Global to Local
Indian FMCG consumers are ready to pick up local brands post pandemic. But whether we can sustain this growth and build on it, is one big question:
A silent change has been taking place in the Indian consumer market, ever since the pandemic disrupted the supply-chain in a big way. In a very gradual shift that was barely noticeable at the initial stages, consumers in India have started using unbranded (or locally manufactured) products for daily household utility consumption like detergents, floor cleaners, toilet cleaners, etc.– as well as raw food items like edible oil, pulses, flour, and the like. They are unabashedly choosing local names over the established brands; and this is happening irrespective of consumer-profile – urban, semi-urban or rural. As a result,the unbranded segments in generic categories – like household cleaners, for example –are showing a faster growth rate than branded items in the same category.
A pandemic push
It all started when the COVID-induced lockdown cut off the tried and tested supply chain, and stores soon ran out of stocks. It was not the perfect situation for soaps manufactured in Karnataka or detergents produced in Maharashtra to reach places like West Bengal, Assam or Himachal Pradesh – just to name a random few. The mass exodus of migrant labourers involved in packing and hauling of consignments, in a bid to return to their homelands, had rendered the manufacturing hubs limb-less. For the first time, there was no one to push-pull-lift-pack-load-unload goods across the sprawling production facilities of the big brands. And then there was no means of transport, as roads were blocked, vehicles were scarce, and it was impossible for drivers to ply through highways without the ancillary support system by the roadside – eateries, dhabas, and other similar set-ups.
Given the scenario, consumers had to find alternatives when local stores exhausted their pre-COVID stocks of popular brands. After the initial confusion of total lockdown, there came a period when thenet-literate consumers took recourse to the online route. This worked well for some time, especially for metropolitan residents. But even online retails need to stock items physically somewhere – which means they, too, are subjected to the supply-chain grind – although it is not visible to the end consumer. The spectre of lockdown soon reached these facilities, and consumers started to get more-and-more “Out-of-stock” or “Currently unavailable” notifications on the portals of online retailers.
This was where the locality brick-and-mortar grocery stores stepped in as a life-saver. They offered to help desperate customers by suggesting local alternatives. The fact is life must go on!And if you are unable to procure that well-known toilet cleaner in the ever-familiar blue bottle from anywhere, you will be testing out the only available local brand of a different colour and perhapsa silly name. Because none would keep their toilet bowls unclean for an indefinite period and wait for an unforeseen pandemic to conclude,whenthe tried-and-tested toilet cleaner returns to shelves!
The locals came to stay
So, that was roughly how urbanconsumers got introduced to local brands over the last couple of years. But now comes the interesting part. Even after lockdown restrictions eased and the supply-chain gradually normalised, a large segment of the consumers kept using those newly discovered local brands. This decision was clearly motivated by common sense.
Firstly, they discovered that these products worked just as well as the reputed brands – at least in the short term. No one knew the long-term effects yet, but a lot of people were ready to give it a try being initially satisfied.
Secondly, such products were cheaper than big names. This is an obvious advantage that always existed, but a certain segment of urban consumers did not care for it – until now. When they found that the product is usable and economical, many preferred to stick to it for some time more.
Thirdly, the overall socio-economic uncertainty cast by the pandemic and the inflation that followed prompted the average customer to curtail their household bills. This is intricately tied to the economic advantage of local products mentioned above.Most fast-moving consumer goods are items that cannot be done away with – whatever you earn. But someone looking to shrink the household budget can either consume less of the same product, or shift to a cheaper variant. While some would go for the first option, that is tough to sustain and is often not that effective unless enforced with military strictness. Option two is more feasible, and the saving is immediately obvious. Hence, many who would not have otherwise gone for local products, now opted for it to tide over the unstable economy and sudden job cuts.
Local up, Global down – but how long?
We started the discussion with soaps, detergents and toilet cleaners. That is indeed one segment that registered abig shift. Various market analyses reveal that between 2021 and 2022, several unbranded goods categorygrew faster than their branded counterparts.Statistics from the London-baseddata analytics and brand consulting firm Kantar show that especially for toilet cleaners, the unbranded segment spiked by 11% in the year ending April 2022, while the market for branded toilet cleaners declined by 13%. The corresponding figures for floor cleaners display a 5% growth for unbranded against a 3% fall for branded products. However,this loyalty shift has spread to a lot of other items as well –including coffee, edible oils and milk products.For coffee, the unbranded grew at 15% while the branded displayed a much slower growth of 4%. The unbranded edible oils segment grew at 4% against the branded growth of just 1%. Similarly, unbranded butter and cheese grew at 9% compared to an 1% growth in the branded variety. The insight was aptly summed up by K Ramakrishnan, Kantar’s MD – SouthAsiaWorldpanel Division, as he spoke to the Times of India on the survey findings:
“The thin line between branded and unbranded consumption is fascinating. In times of uncertainty, consumers tend to gravitate towards known options – meaning branded.… …In the absence of a large and looming threat, it is usually a price play. There is no household that can be classified as purely branded or purely unbranded. Most households have dual play and their share of unbranded goes up when they feel pressure on their wallets. Inflation is one such. Even beyond inflation, commodities tend to be cyclical in pricing and that has its impact on the choice of the consumer as well.”
Overall, this looks like a positive trend for local manufacturers. However, to sustain this windfall advantage and capitalise upon it, the local brands must ensure quality control to attain competitive advantage. The government, too, need to ensure that adequate infrastructure support and regulations are implemented so that interests are protected for both the consumers and the local manufacturers. Whether doing all these will offset the price advantage that the local goods now enjoy, is one big question, though! But let’s hope for the best.
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