Smaller FMCG brands gain share during coronavirus panic buying & lockdown

Kolkata/Mumbai: Smaller and regional consumer goods products have been outpacing larger market leader brands in sales in nearly a dozen key categories as consumers pick availability on shelves over loyalty, say top retailers and companies.

As per Nielsen, share of top three brands in hand sanitiser dropped from 85% in January and February to 39% in March after 152 new players entered the segment. In packaged rice in modern trade, top three brands cumulatively lost their share from 72% in February to 64% in March.

Similarly, about 65% of the consumers have tried new or alternate brands, of which nearly 10% intend to not switch back, according to a latest McKinsey study.

Shifts are happening in atta, pulses, spices and edible oil with local brands and some who are able to supply gaining share as their supply chains have a fair degree of flexibility, said More Retail deputy MD Mohit Kampani.

Most companies have been seeing issues in supply chain from procuring raw materials to manufacturing products. However, the biggest challenge still remains last mile delivery due to shortage of labour.

“Brands that have done better planning in supply chain are able to get share and an opportunity for sampling. Simply put, products that are on shelves will sell instead of brands that may be heavily advertised but are not available,” said Devendra Chawla, managing director of Spencer’s Retail and Nature’s Basket.

Local and regional players have smaller production units that are also located in the vicinity of marketplace, which saves both time and processes from inter-state transportation. Consumers bought the popular brands in early days of panic buying and then settled for whatever was available in stores.

“Big brands are not as nimble as smaller ones, which are adapting to the challenges with quicker turnaround. We see local products and our private labels outperforming larger brands, and many of our customers may not go back to these brands at all if they see value,” said Arvind Mediratta, managing director at Metro Cash & Carry India that has over 3 million members including kirana stores.

Experts also feel a set of consumers could also get habituated with lower priced brands, which could pose an issue for bigger national brands even in the long term.

“We have seen a shift in consumer behaviour as the current situation is leading to automatic trials for lesser known brands,” e-grocer Grofers CEO Albinder Dhindsa said.

While market leaders and large brands have lost 15% to 20% share since the lockdown, most retailers and e-grocers have seen a surge in their private label consumption.

Branded products account for less than 10% of the overall consumption of staples such as dairy, rice and wheat. In segments such as tea, smaller players and loose tea operators control 40% of the market, some operating in just one region or district.