CII hosts National FMCG Summit

Despite news of an economic slowdown, the theme of CII's National FMCG Summit held at the Taj Land's End, Mumbai - was ‘Growth Wapsi: Revving Up FMCG Growth’. India’s FMCG industry is showing signs of revival, according to industry speakers at the Summit. Representatives of various companies also mentioned that several companies have beaten the economic downturn this year. Bellwether companies like Nestle, HUL and a few others showcased their experiences at the summit.

“Since liberalisation, the FMCG sector has made significant contributions to India’s growth story and the sector has persistently maintained robust double-digit growth rates," Bharat Puri, chairman, CII's National Committee on FMCG and managing director, Pidilite Industries said. “However, a recent slowdown that is driven by broader macroeconomic factors coupled with tepid consumer sentiment is noticeably impacting rates,” he said. "The sector as a whole is showing signs of revival. The companies that are doing well are those who have built enduring brands, innovated and those who are looking after our planet," Puri added. He said that FMCG companies like Hindustan Unilever and Nestle as well as a crop of new ‘insurgent’ companies have beaten the slowdown, offering hope and lessons that could help the industry rev up its flagging fortunes.

“Business leaders must quickly pivot to invest in strategies that will engineer getting back to double digit growth through a rapid penetration increase, culminating in serving more consumers more completely,” he said. Puri also stated that the FMCG industry employs close to three million directly and almost 10 million people indirectly. "Sustainability is no longer a ‘nice to do’ thing, but has to be a core objective," he said.

Subsequently, Suresh Narayanan, chairman and managing director of Nestle India, took to the stage and started his speech with a statement - “Growth is an attitude, not a birthright.” He said companies should blame the slowdown on their own mindsets.

“The mindset in my company is ‘leave the GDP worry to economists, our job is to see that growth happens every day,” he said. Recalling Nestle’s Maggi crisis, Narayanan said it helped the company rebuild its fundamentals of purpose, trust and values. He also emphasised the importance of keeping communication relevant to the consumers' interest in order to capture their attention in a space that is typically cluttered with multiple brands.

He called the slackening faced by the industry a 'patch'. “We have not gone underground, yet. While the fundamentals of marketing have not changed, there have been a lot of other changes. National plans have given way to localisation and clusterisation. Communication needs to be relevant and in the local context. This requires hard work, but those who did it well succeeded this year," said Narayanan.

Narayanan pointed to the big changes that have impacted the sector: the rise of millennials, expanding reach of digitisation in India and the proliferation of choices for the consumer. "Consumption trends have changed – it is more experiential, experimental, more health conscious and more socially and environmentally focused," he mentioned.

Nikhil Prasad Ojha, a partner at Bain & Company, said that though growth has slowed down over the last six quarters, the company is now seeing some green shoots. “There is light at the end of the tunnel. We expect the FMCG industry to regain stronger growth sometime in 2020,” he said.

He added that the industry also played a role in the slowdown, pointing to companies that cut down on advertising, innovations and new product launches. "Successful companies like Hindustan Unilever, however, did not cut advertising. Over a 15-year period, HUL reinvested the surplus partly into advertising and sales promotion, while the rest flowed into expanding EBITDA. HUL’s volumes are growing ahead of the category in almost all categories," he mentioned.

Speakers also deliberated on the need for sustainability and commitment to a healthier planet. Nestle, for example, plans to achieve 100 per cent recyclable use of plastic packaging by 2025. The session 'Low Impact High Growth on FMCG and Sustainability' focused on the fact that sustainability is gaining traction among consumers - especially millennials. Speakers agreed that sustainability is steadily gaining traction among consumer brands as a core value and brands need to chart a more sustainable path while staying true to their shareholders, by giving consumers the experience.

Industry stalwarts also discussed how they need to collaborate with the government to work towards sustainability, individually and collectively. Deepak Iyer, president – India, Mondelez, said “One thing that I would like to say about sustainability as per my philosophy is that chasing sustainability goals has never been in conflict with chasing profit goals. That is one big thing that can bring sustainability to the centre of the strategy.”