Home / Companies / Start-ups /  Consumer startups see a surge in sales as bigger peers struggle

Consumer startups in the packaged goods, personal care and essentials segments witnessed a surge in sales and new customers during the nationwide lockdown as bigger peers struggled to meet demand.

Startup founders and investors in the fast-moving consumer goods (FMCG) and consumer packaged goods space said brands such as iD Fresh Food, Sleepy Owl, Beardo and Keeros increased their customer base via both offline and online channels, as consumers were left with fewer choices. Smaller brands also ramped up their distribution in places where they saw consistent demand.

The curbs on interstate movement of goods had initially hit supply chains of FMCG majors, but many emerging brands resorted to localized selling and rationalized their supply chain to reach consumers faster.

P.C. Musthafa, chief executive and co-founder of fresh foods startup iDFresh, said its revenue increased by 20% month-on-month in April. “In the first week of lockdown we cut down production of some of the non-essential products such as iDVada (vada batter) even though they were profitable. Instead, we started expanding distributions in places that had minimal safety risks for employees. (Out of 12), we ramped up production of five essential products, including idli and dosa batter, and ready-to-make chapattis."

Many startups, especially in the packaged goods space, also decided to ramp up raw material procurement long before the lockdown was announced. This strategy helped beverage brands like Sleepy Owl meet the uptick in demand.

Sleepy Owl co-founder Ajai Thandi said the company had started stocking raw material from its coffee-based beverage product in mid-February and cut down heavily on marketing promotions. Demand for the products had soared during the lockdown across both offline and online channels, he added.

“By February, we came to a conclusion that covid-19 would soon impact every company, and started ramping up raw material procurement and back-end supply chain operations. We cut down on promotional deals with two big retailers and, instead, used this capital to ramp up supply."

“With supply chains disrupted and logistic channels out of sync, consumers were buying any brand as their preferred choice was not available. So, any brand that could supply products at local stores were able to capture market share," said Deepak I. Shahdadpuri, co-founder and managing partner at DSG Consumer Partners.

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