FMCG firms use last year’s playbook to manage current curbs

FMCGs faced a temporary disruption in the form of supply shock during lockdown last year. However, the situation is much better in current times as companies have learned from last year's playbook and applied themselves better.

The FMCG companies have managed to navigate efficiently, and the impact has been much lesser than what was feared at the beginning of the second COVID-19 wave.

Efficient Supply-Chain Management

The companies have put their learnings from lockdown 1.0 to effective use.

They were better prepared with their supply chain as they increased their investments in automation, warehouse capacities.

The production units continued to work without interruption and supply points were increased in rural and interior areas to achieve better connectivity.

These efforts helped FMCGs to maintain their presence across the shelf, helping to maintain their revenue visibility.

The margins were compromised due to the inflated commodity prices.

However, it was mitigated by a cut in advertising & promotional, and other variable costs.

Trends and Preferences

The absence of panic buying was the major shift that was visible during the second COVID-19 wave. Unlike the severe lockdown of last year, there was no rush to pile up the pantry.

FMCGs operated with a much-improved supply chain.

And home delivery of essentials as well as Kirana services remained uninterrupted. It put customers in a much comfortable position months ago.

The sales of health and immunity products have deteriorated after peaking up sharply when COVID19 had newly burst on the scene.

However, they are still managing to gain healthy traction.

However, products such as chyawanprash, honey, green tea, kadha, etc., continue to remain in good demand.

People have continued prioritizing the purchase of essential items and cutting back on discretionary spending.

The restriction on mobility will continue to impact skincare products and summer portfolios like sunscreen cream, face wash, hair oil, and shampoos.

However, basic products such as soaps, and sanitizers continue to remain on the top priority list.

Teji Mandi (TM Investment Technologies Pvt. Ltd.) is a SEBI registered investment advisor. Information in this article should not be construed as investment advice. Please visitwww.tejimandi.com to know more.