Hurt by consumption slowdown earlier, small brands bounce back in lockdown

Over 150 new players seen in hygiene category alone; food business also sees similar rush

A large number of small brands that had exited the fast-moving consumer goods (FMCG) space last year following a consumption slowdown have re-entered the market amid the ongoing nationwide lockdown.
 

The data from market research agency Nielsen shows that 152 new players entered the hygiene market in March as the lockdown was implemented to contain the spread of the coronavirus disease (Covid-19). The trend is expected to continue, the agency says, as hygiene and health emerge as key themes.
 

Not only hygiene, but the food category also saw small and local players make their presence felt, said Prasun Basu, president, South Asia, Nielsen. “In March, for instance, small and local players saw their share go up to 36 per cent in packaged rice versus 29 per cent in January,” Basu said.
 

In hand sanitizers, for example, the share of small players was even sharper at 61 per cent in March versus 15 per cent in January. Large players, on the other hand, had a 39 per cent share in March in hand sanitizers versus 85 per cent in January, the Nielsen data shows.

Most other food and FMCG categories have also witnessed an increase in the share of local brands, Basu said, driven by the need to plug the huge gap for essential products during the pandemic.
 

“While supply chain concerns were faced by all players, local brands have been agile during the lockdown, responding quickly to demand-side needs. That explains why their share has increased in March," Basu said.
 

Top brands, however, are hitting back as supply-side concerns gradually ease. Most big players are now slowly but steadily increasing capacity utilisation as the government relaxes transportation of both essential and non-essential goods, as well as permits movement of labour in some sectors in a bid to revive economic activity.

Guidelines by the Ministry of Home Affairs, released on Wednesday, allowed the opening up of industrial units and farming operations in rural areas with strict social-distancing norms in place.

"We anticipate last-mile distribution to be mobilised, especially in rural areas," Mohit Malhotra, chief executive officer, Dabur India, said. "This is a big plus because our sub-stockists were not operating in rural areas due to the lockdown. They can now conduct their operations," he said.
 

Most brands are also expected to keep their focus on the food and hygiene categories for now as they look to meet demand in the marketplace. Companies are also tying up with online platforms, aggregators, and quick-service restaurants such as Swiggy, Zomato, Dunzo, Ola, Zoomcar and Domino's for last-mile delivery of goods.
 

Among firms that have initiated such tie-ups include names such as ITC, Marico, Britannia, and Godrej Consumer (GCPL) in the last one week. Some more are expected to follow suit.
 

Companies are also adopting kiranas and corner shops as part of the Centre’s ‘Suraksha stores’ programme, which aims to provide a safe shopping experience for consumers as well as help small retailers follow hygiene norms even as do they business.

Vivek Gambhir, managing director and chief executive officer, GCPL, said his company was looking to ramp up capacity from 20-25 per cent now as the government eases supply-chain concerns in the second phase of the lockdown.
 

“It will be critical to ensure that the (MHA) guidelines are uniformly and speedily implemented on the ground to avoid stock shortages and to ensure availability of essential items,” he said.
 

In a statement, ITC said it would continue to focus on manufacturing food and hygiene essentials while adhering to safety protocols.