We had to reinvent our approach. We adopted different strategies to service our retailers... Tele-calling was a very big part of what we did, says Nadia Chauhan, Joint MD & chief marketing officer, Parle Agro
NEW DELHI :
For India’s top beverage makers, the sweltering summer accounts for a chunk of sales marked by the launch of new campaigns and products. As the country went into a strict lockdown to contain the spread of the novel coronavirus on 25 March, bringing to halt the movement of people, travel and eating out, beverage companies saw demand shrink overnight. Parle Agro, which sells Frooti and Appy Fizz brand of beverages, says the closure of retail stores, airlines and eateries broke its links with several trade channels. In an interview, Nadia Chauhan, joint managing director and chief marketing officer, Parle Agro, said the company is mending those links and seeking emerging opportunities in ‘in-home’ consumption of its brands. Edited excerpts:
What has the coronavirus-induced nationwide lockdown meant for the FMCG industry reliant on physical network of distributors, wholesalers and consumers being on the ground?
The fast-moving consumer goods (FMCG) business has been so much about touch and feel where consumers pick up stuff on the spot. It is usually driven by impulse as well. Now, when you look at how consumers are operating, purchases are extremely planned and structured. It’s not as much on impulse, it’s not at all on-the-go. It’s more at the moment and in-home.
To a certain extent, it is hard to say whether this will be the new normal. Things could eventually change as life starts going back to normal.
For beverage companies, how was business impacted?
The biggest impact was on on-the-go business. Travel is a big consumption point, but there were no travellers.
Several stores were also shut. FMCG companies distribute to more than 9 million stores across India; the beverage category reaches almost 3.5 million to 4 million stores. In the initial phase of the lockdown, it was challenging to reach even thousands of stores. The entire store universe shrunk overnight.
Out-of-home is a big segment and it has been a washout. For a lot of companies, the eating and dining out segment contributes tremendously to their overall business—it’s expected to continue to be a segment that’s going to be hugely hit in the long term.
In the initial stages of the lockdown, many beverage businesses would have come down to just a single-digit percentage of their total business for that month compared to the previous year. Today, we have recovered quite aggressively.
What did you do to ensure the availability of your products in the market?
We had to reinvent our approach. We adopted a lot of different strategies to service our retailers—tele-calling was a very big part of what we did.
We stayed in touch with every one of our 2 million retailers by calling them, talking to them, taking their orders.
We changed our operating timings—normally the market would open around 10am, we had our deliveries taking place as early as six in the morning. When it started, we were worried. Now, we are optimistic and we hope that we can close the year at maybe 10% growth.
What have the learnings been?
Often, through challenges, a lot of new opportunities arise. The fact that FMCG products are being also consumed a lot more in-home—that has opened up a massive opportunity, especially for the beverage category.
It’s not just the home consumption packs that are going up, but it’s also single-shelf packs that are going inside homes because consumers are maybe having one pack a day.
It’s hard to say how long-term or short-term this change in shopper behaviour will be.
But overall, this reliance on e-commerce—because it’s a lot more convenient—still needs a lot of streamlining. Even consumers who possibly resisted the use of e-commerce have actually started adopting it. It will evolve and grow for many categories.
Have you cut costs?
We have completely held back on the entire advertising side and that itself has led to a substantial cost reduction as we spend about ₹200 crore on advertising during the summer. That’s where we have cut costs mainly. I think by the time we are in the second half of this year, which is the second summer season for the beverage industry—August, September onwards—we would really look at reallocating budgets.
As consumer focus shifts to health, will Parle Agro launch new products in line with the trend?
It’s not something we would be in a position to share at this point of time. All our products, even at the moment, are fruit-based beverage products. Going forward, we will continue to keep building on products that have nutritional value and health benefits.