Euromonitor Predicts Challenging Times Ahead for FMCG
Although amongst the last few countries globally to have been infected by COVID-19, the Indian government’s announcement on 24 March 2020 to lockdown 1.3 billion Indians in the second-most populous country for a period of over two months, led to the shutdown of factories, crippled the supply chain, and made around 278 million sq m of retail space redundant.
This comes on the back of the worst economic slowdown in a decade that the government was trying to revive prior to the COVID-19 outbreak. Euromonitor International predicts that Indian real GDP could dip into negative territory in 2020 depending on the severity of the COVID-19 crisis.
Beauty and Personal Care: Focus on Personal Hygiene While Beauty Takes a Backseat
Growing awareness of maintaining high hygiene standards to prevent the spread of COVID-19 resulted in a spike in demand for personal care products, especially bar soap, liquid handwash and sanitisers, during March 2020. These categories accounted for 22% of overall value sales of beauty and personal care in India in 2019. As consumer priorities shift to focus on purchasing necessities, discretionary spending on beauty and personal care categories such as colour cosmetics, fragrances, deodorants and skincare are expected to witness a fall in demand in the short term.
Established and start-up brands have deferred their product launches, especially for discretionary spending products, until the situation returns to normal. Multinationals such as Hindustan Unilever, ITC and Godrej Consumer Products have suspended the manufacturing of most product lines and enhanced the production of necessities, including hygiene products, to ensure there are no supply constraints. These companies are also working closely with the Indian government to provide price cuts for liquid soap, hand sanitisers and bar soap to ensure higher access and affordability.
Home Care: Home Hygiene Points to a More Permanent Shift in Consumer Behaviour
Consistent efforts to increase awareness of washing hands and disinfecting surfaces has resulted in consumers overstocking these products, leading to stock outages in the short run while benefitting these categories in the long run with supply chain recovery. Floor cleaners and toilet cleaners were some of the few categories that exhibited stronger growth compared to the pre-COVID-19 period, on the back of stockpiling and frequent purchasing, including from first-time consumers. These categories will likely continue to witness higher usage post-COVID-19 on the back of habit persistence, accelerating home care growth in the world’s fifth-largest home care market (2019).
Consumer Health: Preventative Healthcare Remedies Will Gain in the Long Term
The COVID-19 outbreak resulted in a surge in demand for consumer health products, especially cough, cold and allergy (hay fever) remedies, as consumers anticipated possible supply shortages in the short term.
The pandemic has resulted in a change in consumer lifestyles, with an increased focus on preventive healthcare remedies. There has been a surge in demand for immunity-positioned supplements, including Ayurvedic medicines and products, as consumers pursue different ways to combat the virus.
Established Ayurvedic companies, such as Dabur India, Himalaya Wellness and Patanjali Ayurved, are witnessing high demand for products like Chyawanprash, Guduchi and Giloy tablets, Septilin and other immunity syrups. In addition to traditional Indian medicine, other immunity-improvement products, such as vitamin C, fish oils, multivitamins and mineral supplements, will likely see a sales boost as consumer priorities shift to a complete focus on inner wellbeing.