THE 7 QUAKES SHAKING UP FMCG FIRMS

The comfortable margins that fast-moving consumer goods companies once reaped are under stress. All players in this $200-bn market in India need to adjust to the changed field

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IN many ways, the fast-moving consumer goods or FMCG company is the defining foundational business that typifies early corporate India. The FMCG category-represented by the cake of soap you use, the skin cream that takes care of you through the winter months, and your favourite brand of teais something we have learnt to live with (and struggle without) over the decades.

The brand at one end and the consumer at the other have been friends with benefits.

Equal benefits even. Well, nearly.

As I tap this piece onto my desktop, my fingers quake with anticipation of the times ahead, even as this entire category is really at a crossroads today. The FMCG category represents a size of $200 billion in India as of today. The biggest companies in the FMCG space are, however, experiencing a unique quake. Topline growth is rather static, price lines are under stress, premiums are being challenged by the consumer at the retail points, and the rather comfortable margins these companies were used to reaping (and in some cases repatriating) are under acute stress.

The good and big companies in this space already started tweaking their business models some two years ago. The relatively braver and philosophically stoic companies are hoping the environment of business will change and they get their lost shares and margins back.

And the smallest of them are in a state of confusion. All of them out there do, however, realise that it's not business as usual. Something big is amiss.

What's happening in FMCG-dom is a bit of an earthquake, a pandemic and a tsunami, all rolled into one.

Let me call it a 'PanTsuQuake'. A tectonic shift of many kinds on many fronts. The trend-lines of each of these have been shaped over the last four years, ever since the Covid era gave way to a new era of consumption and consumptive behaviour all over again. Let me list the big seven.