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Business News/ News / India/  Coronavirus: More FMCG stocks wanted but supply disruptions pose challenge
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Coronavirus: More FMCG stocks wanted but supply disruptions pose challenge

Companies are facing issues with opening warehouses and movement of delivery trucks
  • They complain of local officials misinterpreting central government orders
  • India’s largest FMCG firms, including those with high exposure to rural markets such as Hindustan Unilever (HUL), Dabur and Emami, are waiting for a boost in rural demand to help revive sluggish growth in volumes and earnings, according to analysts tracking their stocks. Photo: Indranil Bhoumik/MintPremium
    India’s largest FMCG firms, including those with high exposure to rural markets such as Hindustan Unilever (HUL), Dabur and Emami, are waiting for a boost in rural demand to help revive sluggish growth in volumes and earnings, according to analysts tracking their stocks. Photo: Indranil Bhoumik/Mint

    NEW DELHI: The government is keen to ensure presence of fast moving consumer goods and essential supplies out on the shelves but lockdowns in various states, aimed at breaking the spread of the deadly coronavirus, are creating logistics issues for distributors and retailers of a lot of those products and their raw materials.

    Several distributors and retailers Mint spoke to said while they are operating in line with orders passed by several state governments--that are allowing sale and procurement of essential goods such as packaged foods, vegetables and medicines--in some cities they were facing issues with opening warehouses and movement of delivery trucks.

    RS Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GMCH) that makes Amul products, said the company has seen some problems in movement of delivery of vehicles, manpower and labour in pockets of Delhi, Mumbai, and Thane.

    Sodhi has assured consumers that procurement and supply of its packaged foods and beverages, especially packaged milk will continue despite lockdowns.

    Another large consumer goods company said it has faced distribution-related issues over the last two days.

    “We are facing issues in distribution where either the district centres or depots are being asked to close down. We are working very closely with the government, making them understand the issue and getting the required permissions," said a top executive at a large packaged foods company who spoke on the condition of anonymity.

    The person quoted above said that the company is also facing issues procuring raw material “due to lack of understanding of orders, authorities are not allowing things like sugar and wheat flour to be transported even though they are essential and exempted from any prohibitions," he added.

    Over the weekend, online grocery firm Grofers its warehouses in several states were being forced to shut, and delivery partner being turned away.

    “We are noticing some misunderstanding on the ground level with respect to implementation of instructions covered in the central government directive. Our warehouses in cities like Hyderabad, Mumbai, Pune, Delhi NCR have been forced lockdown and delivery partners from our local stores are being turned back. We are working around the clock to support people who are relying highly on our services and are waiting for the essential supplies at their homes," said Albinder Dhindsa, Co-Founder & CEO, Grofers. This despite, the Ministry of Consumer Affairs, last week said that delivery of grocery be considered an essential service.

    India is in the middle of strict lockdowns aimed at curbing movement of people to prevent the spread of the virus; however movement and availability of essential services is exempted from these closures. On Sunday, the central government ordered 75 key districts to be placed under strict lockdown as the country stepped up measures to control the spread of the highly contagious Coronavirus.

    State governments are also urging households to stay home, even as many have sealed borders, halted plying of private and public transport and urged employees to work from home.

    However, the FMCG distributors said orders were being misinterpreted at different local administrative levels.

    “We are not being able to replenish stocks because we are not being able to ply in the market," said Dhairyashil Patil, national president at The All India Consumer Products Distributions Federation (AICF). Patil added that there has been some concerns around movement of FMCG goods, especially in the southern states since Saturday. "Market has not been replenished, Sunday everything was closed, grocery stores are open, but they will get exhausted soon," Patil said.

    Ludhiana-based Bonn Industries said its delivery trucks have faced obstructions in a few states. “There are instances where we have been stopped by cops when we tried to enter different states like Haryana, Delhi, Uttar Pradesh and Himachal Pradesh, it is a concern within state as well," said Amrinder Singh, director, Bonn Group of Industries that sells packaged bread and cookies. This is impacting production at the company's plants that are running at sub-50% capacity, Singh said.

    Companies that work closely with kirana stores (mom and pop stores) said the recent surge in demand for packaged foods, personal hygiene products amid consumer concerns around impending lockdowns had dried up stocks at small grocery outlets sooner than expected.

    “Small kirana stores typically carry 1-2 weeks of inventory, and this buffer inventory helped cater to demand in the last few days. However, this inventory won't last forever. For a variety of reasons, products which are manufactured are not reaching these retailers, and mass-scale supply chains across the board even for essentials are operating at only about 30% efficiency," Amit Sharma, co-founder of ShopX, a business-business platform that supplies goods to kiranas and local traders, told Mint. “This needs to increase to 70% very soon to ensure there is ample stock in the market," he said.

    Sharma said there needs to be clarity with the local enforcement authorities so that they smoothly allow the movement of essential supplies.

    Large FMCG companies told Mint they are working round the clock to match the heightened demand for packaged food products in the market. Navin Tewari, CEO, Capital Foods, said the company has extended shifts at its plants to cater to demand for its packaged noodles.

    A spokesperson for Mother Dairy said, “We are relentlessly working towards ensuring and meeting the demand of consumers for milk and milk products across the region. Milk, as an essential commodity we are closely working with all our stakeholders and taking all efforts to ensure seamless flow in the value chain to serve consumers at this challenging times."

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    ABOUT THE AUTHOR
    Suneera Tandon
    Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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    Published: 23 Mar 2020, 06:50 PM IST
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