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CONSUMER PRODUCTS
INDUSTRY OUTLOOK
India’s Consumer Goods Sector at a glance
➢ The fourth largest sector of the country, Consumer Goods is dealing with the disruptions of the COVID Pandemic. Understanding the change
& adapting to new ways is the way forward.
➢ In this report we delve into these trends and issues pertaining to the consumer goods industry with a focus on India and it’s journey
towards realizing its competitive advantage.

Revenue Breakup1 FMCG Revenue Over the years1

2020 103.7
Healthcare
20%
30% 2019 83.3

Household & 2018 68.4

Personal Care 50% CAGR :
2017 52.8
16.2%
Food &
Beverage 2016 49

Revenue ($ US Bn) Market Size ($ US Bn)

Key Drivers

Growth in GDP/Capita to almost 2X & Rural market to Brand Consciousness, Increasing Modern
Rural reach US$220 Bn by 2025. Better Internet Organized Retail & GST tax system has led to shift from
Consumption penetration & higher aspirations in rural area market Shifts the Unorganized to organized sector.
Streamlined value chain with robust IT Tech Increasing penetration in specific categories like
IT & Supply Penetration
support will be key going ahead. Disruptors as instant food, male grooming, etc. is
Chain rates Increase
COVID need to be tackled efficiently attracting foreign investments
Source: 1. IBEF FMCG report; 2.Statista
© Management Development Institute, Gurgaon | 2021 - 2022 2
 Shifting Consumer Behavior

Mindful Shopping Rise of Online Shopping Reducing Brand Loyalty Rise of Wellness Sector
45%1 respondents shifting to 4.6%4 jump in online Retail #11 Position of India amongst 10 $1.5Tn USD2 is the size of
less expensive substitute in India Penetration during pandemic countries in adopting new brands the Global Wellness industry
82%5 consumers choosing Non 80%3 of New e-Commerce 70%1 of GenZ consumers adopt 5-10%2 expected CAGR for
premium staple food customer from Tire -2 cities brands marketed via social media the next 5 yrs.

➢ Overall decline in optimism ➢ Gain in OTC & Alcohol part ➢ Low availability of products ➢ Digitally sold, Influencer led
New Frontiers

of post COVID recovery (At Home Consumption) due to COVID Disruptions natural & personalized
products trending
➢ Hence consumer spending ➢ Strong rise seen in D2C & ➢ Consumer shifted to more
➢ Heath, fitness, sleep &
focusing on Essentials Omnichannel trends accessible brands
mindfulness considered key
➢ Less Pronounced trends in ➢ E-Retailers are now critical ➢ More pronounced trend in ➢ India’s natural therapy
South East Asia for e-Commerce robustness countries with long lockdown gaining popularity

Optimism about Economic Recovery1 E-Commerce Growth Top Reasons to shop for a India’s AYUSH Wellness
60 Pattern4 new Brand Scheme Gaining popularity
Low One time Persistent
Net Optimism %2

Grocery &
40 Personal
Growth

Care
Trend

20 Mobiles & Value Availability

Electronics
0 Fashio
Ayurveda Yoga
Apr'20 May'20 Jun'20 n&
Luxury Quality Unani Siddha
USA CHINA INDIA Homeopathy
Source: 1.McKinsey Retail & Consumer Goods Report; 2. McKinsey – Feeling Good; 3. BusinessToday- Online Shopping; 4. Bain-How India Shops Online; 5. Nielsen
© Management Development Institute, Gurgaon | 2021 - 2022 3
Consumer Decision Journey – Revamped!

How: Consumers get Where: Consumers What: Consumers

Information purchase purchase
➢ Shift from TV media to Online ➢ The gross merchandise value ➢ Consumers are being mindful of
Advertisements and Promotions (GMV) of the online grocery their spending and trading
becoming sources of Consumers segment in India is expected to down to less expensive
getting information from increase 18 times over the next products
five years to reach US$ 37
➢ Decline in in-person billion by FY25, indicating the ➢ 45% of Indian respondents to a
engagement, meaning decrease splurge of the E-Commerce McKinsey survey have said that
in word of mouth as a source of market they are changing to less
getting information expensive product options to
➢ From 2017 to 2020, Online save money
➢ However, word of mouth FMCG market grew from $20
remains to be the most reliable Bn to $45Bn whereas online ➢ In categories like apparel,
one users more than doubled, from footwear, purchase intent
90 Mn to 200 Mn remains weak

Minutes on average are Indian consumers are Indian consumers

being spent by most likely to shop researching brand and
155 72% 40%
consumers on Internet online locally for product choices before
per day premium products. buying

Source: 1. IBEF FMCG Report Feb’21 2. McKinsey Consumer Goods Report 2020 3. Statista
© Management Development Institute, Gurgaon | 2021 - 2022 4
Omnichannel : Integration of Online & Offline
Omni-channel commerce is a multichannel approach that Omnichannel Driver
focuses on seamless customer experience by integrating
online & offline channels of sale.
The rise of e-commerce, driven by better internet Top Line
penetration, willingness to new experiences and shifting Impact
consumer behavior during COVID has led to an Enhance Reduction of
amalgamation of brick & mortar stores with internet based customer Operation
channels Experience Cost
Consumer
Interaction
Preferences
Phase wise Omnichannel Development

27.7%1 Decrease in Consumer Interaction Methods have

Human Interaction shifted significantly from Human
54.5%1 Increase in interactions to contactless Digital
Digital Self Service means.

Crawl Walk Run

Omnichannel Challenges
Competitive e- Enable store to End to End
commerce & home shipping & integration which ➢ Wrong Priorities – Divergent strategies are often pursued because of
service offering click-collect ops has cross channel improper alignment of long term goals
Implement a Have dedicated functionality ➢ Lowered focus on Customer value – Flashy tech innovations &
order system D2C warehouses Use last mile acquiring customers with low average basket size are adding less value
Integrate new to improve timing delivery for new
channels Create flexible opportunities ➢ Investments – Large, Fragmented and Unclear sequenced investments
Ensure Inventory return policy Optimization of destroys value
consistency across Ensure Real-time nodes and ➢ Inventory - Real-time inventory state is a challenge
channels Inventory tracking partnerships
Source: 1.Deloitte-FMCG reboot; 2 McKinsey Retail & Consumer Goods Report; 3.McKinsey-Path to Value; 4. McKinsey-Into the fast lane
© Management Development Institute, Gurgaon | 2021 - 2022 5
Sustainability in FMCG
Startup efforts towards sustainability Legacy companies contributing towards sustainability

Flexi-Hex ➢ Environmentally-sustainable packaging Personal Care

-January 2018 launch ➢ Adaptable, plastic-free solutions
-For surf and snow ➢ L’Oreal has come up with building dry factories with a closed-
boards, initially ➢ Patented honeycomb design is made loop water system, using energy efficiently
from recycled paper
➢ Body Shop sources its plastic through a partnership with Plastics
Aims to remove plastic from packaging industry and for Change, who recycle plastic waste and use it for making
raise awareness of the threat that plastics pose to the shampoo & conditioner bottles
world’s oceans
➢ Procter & Gamble to launch refillable aluminium bottles for its 4
Vegshelf ➢ Digital B2B platform connecting hair care brands, reducing their overall consumption of virgin
-Need identified when vegan brands to stores, supermarkets plastics
founders go vegan ➢ Exposure, direct access to buyers
-Launched in 2018 Food & Beverages
➢ Shortens the sales cycle
➢ Kitkat will become a carbon neutral brand by 2025, claims
Aims to cater to the 70% world population that is reducing Nestle
meat consumption and hunting for cruelty-free brands on
Instagram. ➢ Swiggy has partnered with InfinityBox to provide optional
reusable containers, which can be dropped in a smart bin or
collected by an executive after use
My EcoWorld Stealth GIBIE
Company ➢ Unilever commits to cut factory-to-shelf food waste by upcycling
Sells eco- Bed & bath ice-cream i.e. re-melting ice cream lost in production
friendly coffee Replacing wet- linen reviving
Worth a wipes, bidets. 5000 y.o.
cups & ➢ Starbucks ‘Green’ stores with purchasing cabinetry made of
follow Stop flushing Ayurvedic
shampoo bars 90% post industrial materials, and low-flow water valves
forests dyeing practice

Source: 1. Vegshelf website 2.Flexi-Hex website

© Management Development Institute, Gurgaon | 2021 - 2022 6
All the very best!

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