FMCG SECTOR SHOWING REVIVAL AFTER SIX QUARTERS: LEADERS AT CII FMCG SUMMIT
At the CII FMCG Summit yesterday, industry leaders had good tidings to share towards the end of what has been a difficult period for the sector over the past six quarters. Industry stalwarts opine that the sector is showing signs of a revival, speaking at the CII FMCG Summit, despite its dismal growth rate of just under 10% according per market research agency Nielsen. Marquee FMCG brands like Nestle, HUL, Mondelez and a few others showcased their experiences at the summit. Kicking things off was Bharat Puri, Chairman, CII National Committee on FMCG and Managing Director, Pidilite Industries, who said, “Since liberalization, the FMCG sector has made significant contributions to India’s growth story and the sector has persistently maintained robust double-digit growth rates.” He added that in stark contrast with this stellar record, a recent slowdown is taking place in the sector at large that is driven by broader macroeconomic factors coupled with tepid consumer sentiment. Despite the gloomy past quarters, Puri is emphatic that the sector as a whole is showing signs of revival. “The companies that are doing well are those who have built enduring brands, innovated and those who are looking after our planet,” he noted, making a clear reference to the importance of sustainable growth. He further added that “FMCG leaders like Hindustan Unilever and Nestle as well as a crop of new ‘insurgent’ companies have beaten the slowdown, offering hope and lessons that could help the industry rev up its flagging fortunes.” Among these ‘insurgents’ this year have been the likes of beer brand Bira, Bombay Shaving Company and boAt. He added that leaders must quickly pivot to invest in strategies that will engineer getting back to double digit growth through a rapid penetration increase, culminating in serving more consumers more completely. Given that the FMCG sector close to three million directly and almost 10 million people indirectly, sustainability is no longer a ‘nice to do’ thing, but has to be a core objective, he added. Also speaking at the summit was Suresh Narayanan, Chairman and Managing Director of Nestle India, who pointed out that companies only have their mindsets to blame for the slowdown. Referencing the Maggi example, Narayanan said, “The mindset in my company is ‘leave the GDP worry to economists, our job is to see that growth happens every day.” Narayanan pointed to the big changes that have impacted the sector: the rise of millennials, expanding digitization and the proliferation of choices for the consumer. Consumption trends have changed – it is more experiential, experimental, more health conscious and more social and environmentally focused. Stating that there is light at the end of the sector’s rather dark tunnel, Nikhil Prasad Ojha, Partner, Bain & Company said that the FMCG category is finally seeing some green shoots. He said the industry also played a role in the slowdown, pointing to companies that cut down on advertising, innovations and new product launches. Successful companies like Hindustan Unilever, however, did not cut advertising. Over a 15-year period, HUL reinvested the surplus partly into advertising and sales promotion. Other speakers offered insights into the need for sustainability and commitment to a healthier and cleaner planet. Deepak Iyer, President – India, Mondelez, who also spoke at the summit was empathic about the FMCG category’s sustainability agenda. “One thing that I would like to say about sustainability as per my philosophy is that chasing sustainability goals has never been in conflict of chasing profit goals, that is one big thing that can bring sustainability to the centre of the strategy.” Other speakers at the summit were Nikhil Prasad Ojha, Partner, Bain & Company, Indrani Kar, Principal Advisor, CII, Bharat Puri; Chairman, CII National Committee on FMCG and Managing Director, Pidilite Industries and Suresh Narayanan; Chairman and Managing Director, Nestle India during the CII National FMCG Summit in Mumbai