What challenges will this industry face this year?
Varshney: FMCG industry has always faced revenue related challenges. Managing availability in the complex distribution set up and dealing with complex tax structures act as obstacles for this sector. An efficient FMCG business requires the support of high-quality infrastructure, which includes good highway networks, well-constructed interstate roads, and proper facilities for warehousing in rural areas. Therefore, given the challenging business environment, the government should support the sector to fuel the growth.
Rao: The paradigm shift in the industry is definitely creating a lot challenges for the FMCG players. Intensified competition, rural slowdown, consumer awareness, lack of infrastructure, and regulatory issues are the major issues for the sector. As the sector is fairly unorganised, the players face competition from local companies which benefit on account of local presence, exemption of excise duty, focused product lines and minimal expenditure on marketing.
Kotha: As the FMCG market in India is fairly unorganised, the local firms can manage to compete with big players on the basis of their local presence. However, shrinking margins, sustainability, having an effective supply chain management and managing your brand portfolio always have been the concerns of an FMCG player.
How does the future of Indian FMCG industry look like?
Varshney: The rising of disposable incomes, growing population and awareness, and consumption-driven society, are transforming the face of the sector. We are aiming to set up our own mega marts across cities to exclusively sell Patanjali products. We also have plans to expand to tap further revenues across geographies.
Rao: Although it was a roller coaster ride, this industry is expected to grow significantly in the coming years. Increased focus on the rural section will boost the incomes, which in turn will provide better growth prospects to FMCG companies. Also, better infrastructure facilities will improve their supply chain. If FMCG players are able to grow awareness among their customers, they would be able to generate higher growth in the near future.
Kotha: Implementing big data in FMCG industry has helped the players a lot to understand the customer behavior. Mobility and online services are also becoming increasingly dominant in the sector. The smaller towns and cities of our country can also contribute in shaping future demand for the sector. FMCG companies require building capabilities in digital marketing and new emerging channels like e-commerce to thrive in the business.
Source: CIO India
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