Small and local brands grow big in FMCG market amid coronavirus lockdown

Companies say low-unit packs as well as lesser-known brands seeing greater traction during lockdown

A search for a bottle of ketchup lands up at the foot of a little-known brand called Nilon’s at the neighbourhood store. In honey, a new name called APIS beckons for attention at supermarkets. And, within hand sanitizers, there are a number of options these days, beyond the club of popular trademarks. Groceries, supermarkets and online platforms are replete with examples of small and private brands, whose offtake has grown during the lockdown.
 

Research agency Nielsen has confirmed the trend, saying that the number of small brands has increased sharply during the lockdown, especially in categories such as food and hygiene. In March, for instance, as many as 152 small brands entered the hygiene market, Nielsen said, which has continued into April and May.
 

In food, categories such as packaged rice and edible oil, says Nielsen, have seen double-digit growth in the past two months, led by the proliferation of small brands.

Some companies and e-tailers have admitted to consumer propensity for smaller and cheaper labels, while others choose to be cautious about it.
 

R S Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation (GCMMF), the maker of Amul, says his firm has had to contend with a flurry of small brands in dairy, even as his firm did brisk business during the lockdown.

“We managed to keep our supply lines going and have used our distribution network prudently to get products such as cheese, dahi, dairy whitener and ghee apart from milk out into the market. But at the same time, I did notice that when pantry loading was high and the supply constraint acute, local names were filling the gap,” Sodhi said.

Suresh Narayanan, chairman and managing director, Nestlé India, says categories where the level of differentiation has been low and local brands fairly strong, inroads by them have been greater. “But I don’t think there is any such wave. This is more of a transitory behaviour and not a lasting one,” he says.

An executive with Future group, which runs the Big Bazaar chain of stores, however, says sampling for its private brands in food and fast-moving consumer goods (FMCG) has grown in the past two months. This has happened because established names were difficult to find in the rush to secure kitchen supplies during the lockdown, pushing consumers to try out newer labels and affordable options.
 

For instance, brands such as Golden Harvest, Tasty Treat, CareMate and Voom, all from the Future group stable, covering staples, snacks, hygiene and detergents, respectively, have reported 30-50 per cent growth in offtake over the past two months, the executive said. Most of these brands have a price differential of 10-15 per cent to their nearest national rival.
 

Albinder Dhindsa, chief executive officer and co-founder, Grofers, endorses the view on affordability, saying customers on his platform have been moving to smaller packs and are opting for private labels as they seek to prioritise their expenditure in the face of challenging times.

In its fourth ‘Covid-19 Barometer’ study released last week, WPP-owned Kantar says that an extended period of ‘value-consciousness’ will continue for the next few months across the world, including India, led by economic anxiety combined with pessimism about a virus resurgence and the need to conserve cash for tougher days ahead. This has led brands to consider pricing, promotional and value-add strategies and those who have deployed these initiatives quickly have seen positive outcomes, it says.
 

A spokesperson for rival BigBasket, for instance, says its customers have been open to trying out ‘substitute brands’ within a category, if their preferred labels were not available.
 

Dhindsa says Grofers has witnessed a sharp increase in penetration of private brands across multiple categories. “Our edible oils saw a penetration increase of 157 per cent, sauces and ketchup increased by 83 per cent, while pasta and soups grew by 59 per cent. Jams, honey and spreads, on the other hand, increased by 41 per cent,” he says.

Currently, private labels make up 40 per cent of Grofers’ overall business, which the platform is looking to take to 60 per cent in the next six months. Future group has 25-30 per cent of its business coming from its own food and FMCG brands within its stores. It proposes to take this number to 70 per cent in the next few years. The surge in consumer trials during the lockdown, the group says, will help galvanise efforts.