Indiaâs economic outlook looks bleak in the current fiscal as there has been a major slowdown across categories. But one segment thatâs racing past every expectation when it comes to recovery is the FMCG category.
According to the countryâs top brands, they are experiencing growth from both rural and urban segments and it is likely to continue as long as people remain indoors.
For some brands, sales are almost as high as it was around the same time last year and in some categories, there has been a double-digit growth.Â
The companies, however, are not loosening their purse strings when it comes to advertising as they want to operate at the minimum cost given the uncertain future outlook.
Since March, TV advertising has been almost at 50-60% of the pre-pandemic level, whereas for print, outdoor and radio, it has been between 20% and 30%. In the current year, the overall adex was expected to be around Rs 80,000 crore. Experts now fear that it could be as low as Rs 60,000 crore or less.
Brands experiencing rural and non-metro resurgence
âThe recovery rate for the months of April, May and June looks positive. In the month of June, we finally touched 100% of last yearâs base for the same month, with some of our brands clocking double-digit growth rate. Some states are showing a positive growth rate as well. We continue to be optimistic and hope that over the next few weeks, markets will open up and we will have additional or possibly all our states going into a positive growth rate trend,â said Nadia Chauhan, JMD and CMO, Parle Agro. Chauhan said both the urban and rural markets are rebounding well.
In terms of its advertising budget in the short term, considering the current scenario and the way things are at this point of time, the company is refraining from any mass media communication.
Chauhan said all of its communication is primarily driven through digital and focused more on social messaging.Â
Parle Products too has seen a significant increase in demand across urban and rural markets in this quarter of the calendar year.
Krishnarao Buddha. Sr. Category Head, Marketing, Parle Products, said that the recovery rate for the FMCG sector in this quarter of April, May and June is significantly higher, as opposed to certain other sectors and industries.
âIt is not like the whole FMCG has done extremely well. But in certain categories, including packaged foods or beverages, immunity products, staples and snacks, there has been a terrific rise in overall consumption since people have been shut inside. Thus, an overall significant rise to the whole sector,â he said.
For Cornitos, the major drivers for the demand are metros and tier-1 markets, Vikram Agarwal, Managing Director, Cornitos, said.Â Â
In case of the dairy products, R.S. Sodhi, Managing Director, GCMMF (that runs Amul), said that there has never been an impact in the category due to the pandemic.Â
In fact, the sales were higher due to the imposed lockdown. However, commodity-based products such as ice-cream have suffered, he said.
He added, âWe had good demand from the metro cities. But overall, if we look at the areas that have high containment zones, sales slightly have decreased in those areas. Rural demand, and demand in tier two or three, has picked up good and at the same time the frequency of buying has decreased in metros.â
Amul is keeping its major focus on digital and then news channels for the consumers in metros and vernacular press and local GECs for the rural audiences.
Smaller towns and rural areas are now operating at almost normal levels. Being operated under lockdown and containment zones, brands in urban cities are running on innovation and doorstep deliveries and thus able to sustain a good demand.
However, if compared, Chauhan believes that rural is going to perhaps coming back a lot faster and, in fact, has not been impacted as much as urban.
âSmaller towns are definitely opening up a lot faster. They are operating at a stronger pace and based on our current observations, we believe rural markets will come back stronger. Urban has been hit and impacted significantly and it will be a while before urban markets come back to normalcy. However, with more number of stores opening and longer working hours of stores, we are already seeing a huge shift even in urban markets,â she added.
Even Rao believes that this demand and impact will be sustained at least till September. And after that, it will all be the function of monsoon, outbreak-related vaccine, economic sentiments, and global developments.Â
But with the changes observed over the past four months, Parle Products has altered its focus from TV to digital.
Rao said the budget will remain as it is or comparatively lower because in most cases, the demand is far outstripping the supply.
âAdvertising could be actually lower. Keeping it as minimal as possible,â he said.
With more buying power in non-metro cities, and present opportunity available in rural markets, brands agreed that every marketer and media planner ought to have a balanced approach in terms of tapping these needs.