The CEO and business head of CavinKare discusses the new distribution game in the face of the Coronavirus pandemic.
For the CEO of an FMCG company, these are challenging times. Due to the Coronavirus pandemic, there are restrictions on the production and movement of goods from state to state. Then there is the omnipresent issue of availability at the retail level. To understand these challenges better, afaqs! spoke to Venkatesh Vijayaraghavan, CEO and business head of CavinKare.
Vijayaraghavan has nearly two decades of work experience. He was appointed CavinKare’s CEO and business head in 2018. Prior to that, he had a stint with Airtel as CEO, which lasted nearly 15 years. He has also worked with Reliance Industries in the past. He opens up about the challenges that the pandemic has brought, in the latest edition of ‘Distribution Diaries’.
Here are the edited excerpts from the conversation:
How have you been ensuring that the products are reaching the consumers? How did you ensure the ‘smoothness’ of the distribution process?
The lockdown happened in two main phases. In the first phase, only ‘essential’ products could be delivered. To begin with, we began ensuring supply of our hygiene-related products – namely sanitisers and hand wash, which come under the ‘essential’ category. That helped us continue to keep our factories running, and the supply chain going.
We’ve been running the supply chain at 60 per cent efficiency. Yes, we’ve been having issues with transportation, but in the last 70-75 days, we have been able to ensure the delivery of our ‘essential’ category products.
Given that sanitisers have been classified as an ‘essential’, we’re authorised to operate. We started off with around 60 per cent operational capacity of the distribution chain, and now that’s at around 90-95 per cent. The lockdown has also enabled virtual sales for us. Our sales managers call up retailers to find out if they need stock, and then get it delivered.
As the government relaxed lockdown norms, we have been able to supply shampoos, hair colours, and other products, too. We’re still facing challenges when it comes to last mile transportation, but we are in the process of figuring that out as well. We’ve streamlined our supply chain to ensure availability of goods across channels, including e-commerce, general retail, and modern trade.
Modern trade channels are still a problem because they have not opened yet, so a lot of consumption is moving towards e-commerce, and general trade. Next door ‘kirana’ stores have never been more important in the supply chain since the last 2-3 years.
As a consumer, I’ve started leaning towards the next door ‘kirana’ store, and the society’s supermarket much more than I would have in the past. That trend is here to stay.
"As the government relaxed lockdown norms, we have been able to supply shampoos, hair colours and other products. We’re still facing challenges when it comes to last mile transportation but we are in the process of figuring that out as well now."Venkatesh Vijayaraghavan, CEO - CavinKare
Do you think distribution is going to be more important than advertising, as India ‘unlocks’ its economy?
There are three main cogs in this wheel, going forward:
1. Ability to supply: The demand is something that is dependent on the economy. The lockdown has had an impact on the demand, and it will pick up over a period of time. But right now, some categories will do well, and others will struggle.
2. The key to a company’s success now is to have a streamlined manufacturing process to ensure that goods are available in the supply chain.
3. The third is the distribution chain itself, which is of paramount importance. While brands continue to be important, in today’s scenario, it’s about reaching the market fast. And also producing and supplying the required products that consumers are demanding.
Our focus is equally on manufacturing and keeping the supply chain going, as it is on distribution.
"Modern trade channels are still a problem because they’re not open yet, so a lot of consumption is moving towards e-commerce and general trade. Next door kirana stores have never been more important in the supply chain since the last 2-3 years."
What are the biggest distribution-related learnings that have come in these last 3 months?
Don’t take things for granted. As an organisation, we’ve always tried to ensure that we have a channel-wide focus. This means that general trade, modern trade, e-commerce, etc., are all equally important as other digital distribution channels.
However, this lockdown has thrown the spotlight back on the general trade as well as the neighbourhood ‘kirana’ stores. At the end of the day, the neighbourhood stores are becoming a crucial part of the distribution chain today. Any company that manages this chain of distribution well, will be a happening one, in terms of demand.
The biggest learning I’d take away from this is that each channel is equally important. It might vary from time to time. But at the end of the day, having a robust system that reaches out to ‘kirana’ stores, modern trade stores, and e-commerce platforms is equally important. As an organisation, we’ve become conscious of this fact, and we’re balancing the different channels now to distribute equally on all of them.
Consumer sentiment is pretty low right now. How has the change in consumer thinking affected your business?
There is, indeed, a lot of changes in the way consumers behave, from the perspective of consumption. Fortunately for us, we are in a category where consumer behaviour continues to be robust, as in the case of ‘essential’ items.
At a larger level, the bigger message that’s coming out is that consumers are looking for ‘value for money’. Therefore, whether you’re a brand, or a company, it’s an evergreen proposition that you should look at. In these times, it’s important that we give consumers what they want in prices that they can afford. Affordability is also an important proposition right now.
During this period, ‘value for money’ is more important to consumers than ever. That’s why some of our new products – whether it’s the ‘veg wash’ that we’re pushing, or the sanitisers that we’ve recently introduced – are in the sachet format. The core objective is to create a strong presence in the sachet segment.
While other companies are introducing ‘veg wash’ in bottles, we made an effort to introduce this product in the sachet space. The two main reasons for that – one is affordability, and the other is that every household in this country needs vegetables to be washed in order to stay healthy.
That’s why affordability is an important factor in this product (segment). And, that’s why we brought it out in the sachet format at a nominal rate. It also ‘democratises’ the product – so more households can afford and consume it. ‘Value for money’ is more pronounced and, hence, is important from a consumer perspective.
Consumers have also become more discerning since discretionary spends are getting reduced. Therefore, it’s more important for brands to be relevant in the portfolio of what consumers want today.
What are the changes you’ve had to make to the supply chain since the lockdown began?
Safety is a priority for us. That’s why even though manufacturing and supply chain is in place, we’ve taken precautions to ensure that there are no incidences of the Coronavirus within our working spaces. Both at the manufacturing and supply level.
The severity of the lockdown is different in different parts of the country. So, the supply chain is becoming very dynamic, when it comes to planning and ensuring that product supplies reach different parts. The way operations have to be handled is also far more dynamic, as compared to any other situation.
What was done as a fixed process before, is undergoing changes and becoming more dynamic and adaptable, given the circumstances. There are challenges at the ground level, considering the fact that some states are still under lockdown, whereas others are easing restrictions.