The snacking segment grew by 10% in 2020: K Ramakrishnan, Kantar

Shrugging off the disruptions of the year gone by, businesses and agencies are looking for a strong revival in 2021. Over the next few weeks, Adgully – as part of our annual TRENDING NOW endeavour – will be presenting the strategies and views of a cross-section of industry leaders as they go about reclaiming lost time and market opportunities and build for a stronger future, armed with the lessons of 2020.

K Ramakrishnan, Managing Director – South Asia, Worldpanel Division, Kantar, has several interesting stats to share regarding growth in various categories during the pandemic period. He also talks about certain categories, such as hygiene, immunity-boosters, snacking that have gained prominence in these times.

What are the key FMCG trends in terms of consumer behaviour and purchasing behaviour that you see defining in the year 2021?

Here are some of the key trends that could shape FMCG in 2021:

  • Affordable Hygiene: While expensive categories like Hand Wash and Hand Sanitizers may see it difficult to sustain the same level of growth in 2021, we will continue to see affordable hygiene on the rise. The Costlier hygiene formats would also figure out ways to become more reachable to the consumers who are no longer threatened by the pandemic. Smaller packs, cheaper formats will be attempted in 2021 in these categories to keep the growth momentum continuing.
  • A knack for snacks: After Hygiene, the segment that has seen the most growth is the snacking segment. The segment grew by 10% in 2020. And the wonderful thing about this growth is that it deepened despite the economy opening up and despite people able to move freely. The JAS and OND quarters clocked 14% and 15% growth rates, respectively, pointing out that there is some behavioral shift in terms of consumption of these categories. Categories like toothpaste or shampoo are unlikely to see rapid growth because in the short term people are not likely to increase their frequency of brushing or shampooing. However, snacks are something that need not necessarily have a set occasion and therefore, can see significant growths. Compared to the international markets the Indian organised snacks market is still small for a population of our size and this year could see a shift in the way we buy and consume snacks.
  • Immunity: If there is any indication, people now have a strong sense of necessity for immunity. The growth in categories like Chyawanprash is a direction that points to this. Good products branded with “immunity” will see faster success. Health till 2020 was largely limited to the Calorie Conscious Consumer – with Baked Snacks, Low Fat Oils, Fiber Foods, Digestive Biscuits, Multigrain Atta, etc. We will start seeing a new segment being carved out in the Foods space, which addresses the Immunity Inclined Buyer.

What are your expectations for the FMCG sector in 2021 from a growth perspective?

While the overall FMCG sector slowed because of the closure of the HoReCa sector for a few months, household consumption of FMCG received a boost due to the pandemic. The growth in Household FMCG in terms of volume was 4.2% in 2020, which is twice the growth in 2019. In fact, the OND quarter for 2020 grew at 5.5%, which is a record growth in the last 4 years in the Household front. With the HoReCa sector now open and Household Consumption still going strong, we expect that the overall FMCG sector will see growth in 2021.

On the household front, however, with schools and colleges reopening across the country and many private offices starting to open, we expect to see Out of Home Consumption growing, which will lower the growth rate of the in-home FMCG growth. We still will see FMCG growing in-home also, but at a slower pace than what we saw in 2020.

The year 2020 led to a momentous shift in the way we function as a society. What is the learning for FMCG business to adapt for future uncertainties?

  • Adapt Faster: The Pandemic posed unique questions to the business environment as every day the environment saw a sea change, especially, during the peak of the pandemic. Those who did not adapt dropped out of the race, but those who adapted quicker were able to pull ahead of those that did not.
  • Clearly Innovative: We saw a slew of new launches in this period. In the Sanitizers category alone, between April and June over 350 brands were launched. New pack sizes were launched and new categories emerged during this season. Leaning on the traditional healthy history of our country, many brands launched products to counter the pandemic. Stepping up innovation is one way to keep the consumers engaged without being distracted with your brand, and that clearly worked across brands during this season.
  • Truly Multi Channel: With Modern Trade Outlets either closed or opened for a limited time, Chemists emerged as a formidable channel during the peak of the pandemic. If 47 out of every 100 households bought FMCG at least once from Chemists in 2019, 55 of them bought in 2020. Multi-Channel brands helped themselves as a result.
  • Digital First: 6% of metro households bought FMCG online in 2019. This moved up to 7.3% in 2020 – while this is good growth, there is still a huge opportunity to drive this channel upward for marketers. We now see increased acceptance of the channel across categories. In 2019, we saw only some categories like Skin Creams or Deodorants featuring in the Consumer’s e-commerce basket, however, in 2020 we see even staples featuring in the basket. Any FMCG brand now needs to have a solid digital strategy.
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