Indian FMCG companies are dusting off the impact of last year’s noteban and are restructuring supply chains while devising strategies to stop Patanjali Ayurved, the biggest disruptor in the space.
Heads of India’s biggest consumer goods companies were gathered at the Confederation of Indian Industry (CII)’s annual FMCG summit in Mumbai on Wednesday.
FMCG stands for fast moving consumer goods.
The sector has had a difficult 2016 hurt by demonetisation and has been losing market share to Patanjali Ayurved Ltd, steered by yoga guru Baba Ramdev.
However, companies say demand is slowly returning to pre-demonetisation levels and that they are now streamlining supply chains ahead of the Goods and Services Tax (GST) that the government hopes to implement from July 1st.
“I think once GST the final thing is announced, within 60 to 90 days we should be ready to implement it,” Saugata Gupta, MD and CEO, Marico told BOOM.
“Obviously there will be some hiccups in the entire system but in the long term it’s a very good thing,” Gupta said.
Marico owns brands such as Parachute hair oil and Saffola cooking oil.
Macro themes such as drivers of growth, decoding consumer behaviour and the role of communication in reaching customers, were discussed at the summit.
However, many of the panel discussions and Q&A sessions anecdotally mentioned Patanjali and what established FMCG players could learn from it.
Patanjali has been credited with giving Ayurveda a contemporary makeover by launching products like Dant Kanti toothpaste and Kesh Kanti hair oil.
An industry report in January called the company, the most disruptive force of 2016.
“They really unearthed the sweet spot of the consumer. Nobody really exposed and explored the natural space in a big way,” Prasun Basu, president-south Asia of market research firm Nielsen told BOOM.
“Every company came up with natural products and introduced them but it was all an incremental effort on top of everything else they were doing,” Basu said.
The summit also saw the presentation of an industry report that said India’s FMCG sector could potentially grow upwards of 15 percent over the next two to three years if companies show focused intent and action.
The report was created by management and consulting firm Bain & Company in association with CII.
Over the last three years the sector had witnessed a sharp slowdown but the industry was now on the cusp of a revival, the report said.
Vivek Gambhir, Managing Director, Godrej Consumer Products Ltd told BOOM he was counting on a strong FY17-18.
“As we start to see more income return back to India, we hopefully will see a better monsoon and to the benefits of GST, which will get passed on to the consumer, all the indicators augur very well for next year to be a very strong year for growth,” Gambhir said.