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Opportunities For Optimization In FMCG Industry

The FMCG industry has paved the way for commercial sectors by ranking one of the highest in India, grossing an estimated US$ 103.7 billion in 2020. This is expected to grow to US$ 240 billion by 2025 as affluence continues to spread to the semi urban tier II and III cities.

As the world is changing, so is the consumer brand market at an even faster rate than ever before with available resources. This blog unravels - What Opportunities can the FMCG industry opt for Optimization by leveraging new ways of business.

1. Stronger Engagement - Digital Consumers

The entire Fast Moving Consumer Goods Industry is seeing an unprecedented boom in rural India which covers a market size bigger than most nations combined. The undoubted working economy and expansion of infrastructure has paid heed to this growth. We cannot overlook the market potential which has been extended by omnipresent Digital presence and emergence of E-commerce.

Moreover, the Indian subcontinent continues its foray into the digital ecosystem with FMCG brands following suit. The main goal of Optimization is building stronger engagement with digitally connected customers.

 

2. Faster Connection - Digital Inventory System

The FMCG sector and its inventory systems back from the brick-and-mortar stages of industry growth are now rapidly declining. However, the connection time is halved by more than 90% due to modern modes of faster management systems. An online setup helps transition more sales and better results signifying uncatered benefits for the FMCG industry. 

It also eliminates parallels with facing roadblocks in efficiency and distribution chains. Many inventories now have distributors who deploy their operations through platforms such as the Distributor Management Systems (DMS) to enable effective streamlined operations.

And that is part of the major reason why India is experiencing such extraordinary demand and supply growth in the FMCG industry. As the traditional channels of one entity marketplace have all been scraped to usher in the new integrated entity with multiple marketplaces under a holistic system.

Digitization has helped optimize these platforms, stacking operations greatly on standalone capacity.

 

3. Better Workflow - Redefining Market Models

Market Models are derived on the basis of the market expansion by the industry. Amongst all commercial sectors, the FMCG industry stands out in its territory of Market coverage area. Optimizing these markets and territories allows the brands to raise up gaining benefits from redefining preconceived notions of outdated modus operandi.

    Improved Productivity

FMCG companies need to avoid failure in their sales targets which roots from old and depleted strategies or models of channel distribution.

The sales team and employee workforce need strong drivers of efficiency to optimize productivity. If not for this, there can be failure to utilize and complete overall productivity.

Market models like Modern trade channels elevate the proliferation of supply to demand requirements in a viable and concise manner. This improves productivity levels in employee departments too.

4. Business Upscale - Decoding Demand

As India is diverse in so many aspects spanning across the length and breadth of the country are various terrains, languages, people, geographies, climate, customs, traditions, festivals and so on and so forth.

 

To upscale your FMCG brand in the industry, it's of significant relevance to decode the demand of ever-changing customers. The best way to gauge this information is to ask the question How is the person consuming, and thereby turning into a full-fledged consumer for a FMCG product.

Before any of the questioning, there is a need to decode the context in which the consumer is.

For example, The Pandemic had grave implications for the aviation sector - But it had 100% turn over in volumes for FMCG products like daily essentials. Malls, shops, online portals and even local kinnaras boomed in business with sold out stock every week. Tissue paper, liquid soaps, sanitizers, disinfectants, honey, herbal products and natural healing & immunity generating FMCG products were in hot demand.

The background of Where, What and Why of the consumer knowledge helps in optimizing the eventual forecasting of demand smoothly.

5. Government Incentives

The Government of India has approved 100% FDI in the cash and carry segment and in single-brand retail along with 51% FDI in multi-brand retail.

FMCG industries can take advantage of the Government’s rollout policies in public interest.

The Goods and Services Tax (GST) is highly beneficial in so many ways for the various line extensions in the FMCG space. The taxes like GST, VAT reduce logistics cost down to a minimum. The subsumption of GST invoices has lowered as much as under 18% of the tax bracket. This means now FMCG products such as soap, toothpaste and hair oil will be reduced by more than 2%- 5%. Also, GST on food products and hygiene products have been reduced to 0-5% and 12-18% respectively.

GST Bracket

FMCG Products

Nil

Milk, curd, eggs, unbranded paneer, rice, wheat, oats and fresh vegetables

5%

Branded paneer, honey, frozen vegetables, fried Areca nuts

12%

Butter, Cheese, Ghee and Dry Fruits

GST is changing and revolutionizing logistics for the FMCG industry into an advanced and efficient system as all major FMCG companies, branded and non-branded are restructuring their operations in accordance with vast expansions in warehousing and related facilities.

Updated On Mar 07, 2021