12,112.80-57.05
Stock Analysis, IPO, Mutual Funds, Bonds & More

FMCG companies tweak sales mix in slow market

To de-tangle growth from the grip of a slowdown, fast-moving consumer goods (FMCG) companies are redefining their product and marketing strategies, depending on their stage of evolution.

, TNN|
Nov 30, 2019, 11.12 AM IST
0Comments
BCCL
fmcg bccl
(This story originally appeared in on Nov 30, 2019)
MUMBAI: To de-tangle growth from the grip of a slowdown, fast-moving consumer goods (FMCG) companies are redefining their product and marketing strategies, depending on their stage of evolution.

Hindustan Unilever (HUL), which is already well entrenched in both urban and rural India, has maintained its strategy of straddling the pyramid. Urban-centric company L’Oreal, on the other hand, is looking at a more premium play and has put the sachet strategy on the back-burner. There are some like Nestle India that have a greater emphasis on urban market (75% of its sales) than rural, and are looking to strengthen its portfolio mix with a clear focus on the core.

In an exclusive interview with TOI, Nestle India CMD Suresh Narayanan said three factors will define the texture of consumption going forward. One is the mix of the portfolio which companies enjoy between super-premium, premium and mainstream products. “We will be expanding, but will be judiciously combining premiumisation with more mass-oriented products,” said Narayanan.

The second factor is the demand for a variety of products that consumers seek at different occasions.

“That’s what we played to with the aggressive innovation/renovation programme that we’ve had on 61 products in the last three years. That’s about three times what we were innovating before. The pace of innovation is going to play an important part,” said Narayanan.

Third is consumer-centricity of a brand. Those companies, said Narayanan, which are more consumer-centric and anticipate products that consumers might need are ultimately going to win the game with their agility and responsiveness. “Today’s consumer, whether rural or urban, is seeking not just good price value but also trustworthy and sustainable quality. Consumers are looking at brands that are relevant to them.

That’s a journey that companies need to traverse. So simply because your brand has been around for 50 years, in a particular format or price point, speaking a particular language, is not enough,” said Narayanan. Nestle India bucked the slowdown and declared a domestic revenue growth of 10.5%, which was better than its peers, in September quarter.

A number of companies are said to be going back to focusing on the core. L’Oreal India, which had ventured into low-unit-price packs a few years ago, has withdrawn the sachet strategy. “Sachets are not part of our strategy,” L’Oreal India MD Amit Jain told TOI recently, adding, “We are focused on the premium play.”

Narayanan said it is not going to be a quick slope up. Narayanan said, “Equally, if you have to kick-start consumption, then we have to either put more money directly in the hands of people or indirectly through a tax effect.”
Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service