LEARNINGS FROM 2020: FMCGS HAVE LOCKDOWN-PROOF PLANS

Focus on fewer brands, smaller packs; inventory to be moved closer to target markets

Fast-moving consumer goods (FMCG) companies have put in place new production and distribution plans to help them ride out the 15-day Maharashtra lockdown. These include focus on fewer brands, smaller packs, and creating buffer stocks to minimise disruption.

Fast-moving consumer goods (FMCG) companies have put in place new production and distribution plans to help them ride out the 15-day Maharashtra lockdown.

These include focus on fewer brands, smaller packs, and creating buffer stocks to minimise disruption.

Distribution plans also include moving inventory closer to consumption markets to reduce time required for movement of goods from factory gate to dealers. Companies are building up inventory at warehouses and trimming replenishment cycles by half.

"We have pushed at least four to five days of inventory into the distribution pipeline, so that there is no shortage at the retail end. The idea is to ensure distributors are sufficiently stocked to last the 15-day period. If the lockdown is extended, we still don't see foresee a problem," said Mohit Malhotra, chief executive officer (CEO), Dabur India.

Last year, companies had suspended production for a few days because of their lack of preparedness ahead of the nationwide lockdown.

Sunil Kataria, CEO, India and SAARC, Godrej Consumer Products, said, "With inventory distributed across our warehouses, we will be able to service trade requirements quickly."

The Maharashtra government hopes to break the chain of virus transmission in a fortnight, with stricter curbs on the movement of goods, services, and people. All non-essential movement has been curtailed for a fortnight, and people have been encouraged to stay indoors.

"Food falls in the essential category. We have been allowed to operate our plants with 50-per cent cap on labour. However, to minimise supply-chain constraints, the focus will be on smaller packs and on brands that are popular," said Mayank Shah, senior category head, Parle Products.

Popular brands of Parle Products include Parle-g, Marie, Monaco, Krackjack, and Hide & Seek cookies.

While the lockdown in Maharashtra begins from Wednesday evening, the impact will be felt from Thursday onwards, said sector experts.

Maharashtra accounts for 1015 per cent of an FMCG company's sales and is easily among the top consumption and production markets in the country.

This year, companies say they are prioritising their requirements carefully, working out plans to extend the credit period to distributors if required, and increasing incentives to frontline salesforce that is pushing their products into the marketplace.

“In a pandemic, the attention of consumers is on essentials. We are, therefore, focusing on segments such as cheese, butter, dahi, dairy whitener, and ghee, apart from milk,” said R S Sodhi, managing director (MD) of Gujarat Co-operative Milk Marketing Federation, the maker of Amul.