CII organized the National FMCG Summit 2015 “Re-Imagining FMCG in India” today at New Delhi. Summit Chairman,Mr D Shivakumar, Chairman, CII National Committee on FMCG 2015-16 & Chairman and CEO, PepsiCo India said,“The FMCG industry has always been bedrock of talent to all other industries. It is one of the largest sectors in India and is a largely a Make-in-India industry. FMCG has to be re-imagined for a future world, owing to the varied changes and opportunities seen in this sector. The CII National FMCG summit is a great platform for people to listen to thought leaders in the FMCG sector. We have nearly two dozen CEOs and stalwarts addressing the event.”
Mr Abheek Singhi, Senior Partner and Director, The Boston Consulting Group, India addressing the Inaugural Session of the Summit said “The growth opportunity is massive, yet, the shape of this opportunity would be very different in the future. We expect greater premiumization, tier 2-4 towns to be the drivers of growth. The impact of digital would be profound: By 2020, > 150 Mn consumers are expected to be digitally influenced in FMCG and these digital consumers alone would spend ~ 40 USD Bn on FMCG categories.As a country, India is witnessing unprecedented times. Over the next decade, India is expected to see a 70% increase in income levels leading to the emergence of a new middle class, urbanization and emergence of new cities. We will reap the benefits of a large, young population adding (~100 Mn) to the workforce. These consumers, however, would be more evolved and discerning in their choices. The combined effects of these demographic shifts with the emergence of new channels like e-commerce, proliferation of the internet connectivity (~600 Mn users by 2020) and consumption of digital media, will reshape the FMCG sector.”
Against this backdrop the CII -BCG Report “Re-Imagining FMCG in India” assesses the impact of these trends and imperatives for FMCG companies to win in this emerging landscape. The event saw senior executives across FMCG companies come together to reflect on how they need to reorient themselves.
The thought leaders in the sector shared their perspectives on four key priorities (a) Reinvigorating the innovation engine (b) Engaging with the digitally connected consumer, (c) Reimagining distribution and (d) building people and talent capabilities to be ready for the future.
The CII-BCG Report “Re-Imagining FMCG in India” suggests that that households with > 10 Lacs of annual income would account for ~ 50% of the spend in the category. This would lead to premiumization across categories – from unbranded to branded and “luxuriating” of products. The CII -BCG Report “Re-Imagining FMCG in India” introduces an approach called the “demand centric growth” that helps, companies demystify the consumer decision making process .i.e. understand how and why consumers make choices. The report suggests that biggest determinants of choice are not demographics but needs of the consumer in a given context – that is, where the consumer is, who she is with, what she is doing and hence what she needs when using the product. The same consumer behaves very differently in different contexts and makes very different choices. FMCG companies would need to get superior insights that will allow them to develop superior portfolio strategy and reignite growth.
There is a lot of excitement about digital today. It is attracting a lot of PE/ VC capital and new business models continue to evolve. However, most FMCG companies are unclear on the opportunity and the stance to take. The CII BCG FMCG report “Re-Imagining FMCG in India” estimates that by 2020, > 150 Mn consumers would be digitally influenced in FMCG .i.e. their decision making process would be influenced by digital. These consumes would spend > 45 Bn on FMCG categories. In this context, FMCG companies would need to examine how they can use digital to disrupt the way they do business. Companies would need to build capabilities in digital marketing – be targeted in reaching our many segments vs buying mass media. Companies would also need to push for greater clarity on the role of new emerging channels e.g. e-commerce would play for them and how should they engage with these new channels without conflicting their brick and mortar partners.
FMCG has been historically a talent base which has been a great talent pool for new age companies & startups today. The sector would need to strengthen and communicate its value proposition to retain and grow the millennials who have joined them.
The opportunity size is massive but the change in shape of the opportunity would be profound. It will, therefore, become imperative for consumer companies to fundamentally transform themselves in this environment – and that requires not minor tinkering in their way of working – but about Fundamentally Re-imagining FMCG.
Addressing and participating in the Sessions at the Summit on ? Reinvigorating innovation – unlocking the power of demand occasions ? Special Session : Challenges to the Brand ? Winning the digitally connected consumer ? Reimagining distribution and Winning organizations ? Building people and talent capabilities will be Ajoy Misra, Tata Global Beverages Limited; B Sumant, ITC Limited; Chandramouli Venkatesan, Mondelez India Foods Private Limited; Damodar Mall, Reliance Retail; Hari Menon, Bigbasket.com; Nimisha Jain, The Boston Consulting Group; Punit Misra, Hindustan Unilever Limited; Prashant Singh, Nielsen India Private Limited; Rama Bijapurkar & Rajesh Shukla, People Research for India's Consumer Economy; Rakshit Hargave, Nivea India; Sandeep Bhushan, Facebook India; Suresh Narayanan, Nestle India; Sandeep Kaul, ITC Limited; Sonny Iqbal, Egon Zehnder; Tarun Rai, J Walter Thompson South Asia ; Vinay Singh Kushwaha, Britannia; Vipul Prakash, PepsiCo India; Jasjit Sethi, TCI Supply Chain Solutions; Saugata Mitra, Mother Dairy Fruit & Vegetables.
Rakshit Hargave, Managing Director, Nivea India
“In the next decade, the ease of dissemination of awareness and the rise of generation Z will create opportunities for FMCG companies to develop several MINI SEGMENTS, which will require speed, ability to think and act ahead of the curve. Some of these MINI SEGMENTS can develop into large categories by themselves.”
Suresh Narayanan, Chairman and Managing Director, Nestle India Limited
“In India, the single most important challenge will be the multiple usage of channels by shoppers and consumers. E- commerce platforms will jostle for share of wallet traditionally going to Unorganised Trade and the Organised trade banners. This will define portfolio, shopper insights, occasion, pricing, and emerging niche opportunities for Marketeers.”
Hari Menon, Co-founder and Chief Executive Officer, Bigbasket.com
“The one trend that would shape and impact the future of FMCG companies is their ability to adapt to the digital world. The next decade will see digital technologies ruling consumer behaviour. The next gen will live their lives "digitally". Apps, social media, advanced messaging, analytics/big data will rule. It's critical for FMCG companies to build capability in this space ... starting now !”
B Sumant, Divisional Chief Executive, Trade Marketing and Distribution, ITC Limited
“The e commerce revolution is going to have far reaching implications for business as we know it. The FMCG industry will have to rethink the design of the current jobs and fundamentally redesign tasks and roles to make them attractive by investing in digital to both remove mundane physical tasks and improve the effectiveness of its workforce.”
21 December 2015
New Delhi