34523" type="General" weightage="20" keywordseo="fmcg" source="Orion">FMCG</keyword> landscape. By leveraging the power of honest and transparent advertising, we are empowering consumers with the right knowledge backed by scientifically verifiable facts and realistic claims. We want consumers to make informed choices about their consumption habits and our advertisements narrate the story in a unique and palatable way. Our differentiated approach to advertising has introduced a new vocabulary of pH and generated a buzz in the personal care category. It has nudged consumers to challenge the status quo and question claims around standard beauty practices and provide them with science-backed facts instead, and as a result, build a strong connection with Sebamed. We have been able to win the trust of huge number of consumers who are looking for highly efficacious and scientifically superior products. Q) What sort of reception have your ads received? They did the work of getting the brand noticed but did that translate to sales? We are overwhelmed by consumer responses after every campaign. It really gives a surreal feeling that consumers wait for our advertisements as every category we get into we impart new knowledge and most importantly something they can trust and validate. In addition to disruptive awareness, our advertisements have resulted into exponential increase in our revenue as well. Our annualized portfolio run rate is Rs 600 crore in MRP terms. We remain committed towards investing in brand building as a full-stack player. We continue to strive for share of affinity of our consumers and it has been overwhelming since inception. Q) What sort of growth have you witnessed since you launched your campaign? We are on an exponential growth path and have grown 5X in the last 3 years. In fact, some of the subcategories in personal care have grown more than 10X post the campaign. Q) How did the pandemic impact the business? Where do you stand now? Like any other FMCG player we were also impacted by the first wave of pandemic during Apr-June’20 quarter. However, we have managed to bounce back and are now on our growth trajectory. We witnessed ~40% growth on our overall portfolio vis-à-vis 2019 despite the pandemic. We used this as an opportunity to realign our Marketing, Sales, Distribution &amp; People strategy.We managed to bounce back after a quarter and are now back on our growth trajectory.Hence, the silver lining is, despite pandemic our exponential growth journey continues.Our offline sales have grown around 50% over last year itself. Q) For any relatively new brand, sampling plays an important role. With people stuck in their homes, how have you been able to take the brand to people's homes? How are you ensuring the brand stays top-of-mind for your consumers? Sampling has been a key enabler to induce trial for consumers across all categories and we have leveraged this since the beginning. During pandemic when people were stuck at home, we partnered with hyper local delivery partners as well as some society activation partners to take the experience to consumers’ home. Further recently we have also launched Sebamed shampoo sachet at Rs 10 to encourage trials. Today all Sebamed shampoos – Anti Hairloss, Anti-Dandruff and Everyday are available at Rs 10. We have also started seeing early trends on increasing revenue contribution of Tier II and Tier III cities for Sebamed products. Q) How important has e-commerce been for you? The world-wide pandemic has turbocharged ecommerce transition for FMCG companies. With the touchless economy and safety conscious consumers, we have witnessed a strong preference towards ecommerce during the pandemic and it’s going to continue in the long run as well. Ecommerce has been a key growth driver for us, and we have further enhanced our presence by partnering with quick commerce players as well in addition to traditional ecommerce players. In fact, we have taken an emphatic approach to set up our own ecommerce platform mywellnesskart.com during the first wave of the pandemic to ensure our products are made available to consumers amid logistic disruptions. Q) What's your marketing budget for the year? Will you be increasing spends this year? Which medium will get the largest chunk of the marketing pie? Our marketing budget is commensurate with our growth aspirations. We have grown our marketing budget by 3X over last 3 years. We remain committed towards investment in brand building as a full stack FMCG player and strive for consumer’s share of affinity towards our brands. Our current split between traditional and digital marketing is 50:50 and we will continuously evaluate the same and pivot it around consumer’s behavioral shift. Q) Going ahead too, will the brand continue focusing on competitive advertising or do you plan to modify your strategy? We invest a lot in understanding our consumers. Keeping the evolving consumer needs in mind, our advertising approach has been focused on building long-term trust with the consumers – there is no short-cut to gaining trust. This requires consistent effort. Competitive advertisement is just one tool in the marketing playbook. Every category has different objective and advertisement strategy would differ accordingly; however our brand purpose will remain consistent as the common denominator across every segment we operate. Q) Sebamed has positioned itself as a brand that empowers consumers with the right information on the basis of scientifically verifiable facts and realistic claims. Apart from your campaigns, how else are you educating consumers, since it takes a change in behaviour for people to opt for a new shampoo/soap instead of products they have been using for years? After the pandemic, basic health and hygiene choices are being re-evaluated. We strive to educate our consumers about the benefits of pH5.5 products for healthy skin and hair and impact of using conventional products. pH is a relatively new conversation in the personal care segment, and we are aware that persuading consumers to opt for a new shampoo/soap instead of products they are using for years is a journey. In order to expedite the transition process, in addition to integrated campaigns we are following a 3-pronged approach: -Offering free pH test kits to consumers, so they can test themselves at their homes -Offering free customized skin and hair solutions by our experts through our portal -Sampling and society activation initiatives Q) What is your strategy towards increasing your marketing spend? What is the growth strategy you are going to follow? -Brand building is a journey and we are committed to ramp up our marketing investments in alignment with our aspirations. -We will continue to focus on five key transformational pillars – people, differentiated products, branding, rapid distribution expansion and robust governance. Q) What kind of revenue target do you have for 2022? We are here for the long haul, we plan to grow 10X in the next 5 years, hence we aspire to grow exponentially in 2022 as well, pretty much the way we have grown over the last 3 years.

Our differentiated approach to advertising has nudged consumers to challenge the status quo and question claims around standard beauty practices: Shashi Ranjan, Sebamed

<ul><li>As consumers started cooking or baking more evolved, gourmet dishes at home during the lockdown, <keyword id="9613152" type="COMPANY" weightage="20" keywordseo="britannia-cheese">Britannia Cheese</keyword> witnessed an increase in its demand. </li><li>We caught up with <keyword id="917197" type="PERSON" weightage="20" keywordseo="Gunjan-Shah">Gunjan Shah</keyword>, CCO, <keyword id="146218" type="COMPANY" weightage="20" keywordseo="Britannia-Industries">Britannia Industries</keyword> to understand if the brand has been able to retain the demand it saw in the beginning and how it has changed its marketing strategy in the unlocking period. </li><li>He also told us how the company transformed its business digitally during the lockdown and all about its biggest digital campaign, Britannia Cheese StarChef starring Saif Ali Khan, that brought in the highest growth for the brand till date. </li></ul>With the pandemic-induced lockdown, consumers started brushing up their cooking or baking skills and eating became more of a family exercise. It brought out people’s hidden talent for cooking, especially among the urban masses, which they were exploring only now, thanks to them staying at home and not having to travel to work everyday. In April, recipe searches also surged on the internet, as people began experimenting with a variety of cuisines ranging from the easy to the complex, gourmet varieties. Cheese became one of the ‘star ingredients.’ Britannia Cheese was quick to recognise this opportunity and it amped up its digital marketing strategy to latch onto the increasing demand for cheese, which became an integral part of consumers’ grocery list -- providing a huge impetus for the growth of the category. As a result, cheese became one of the highest growing food categories during the lockdown. As per Nielsen’s report on COVID-19 Impact on FMCG &amp; Retail, the cheese category saw a 60% growth. The report also highlighted how the rapidly evolving preference of urban consumers includes cheese as part of the monthly shopping cart. <div type="image" title="cheese trend" msid="78258099" hostid="261"></div>(Source: Nielsen RMS) Britannia Cheese saw 300% of its business coming from E-commerce during April to August. To leverage this demand, Britannia executed a three-way plan. Elaborating on the company’s digital plan, Gunjan Shah, CCO, Britannia Industries, said, “We provided ease of discoverability and convenience to new users on key ecommerce platforms like BigBasket by creating Britannia Cheese Brand stores on the home pages for an extended shop-in-shop experience. Secondly, we have tied up with several subscription-based e-commerce platforms like Milkbasket and Supr Daily, which provide daily essentials delivery services across all major metros. This helped us recruit new users, gain consumer retention and increase stickiness by incentivizing purchase frequency. Thirdly, to strengthen the last-mile delivery, we have also entered into partnerships with portals like Dunzo, Swiggy and Zomato which provide superior hyper local grocery delivery services.” Star campaign on digital mediums To become a part of people’s daily meals, Britannia Cheese launched a digital campaign with Saif Ali Khan called Britannia Cheese StarChef. The show transforms Khan into a StarChef as he learns to cook from MasterChef winner Shipra Khanna. It targeted newbie cooks and keen learners and provided easy-to-cook recipes. Sharing the insight behind the campaign, Shah said, “The dramatic rise in in-home cooking since the outbreak of the pandemic, was the key trend that informed the making of the show. We worked on the insight that every home chef is looking for extraordinary dishes that makes her a star in the kitchen! And Cheese is the magical ingredient that has the power to help make those dishes. The adage ‘Life is great, Cheese makes it better!’quite sums up the universal love for cheese. The Britannia Cheese StarChef show hones in on Cheese as that special, star ingredient that turns a good dish into a dish extraordinaire.” It soon became the company's best performing digital campaign. Shah said, “The Campaign was significant on two fronts- first, it is the largest single brand Digital Campaign that Britannia has ever embarked upon and second it has performed the best in terms of the metrics that we track for our digital investments. The Click throughs achieved on our promos have been between 200-250% of the industry benchmarks and the campaign has helped drive a significant spike in growth for Britannia Cheese Year till date. The overwhelming response to the campaign made us take it to mainstream TV media towards the end of August.” Altering marketing strategy with changing times The lockdown period proved to be challenging for companies across business verticals in India. There was no rulebook in place for an unprecedented situation such as a pandemic. However, Britannia Cheese understood the magnitude of the situation. To seize the opportunity, it altered its strategies and concentrated on achieving short-term goals. Sharing how the company responded to lockdown, Shah said, “First and foremost, we responded quickly to the changing consumer preferences by keeping our ears on the ground. The Britannia Dairy Team reached out to over 500 retailers in the first month of the lockdown, analyzed the demand-supply situation and the swiftly emerging consumer trends. Anticipating a rapid uptick in cheese consumption, we worked with our manufacturers to ramp up supply by removing bottlenecks and increasing the supply of the fastest moving formats like Cheese Slices, Cubes, Blocks and ‘Cheezza’. Secondly, on the field, we focused on Pareto outlets to ensure that we get a massive increase in throughput from the same stores. We also mapped geographies displaying a huge shift in consumer awareness and adoption to increase our width and depth of distribution of cheese, in the process leading to a sustained growth in our cheese business and growing revenue from E-commerce by over 300% (Apr-Aug’20).” Changing consumer preferences after lockdown Globally, more than <a href="https://www.marketresearchreports.com/blog/2020/07/07/cheese-market-india-leading-players-industry">3,000</a> varieties of cheese are available for consumption, whereas only about 30 to 40 variants are marketed in India. With the changing preference, this presents a huge opportunity for global and local players to grow in the country. As we start entering the unlock phases, the consumer is demanding a range of products to experiment with. Britannia Cheese is also working on expanding its portfolio to meet this demand. “We have put the focus on new outlets and towns and will scale up both range and depth to ensure that we are ahead of the curve, while continuing to tap the potential of e-commerce platforms. Driving availability of even smaller SKUs like Spreads and Cream Cheese is becoming more important and hence, Britannia is driving the width of availability,” said Shah. “The extended stay-at-home period has led to consumers learning how to use the many available cheese formats for the first time. This has led to inorganic business growth in new stores and new towns. Post unlock phase, it’s imperative for us to nurture these stores and towns through loyalty programs, tracking and monitoring,” added Shah. On the brand’s unlocking strategy, Shah said, “With demand stabilizing, the market is again becoming competitive and hence there is a need to increase investment in the ATL and BTL space. We have now taken Britannia Cheese StarChef content on to TV which still delivers the widest reach for us. We have also increased our in –store investment.” Britannia’s focus is going to be on staying agile and invested in making the most out of the behavioral shifts and macro consumer trends. Vision for the brand Britannia is currently the second-largest player in the Rs 850+ crore Indian retail cheese category. Even post-COVID, it aims to be the consumers’ most preferred ally for culinary experimentation. “We will continue to build preference for Britannia Cheese. In the past few years, a lot of consumers have made us an integral part of their cooking forays and celebrations. We value this and are committed to stay invested with a unique positioning and taste delivery, peerless quality and easy accessibility. We aim to build an ever-expanding consumer franchise firmly rooted in their passion point of cooking,” said Shah.

Strategy behind Britannia Cheese’s 300% growth in online sales between April and August 2020

<ul><li>The decades-old practice of getting milk delivered to the doorstep is a big reason. </li><li>Dairy companies spend between 1-2% of sales in advertisements, which is far less compared to other consumer staples companies. </li><li>This is a huge advantage for branded milk sellers at a time when consumers are moving away from unorganised local vendors. </li></ul>Do you get your milk delivered to your doorstep every morning? There is a good chance that you do not have up-to-date information on other brands of milk, competing prices and offers, if any, which may be available. Consumers are less likely to frequently shift from one dairy brand to another because of this decades-old practice. This has also meant that dairy companies in India have had to spend very little on advertisements and promotions. 
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 An urban consumer in India spends 20.3% of the monthly spend on milk and milk products, according to a survey by the National Sample Survey Organisation released in 2012. Milk is a staple and there is big money to be made in the segment. And yet, dairy companies spend only 1-2% of sales on advertisements, compared to online marketplace Flipkart, which <a href="https://economictimes.indiatimes.com/industry/services/advertising/at-30-of-annual-revenues-flipkart-spends-thrice-as-much-on-ads-as-hul/articleshow/66611156.cms">reportedly</a> spends over 30% of its revenue. While Hindustan Unilever spends about 10% of its sales. “An effective advertisement of soap can win new consumers and additional revenues of ₹20 per new consumer per month whereas an advertisement of dairy brand can win revenues of ₹1,000 per new consumer per month,” an <keyword id="7442614" type="UNKNOWN" weightage="20" keywordseo="ICICI-Securities-report">ICICI Securities report</keyword> explained. This would also explain why dairy companies do not offer any freebies to consumers and any discounts to distributors are negligible. However, on the down side, the same stickiness in consumer preference also makes it difficult for new entrants to capture customers from established players. The good news is a lot of people are yet to move from buying milk from unorganised neighborhood vendors to picking up branded milk and related products off the shelves. The Indian dairy sector is expected to grow at about 15% compounded annual growth rate, according to ICICI Securities, and there is possibility of steady shift of consumers from unorganised sector to organised sector. The fact that this growth does not need high promotional expenses is an added advantage for newer companies.

Here’s why you see so many ads for soaps and shampoos but not for milk

The metro cities enjoy the luxury of sitting at home and buying things online. While most of the online sellers claim to reach all customers across the country, there is certainly a big gap that keeps people from smaller towns aloof from the trend. The result is a major loss for online sellers who lose out on the customers who prefer buying from physical stores. Last financial year, Ken <keyword id="15509" type="ORGANIZATION" weightage="20" keywordseo="Research">Research</keyword> has reported, only eight metro cities have generated major sale online besides 3,133 Tier II and Tier III cities including 1,233 rural hubs. This is a clear indication of the potential that smaller towns posses when it comes to online sales. But then there is something that is keeping these places remote from the major sellers. Bengaluru based tech start up <keyword id="3510995" type="UNKNOWN" weightage="20" keywordseo="ShopX">SHOPX</keyword> intends to shift this ecommerce dominance from just a small percentage to the overall retail pie, the Indian mass market. The basic aim of SHOPX is to enable every town in India to shop online. In an exclusive chat with Business Insider Amit Sharma, CEO and Co-Founder of ShopX, said how the market dynamics in smaller towns work. What made them come up with the idea? Research indicates that the middle-income mass market in India is not comfortable speaking in English and majority of them are not comfortable shopping online. The general population of Tier-2 and Tier-3 towns, will consider the suggestions of their kirana store owner before making a purchase. Trust and comfort are two factors that affect buying decisions. Technology and the ‘human touch’ becomes a solution to this problem- small retailer can become the point of contact not just for purchase but also for delivery of products. Since its inception in 2015, SHOPX has grown in reach, distribution, and engagement with retailers across 10 states and 220+ towns in Tier 1, 2, and 3 cities across India. Over the years, SHOPX has grown with 45,000+ retailers across <keyword id="6364822" type="ENTERTAINMENT" weightage="20" keywordseo="South">South</keyword> and West India. Due to the increasing demand of premium brands in Tier-2 and Tier-3 towns, SHOPX has consolidated a wide range of products in various categories, such as <keyword id="34523" type="CITY" weightage="20" keywordseo="fmcg">FMCG</keyword>, mobile phones and accessories. One such example is the launch of <keyword id="6354606" type="COMPANY" weightage="20" keywordseo="iPhone">iPhone</keyword>s on the technology platform in January 2017. They sold more than 300 units of iPhones, out of which 70 percent of the shipment is iPhone 5s. SHOPX is backed by strategic investor, <keyword id="44604" type="PERSON" weightage="20" keywordseo="Nandan-Nilekani">Nandan Nilekani</keyword> and mentors including Jagdish Kini [ex- CEO, <keyword id="15491" type="COMPANY" weightage="20" keywordseo="Airtel">Airtel</keyword> (<keyword id="2465548" type="UNKNOWN" weightage="20" keywordseo="South-Region">South Region</keyword>), Managing Director, Gillette India], and Pramod Varma [former Chief Architect, UIDAI Aadhar Project, CTO Sterling Commerce.] <div type="image" title="uoVLSxCa" msid="58577154" hostid="261"></div>
 Uniqueness The SHOPX app is disrupting the traditional retail ecosystem with a differential approach. It enables the retailer to offer a better experience to their consumers. The benefits for the retailer are low investment, zero stocking, and increase in income opportunities. SHOPX enables retailers to earn 30-40 percent more than the traditional retail model. SHOPX offers various digital services like mobile and DTH recharge, bus and flight booking, utility bill payments, SHOPX Suvidha (lending service only for SHOPX distributors) along with a wide range (more than 50,000) of physical products in categories like FMCG, mobile phone and accessories, fashion etc. Localise Last Mile Delivery We have launched last mile delivery (the last leg of the logistics cycle where parcels are delivered to the end customers) to address the challenges of scaling up logistics and supply chain. Instead of relying on national logistics providers (who tend to be expensive and often slow in last mile), ShopX does its last mile delivery through its local partners. This allows faster speed, lower cost, and more reliable delivery. While there is a stiff competition from market players like Just Buy Live, StoreKing, SnapBizz and Amazon Udaan Sharma is quite confident of the game. Availability 
 Consumers can access the SHOPX app at 45,000 retail outlets who have partnered with us. More than 50,000 products are available on the SHOPX platform along with various digital services like mobile and DTH recharge, and travel ticket booking. We have easy order and return policies to provide consumers and retailers a hassle-free shopping experience.

This startup is enabling online shopping in small towns just like in the metros

One of the strongest pillars of the <keyword id="6356076" type="UNKNOWN" weightage="20" keywordseo="indian-economy">Indian economy</keyword> - the Consumer industry - may not have shown exponential growth in the past 3-4 years, but this one has managed to keep itself insulated from the vagaries of the global macro-economic environment unlike few other vulnerable sectors. And guess who is watching this closely? It's the IIM and IIT students who have got their eyes on this sector. 
 Yes, despite the startup era, it's the <keyword id="34523" type="CITY" weightage="20" keywordseo="fmcg">FMCG</keyword> companies which are the top choice of these students even today. The Campus placement season has been seeing a promising response from this sector for years now. The sector has been stable, and in terms of salary, it hasn't dissapointed students at all. 
 
"Isn't it better to get a lesser package in a company/sector whicg guarantees job security than a one which gives more, except that it may ditch us even before we are to begin work with them," says an IIM-Calcutta student who recently picked up a 18,ooo lakh offer with a FMCG company of repute. 
 
Many B school students like him therefore have put their faith in the FMCG sector over any other offer that is coming their way. We spoke to two experts to understand this, and here are the reasons that have settled the recruitment game in the facour of the big daddies: 
 
What recent salary projections say 
 
“Even in the future, the sector is likely to be stable in terms of salary projections,” says Gaurav Gupta - Sr. Consultant, Rewards, Aon Hewitt. 
 
"With an uptake in consumer sentiments, we will see double digit growth in FMCG in the next 4-5 years. So, you can say that we are seeing a neutral to positive environment for this sector in the short to medium term. This is largely reflected in terms of the salary increases. FMCG was leading the pack in terms of salary increases unlike the service industries and financial institutions who are suffering as a result of the global economic turmoil," he said. 
 Notably, the <keyword id="1048517" type="ORGANIZATION" weightage="20" keywordseo="consumer-sector">consumer sector</keyword> overall has largely two sections - the foreign MNC firms and the Indian companies. For the foreign MNCs, Gaurav says, India has been a very lucrative destination. 
 
"It has been a investment destination which is seen as an engine for growth in future. Hence, you see them investing a lot in terms of their plants, production activities and hiring top talent from the market. That's why we have seen growth in salary increases by them. On the Indian side, the picture is very different. These companies have seen aggressive growth in their top line and market capitalisation. The talent catchment area has increased as they now have competitors operating even in local markets who are also hiring their employees. From that perspective, the large Indian companies in this sector are competing with these local businesses which may be strong in the area they operate, and therefore have been looking to bridge the gap in pay levels,” he says. 
 
Moreover, there has been critical focus on ring fencing of talent in this sector. This is because talent movement across sectors has been worrisome. A lot of service firms banking, telecom, insurance and e-commerce are hiring these talent. This is why consumer industry is trying to give higher increases and bringing in sincere key talent while also retaining existing ones. 
 
Attrition: 
 
Meanwhile, Gurdit, who is also Sr. Consultant, Rewards at Aon Hewitt, informed that even as the FMCG sector has traditionally seen lower attrition rates than India average (13.5- 14% over the last 5 years consistently against an India average in the 16-18% range, and on 13.7% currently), there has been no clear trend whether it has been increasing or decreasing. 
 
Key talent: 
 
Moreover, the key talent attrition is extremely low in this sector. In the last 4-5 years, it has been below 5% and this is both voluntary as well as involuntary. Notably, the way key talent is defined is it’s a combination of high performance, high potential as well as business critical skills which are difficult to find in the market. Typically organisations earmark about 10-15% of employee base as key talent, however, it varies with different organisations. Also, key talent is differentiated on a set of factors. 
 
Gurdit explains further: “Firstly, from salary increase perspective, what we found is that over the last 3-4 years the differentiation in the salary increases given out to key talent v/s an average performer has been increasing. This is not just in FMCG, but across sectors. However the amount of differentiation in the consumer space is slightly higher. The ratio of salary increases shows that a key talent employee would typically be paid 1.5-1.8 times higher of what an average performer would be paid. Now, if you keep aside the compensation increases, the other ways companies are differentiating key talent is - they take a call to benchmark key talent at a position slightly higher than others. From the perspective of non-monetary rewards, these employees get accelerated growth opportunities, better exposure to leadership, more meaningful roles and rotation of roles in order to develop their skills faster.” 
 
To this, Gaurav adds: “With regard to foreign MNCs, we have seen a lot of global mobility programs as well, especially for key talent.” 
 
Challenges: 
 
Meanwhile, citing a few challenges the sector faces, Gurdit says: “Traditionally FMCG is known to have the best talent in the market. Therefore, war for talent in this sector is pretty high. That's the reason why most FMCG companies will typically have really good policies and from total rewards perspective, they are well placed to retain best talent. However, one of the challenges is the new lot – startups - which is absorbing the best talent and paying high salaries. For this reason, FMCGs have started focusing on how to retain younger talent. Companies are bringing in programs to cater to the Gen Y employees, they are bringing in more flexibility work arrangements to take on this challenge.” 
 
Also, Gaurav points out that the emergence of tier 2-3 FMCG players pose a huge threat to the bigger players. They are locally strong and are pulling talent. FMCG industry may have to look at curbing this in future.

Here's why B-school students ultimately opt for FMCG companies over startups during placement season

Indian <keyword id="34523" type="CITY" weightage="100" keywordseo="fmcg">FMCG</keyword> major Dabur is now extending its popular digestive brand Hajmola into the ready-to-drink beverage category as consumers are shifting to more functional drinks like Aampanna or Jaljeera from carbonated drinks. The new drink brand — christened Hajmola Yoodley — is set to be launched in six Indian flavours. 
 
 "Hajmola has a strong equity of chatpata taste. We are leveraging that same equity here for chatpata Indian ethnic drinks," <keyword id="6373748" type="CITY" weightage="100" keywordseo="Dabur-India">Dabur India</keyword> marketing head (foods) Sanjay Singal told TOI. At present, Dabur operates in the beverage category with its Real and Real Activ range of fruit juices and nectars. 
 
While the Rs 14,000-crore domestic soft drinks market — dominated by multinational companies such as <a href="http://www.businessinsider.in/Coca-Cola-To-Drop-Controversial-Chemical-From-Its-Drinks/articleshow/34726902.cms">Coke</a> and <keyword id="54572" type="CITY" weightage="100" keywordseo="PepsiCo">PepsiCo</keyword> — has started showing signs of slowing down, the organized market for ethnic flavoured beverages stands at around Rs 150 crore and is growing fast on a smaller base. The unorganized market for such drinks is larger and is estimated to be at least Rs 1,400 crore in size. However, industry experts say that ethnic beverages are very niche and are unlikely to become mainstream anytime soon. "<keyword id="6391475" type="CITY" weightage="100" keywordseo="Coca-Cola">Coca-Cola</keyword> used to have this digestive drink named Rimzim cola and it doesn't exist now. Local drinks such as Mangola had a cult following before it fizzled out. Mainstream drinks in India still mean flavours such as cola, mango, lemon and orange," Arvind Singhal, retail expert and founder of Technopak, told TNN. Even Parle's coffee-flavored drink Cafe Cuba has disappeared from retail shelves. 
 The new Hajmola Yoodley ready-to-drink beverage range is being launched across the country in a 250ml pack, priced at Rs 30. It will be available in six different variants — Awaara Aam Panna, Nimboora Shikanji, Go Goa Guava, Jhakaas Jaljeera, Golmaal Golgappa and Kabhi <keyword id="2968197" type="UNKNOWN" weightage="100" keywordseo="Kala-Kabhi-Khatta">Kala Kabhi Khatta</keyword>. 
 The other dominant player in the space, <keyword id="1107665" type="COMPANY" weightage="100" keywordseo="Hector-Beverages">Hector Beverages</keyword>, the maker of Paperboat brand of ethnic drinks, opened its second manufacturing plant in Mysore in March. It has currently been valued at around $100 million. Neeraj Kakkar, co-founder of Hector Beverages and a former Coca-Cola employee, said, "We are growing at a very fast pace but the challenge is distribution. We are working hard to work out the right distribution channels." 
 
Dabur, on the other hand, wants to be future-ready. Dabur India executive director (consumer care business) Krishan Kumar Chutani, said, "The first part of this initiative saw the launch of brand Hajmola in a liquid candy format last year and the introduction of Chocolate Chyawanprash, to name a few. We are now getting into the second and more aggressive part of the initiative." 
 
(Image credits: Indiatimes)

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