Trends that will shape the FMCG market in 2020

No industry is required to be as agile as FMCG. With the market flooded with competing product mixes vying for customer attention and loyalty, it has become increasingly pertinent for FMCG companies to have a dynamic plan which can react quickly to changing consumption patterns.

Now, more than ever, the role of FMCG strategists who can analyze data, validate and respond quickly, and remain provident about emerging trends in the FMCG market is becoming all the more crucial.

Let’s have a look at what the future has in store in the coming year for the CPG market:

Changing Market Dynamics

1. Digital transformation of India 

Increasing smartphone and internet penetration, and easy mobile payment options for rural, Tier-II, and Tier-III cities’ has ushered in the expansion of e-commerce and the need to adopt digital strategies to keep pace with changing preferences.

2. Omni-model of Shopping

With the spread of digitalization, commerce is witnessing multiple channels of trade. Users can make purchases through apps such as Instagram, Facebook, Youtube and such social media platforms along with existing platforms of trade like amazon, Flipkart and niche applications such as Grofers and Bigbasket bringing modern trade to your handsets.

3. Changing business models

India is also witnessing entrants with new business models such as D2C (Direct to customer) which has multiple variants such as subscription models, store labels and doorstep delivery e-commerce. These models are in their infancy at present in India, but if we are to learn from mature markets such as US, China, Switzerland, Germany, these models can grab bigger market share.

With an increasing number of private labels and unorganized and small business segments, the consumer packaged goods market is seeing new entrants eating away the market of big brands.

4. Impulsive buyers

Another rollover effect of having such varied options in the market is a fickle consumer. Even the incumbent enterprises are launching product mixes of varied depth to maintain their share of the market.

5. Consumer Community

Digitalization has also impacted how consumers are interacting not only with the company but also with other consumers. Community formation around a brand is increasingly becoming an important strategy to adopt for sustainable growth. A bird in the hand is worth two in the bush sounds about right when you consider the choices of the loaded consumer. To build such a community, businesses are increasingly investing in marketing strategy that incorporates social, cultural and political factors.

6. Influx of Western Brands

The huge consumer market in India has attracted a slew of Foreign Brands into the Indian market. Over the past 25 years, multinational brands have been quite successful and have flooded the shop shelves. There is a sense of trust that consumers vest in these foreign brands. By providing tailor- made offerings to the Indian market, they have entrenched the grocery list. Indian brands must compete with this trust in quality illusion that seems to halo foreign brands.

Changing Consumer behavior patterns

1. Economy pack prevails

The industry is seeing consumers buying bigger home-packs and combo deals with fewer trips to grocery stores. This discretionary behavior is in an effort to drive for better value and economy as consumers. This is an important behavior analysis which could impact schemes and promotional strategies adopted by the businesses.

2. Quick Food, Quick solution

Increase in ready to eat food option is also an important behavior which shows how disposable income is being invested. The consequence of the busy city lifestyle, the range of products of quick-fix meals and precooked food has been domination the snacking industry.

3. The “Wellness” wave

Digitalization has also increased awareness among consumers. We can witness more consumers shifting preferences towards health and wellness and as a result, most big and small CPG companies have launched a product mix especially to cater to this health-conscious population. We can see an increase in the number of products sold as 100% organic variant as well as herbal and Ayurveda versions of most of the big names.

4. Innovation domination

We can also see a shift from essentials to premium products. Whether this is the lipstick effect during the economic downturn or just a shift in consumer preference towards the more customized and personalized product, one thing is clear, FMCG companies need to stay on their toes.

There is an urgent need to innovate existing products with the primary focus on the benefits and advantages of every product for the consumers. In pursuance of this tilt-shift, many companies have now launched products with regional flavors, ingredients, and recipes. This customization puts consumer experience at the forefront and is increasingly being endorsed by consumers.

5. Seasonal Consumption

Another very definitive characteristic of the Indian consumer is the increase in consumption around Sporting events—such as EPL and IPL, festivals such as Diwali, Duggo Pujo, Eid, Ugadi, and big fat Indian weddings. Consumption around these events happens regardless of how global trends and direction of economic growth.

What steps should FMCG companies take?

1.  Provide real value to the consumer

FMCG companies must focus on innovating products with consumer preferences at the core of strategy building. Today’s consumers are more agile than idle. With access to information from the internet as well community, users now take a conscious decision about what they are consuming– its ingredients, benefits as well as carbon footprint. This sense of wellbeing should be at the center of innovation.

2. Efficiently manage visibility and awareness

By the speed with which social- media platforms like Snapchat and Instagram have taken over and are flooded with millions of photos each day, we can say with surety that humans are highly visual.

This same nature is of FMCG products. Merchandising with attractive visuals to bolster awareness and enhance the stickiness of a brand is critical to maintaining recall.

It’s no surprise that right shelf management and planogram can increase return on investment.

3. Leverage Digital strategies and optimize marketing efforts

Enhancing brand awareness and visibility, building a community, driving the consumer experience through an Omni-channel approach is crucial in today’s day and age where customers expect to shop wherever they are.

4. Build local connect and strengthen the FMCG distribution management system:

As the market gets more competitive, national players must compete with local products for attention. FMCG companies must shed their earlier paradigms of how distribution is managed. Modern Trade and E-commerce have this vantage point. They can directly communicate with the consumer.

To maintain market dominance, FMCG enterprises must invest in fostering local connects and build a relationship with the consumers.

5. Sales enablement to drive product availability

India is big and diverse. To intelligently map the market, FMCG companies should enable their sales performers with the right technology that can help them cover maximum possible prospects. As FMCG companies diversify their offerings, it also becomes increasingly important to train the sales professionals in all these complexities, with product knowledge, schemes and sales resources.

6. Make calculated decisions based on market intelligence and consumer insights

Every touchpoint with the consumer is data. Consumer preferences direct the market season after season. Understanding these behavioral patterns is important to cut costs and produce products that can be adopted quickly. Product range, price point, and individual choices affect overall sales.

Actionable market intelligence and Competition tracking are required to predict market trends instead of working on historical data.

At Peri, we believe empowering company’s salesforce or frontliners with the right tools, technology and training are critical for entering, sustaining and growing in the Indian market. As the role of sales representatives evolves as advisors instead of just taking orders, enabling them with the right product knowledge furnished with a well-defined process and directed through coaching will help transform and gain the support of distributors and provide sustainable growth to the integrated approach of sales and marketing. We provide these functions through a rapid yet staged approach that aligns with the business’ strategy.