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16 October Ficci FMCG

FMCG companies that were once leaders are now becoming slow moving consumer goods (SMCG) companies as the industry is rapidly changing. FMCG companies rely on traditional brand building, distribution, and advertising approaches that are becoming less effective. Younger consumers now engage with brands online through social media, reviews, and e-commerce. India's e-commerce sector is growing rapidly and expected to reach 4% of FMCG sales by 2022. For SMCG companies to adapt, they must change their approach to be more open to experimentation, partnerships, and learning from the changing consumer behavior online. Senior management needs to update their mindset or risk becoming outdated in today's dynamic marketplace.

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Prasad Duvvuri
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56 views19 pages

16 October Ficci FMCG

FMCG companies that were once leaders are now becoming slow moving consumer goods (SMCG) companies as the industry is rapidly changing. FMCG companies rely on traditional brand building, distribution, and advertising approaches that are becoming less effective. Younger consumers now engage with brands online through social media, reviews, and e-commerce. India's e-commerce sector is growing rapidly and expected to reach 4% of FMCG sales by 2022. For SMCG companies to adapt, they must change their approach to be more open to experimentation, partnerships, and learning from the changing consumer behavior online. Senior management needs to update their mindset or risk becoming outdated in today's dynamic marketplace.

Uploaded by

Prasad Duvvuri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FMCG or SMCG

The Benchmark yesterday,


laggard today ?

FMCG – Fast Moving consumer goods


SMCG - Slow moving consumer giants
FICCI Massmerize |October 16, 2019 | Shiv - ABG
I came from the FMCG sector, so sorry to
rain in on your parade!! My point is change !
FMCG or SMCG
Examples of Innovation from FMCG
• Brand management system
• Couponing system
• Day after recall tests
• Category management
• Sachets
• Understanding human behavior
• Distribution
• Revenue Management
What went wrong?
Why are they SMCG now?

SMCG – Slow Moving consumer giants


Many times your strength
becomes your weakness,
habit thinking sets in…
The FMCG to SMCG transition
Variable Successful past practice Shifting To…
Brand Building Slow, deliberate process involving Fast daily search process,
multiple layers in organization involving people closest to the
consumer and context.
Spokesperson Mostly celebrities, “when you don’t have Opinion makers, satisfied
a strategy, sign a celebrity” consumers ratings & reviews
Content 10,20,30 second TV spot depending on Millions of consumer content,
sales revenue for the year content that starts and
enables conversations.
Distribution Control over pricing and limited channel Disrupted, niche categories
conflict, helped scale companies, selling are growing, channel conflict,
niche was a challenge, getting range was helps niche , small players,
a challenge, category aisles a limitation easier range and assortment
Consumer viewing Television, Print, Outdoor Mobile Phone
platform
Online as % of FMCG sales
Country E Commerce % of FMCG sales
spend
South Korea 18 %
China 16 %
Global FMCG UK 6.3%
France 6.1%
eCommerce sales
USA 5.6%
is 6 to 7% Australia 3.1
New Zealand 2.9
India 2018 2%
India expected 2022 4%
India is a Digital racehorse
People on the Internet 650 Mln
Number of smart phones 500 million
What’s App users 400 million
Daily Urban Internet users >200 mln
Daily Rural Internet users > 100 mln
Number of women Internet users > 150 mln
Facebook India >320 mln
Instagram India >100 mln

Source : Industry Experts


India Retail Market
Billion $s Size of market E commerce Modern Traditional
% Trade% trade%

2017 672 2% 9% 89 %

2022 1200 4% 14 % 82 %

2030 2900 10 % 25 % 65 %
Last 4 weeks India – No of shopping trips

2017 2018

Traditional Trade 7.9 7.7

Modern Trade 1.6 3.8

Online 1.6 3.3


Categories already showing speed >
1% of FMCG spend
Diapers 16 %
Liquids and Toilet Soaps 4.1 %
Hair Conditioners 4%
Pre /post wash products 3.2 %
Shampoo 2.8 %
Washing powders/liquids 1.5 %
Hair oils 1.3 %
Non carbonated Soft drinks 1%
Factors for eCommerce to win
• Niche
• Subscription, fo everyday products
• Bulky to carry
• Regime
• Categories with low level of distribution
• High trade margin categories
• Higher women working population
• No sales team excuses
• Constant ability to rework value of offering
Massive Businesses as a result of eCommerce

• Privacy
• Consumer data bases
• Data Centres
• Last mile delivery
• Packaging Industry
• Web sites, design
My inputs for SMCG to change
• Senior management needs to learn
• Attitude to risk, try new things
• Attitude to experiment outside comfort
zone
• Starts with attitude to partnerships
• Starts with a willingness to let go of an
old hackneyed formula
Summary

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