Restrictions in some states on timings of stores selling essential goods has narrowed the window for their delivery in these markets, eventually impacting the availability of some products, said makers of fast-moving consumer goods (FMCGs) and their distributors
Restrictions in some states on timings of stores selling essential goods has narrowed the window for their delivery in these markets, eventually impacting the availability of some products, said makers of fast-moving consumer goods (FMCGs) and their distributors.
Maharashtra, which has extended till 15 May the lockdown imposed to battle the second wave of the pandemic, is allowing shops selling essential goods to open only between 7am and 11am. Karnataka has permitted stores selling food, grocery, fruits, and vegetables, to function from 6am to 10am, while such shops in Odisha will be open from 6am till noon on weekdays. Rajasthan has restricted the opening of stores selling essential goods to just five hours on weekdays, with exceptions on weekends.
“The weakness we are seeing is not in offtake or consumption. It is more the supply chain disruption because each state is going for a sequential lockdown. The grocery store opening hours are limited and this has led to supply chain issues," said Saugata Gupta, managing director and chief executive officer (CEO), Marico Ltd, in a post earnings call last week.
“Also, some of the distributors are not well. So, these are just some supply chain disruptions. We don’t see any significant consumption impact," Gupta said.
The latest restrictions have shrunk the time companies have to reach markets, according to Indore-based snack maker Prataap Snacks. “There are two issues that we are facing. The first is the limited time in market to sell in limited number of outlets. Second is reaching stocks to distributors in cities," said Subhashis Basu, the company’s chief operating officer.
Such restrictions could eventually affect product availability in the market, creating shortages despite smooth production.
“Things have to be managed within a few hours in the morning from, let’s say, 7am to 11am, with different places having different timings. So there is some impact," conceded Mayank Shah, senior category head, Parle Products. The move is for the larger good, but it does limit both product assortment and distribution coverage, Shah said. Thus, Parle is prioritizing and sending only its hot-selling stock keeping units to the market with new launches taking a back seat.
Consumers are not pantry-loading or panic buying, but with reduced store timings, deliveries are being impacted, said Dhairyashil Patil, national president, All India Consumer Products Distributors Federation. “At some places, they may be at 80% or even 60%," he said.
Restrictions are worrisome for Amrinder Singh, director, BONN Group of Industries, which makes bread and cookies, because of the nature of the products. “Our business completely depends on how quickly distributors get the goods to the retailer. The longer they hold goods, the higher the chances of spoilage, damage, or obsolescence," he said.
There could be a limited impact on product availability as companies are trying hard to reach products to the stores, according to Abneesh Roy, executive vice-president, Edelweiss Securities. Yet, smaller companies may be impacted. “Companies with a presence in chemist shops, which are open for longer hours, will benefit immensely," he said.
To overcome the curfew on store timings, Bisleri, for instance, said it has expanded its reach and presence across channels such as chemists and milk and vegetable vendors and has also deepened tie-ups with online platforms.
“In most cities, these channels are permitted to sustain operations through the day. In many places, our delivery partners helped us improve our service levels significantly. We have also tied up with online delivery partners to scale up servicing across the top 40 cities," said Angelo George, CEO, Bisleri International, Pvt. Ltd said.
Marico is also scaling up some of the initiatives such as telecalling that it put in place last year, Gupta said. The company expects to get back to normalcy sometime in May-end or June, he said.
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