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FMCG players Driving the Growth with D2C platforms

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For Fast Moving Consumer Goods (FMCG) traditional brands, the pandemic has been an absolute bloodbath for the last eighteen months or so. From supply chains to stores being shut down, the brands had to face all sorts of retail challenges over the period. 

Meanwhile, the rapid adoption of the Internet and digital marketing strategies, saw brands offering niche and customized options for customers, which eventually raised the demand of D2C (Direct to Consumer) brands in the FMCG category. The brands also took this advantage seeing the market size. 

The D2C brands found this as a good moment to foray into the FMCG market as the sector is 4th largest sector in the Indian economy. The factors which drove the popularity of the FMCG in the D2C category were:

  • Growth in online spending: The ongoing pandemic made every customer follow the e-commerce route, which wasn’t the case earlier. Plus, the trusted payment options and fast-growing logistics systems are giving the consumers a convenience to order from anywhere. According to the report, online spending in India is expected to reach $200 billion from $39 billion in the next five years.
  • Tapping the untapped market: The D2C sector is catering to the market which was unserved before and brands are following methods like offering personalised and options to the consumer. The brands are catering to the change in consumer behaviour of the Tier II & III markets. 

Initially, when the D2C brands started their journey consumers were not relying on their products and services. The brands also had many challenges as they were in direct competition with the traditional brands which were in the market for so many years. 

Sameer Bhatia, MD and Founder, House of Candy explains, “Direct selling to the consumers is challenging as the brands tend to have little less visibility in terms of distributorship. But we have already made a mark in the FMCG distribution sector through modern trade stores namely, FoodHall, Super99, Modern Bazaar, Spar and Big Bazaar.”

Abhishek Negi, Co-Founder- Eggoz, a brand that started in 2017 which provides nutritious-eggs, talks about the hurdles that their brand faced The first hurdle faced by the consumers is the brand awareness.  If you’re starting out a brand and selling directly to customers, you need to spend a lot of money towards brand awareness. Other hurdles include small order quantities, returns, tight delivery timelines, customer expectations, complaint handling, and product explanations.” 

Madhav Kota, Founder of iGRiD, a brand that is providing home-essential items through digital channels explains, “In India, building trust is everything. All new D2C consumer brands spend considerable time and money building consumers’ faith in their products, as a brand finding the niche which identifies with the consumer and competing against existing brands are the biggest hurdles. D2C brands are also getting the advantage as the advent of e-commerce is there, and it is faster to reach the customers.”

Talking about the rise of Omnichannel model during the pandemic, Naren Pasuparthy, Founder, CEO & Chief Farmer, Nandu’s explained, “Nandu’s is an omnichannel meat brand, this gives us the opportunity to serve our customers directly without having to go through middlemen and the third parties. Hence a line of transparency is there. The meat market is eventually getting organised, and this enables brands like ours to align our functioning to the requirements of the market.”

“The initial challenges were to create necessary awareness about our brand and our offering to consumers. We had to educate them about how clean, hygienic, fresh and safe our meat is and how they have a right to know where their meat is being procured from”, he added further.

Tier II and III cities Leads the Next Wave of Growth  

Tier-II and III cities are the center point of the next wave of retail growth. These cities are witnessing five times more investments in the retail infrastructure. The growth in the cities has been witnessed due to high disposable income, high usage of mobile internet and support infrastructure. The new age brands have started penetrating their business as the market has a high potential. 

Bharat Sethi, Founder, Rage Coffee explains, “More than 50 per cent of our online sales comes from the Tier II cities. We’ve got partners who understand the dynamics of these markets from a trade point of view. We associate with the distributors in the region and look at the data from the retail outlets prospect and then plan the strategies. The planning in respect to online and offline is double-forked. Our team truly believes that with the hyperlocal network getting established many Tier II & III cities will be under our business radar directly.” 

Lisa Suwal, Chief Growth Officer, PRASUMA adds further, “These regions are the growing markets, and we are making sustained efforts to support the organic growth being generated from these centers. We are experiencing both consumer and retailer pull based on word of mouth of our delectable momos.” 

 Talking about how to serve the untapped market, Sonal, Founder and CEO of Whitecub says, “Since there is a shift towards vegan, plant based products, the market for dairy and gluten free products and ice creams are expanding. We are building our presence in Tier II cities like Pune & Ghaziabad. Creating brand awareness and changing consumer’s preference to dairy free products in Tier III cities is a challenge and will take time.” 

 Tier-II & III cities are our core targets. We have opened our warehouses in 5 different locations to enable faster delivery. As a significant portion of our consumer base is from this region, our VFM model augurs well with consumers in these locations,” explains Kota. 

Strategies and Innovations 

D2C and traditional brands both are adopting new marketing strategies and leveraging technologies to fulfill the change in the customer behavior. Nowadays, customers are looking for brands that can offer value-added products while also providing seamless post-purchase experiences. To cope up with this, brands are adopting certain new measures. 

Talking about the new strategies Negi says, “Our business model is centered around freshness. An Eggoz egg is delivered to the store or consumer within 24 hours. This is ultra-fast as compared to a regular egg which is delivered to the consumers 7-10 days after laying. We are a consumer-centric brand and also offer a replacement policy in case of any concerns over quality.”

Talking about new technologies implemented, Kota adds, “We use CRM tools to stay in touch with our consumers. Besides teaming up with the best courier companies, we have opened warehouses in EWNS of the country to reach faster to the consumer and work on a replacement warranty to any consumer who is not satisfied with the purchase.” 

“The only way to cater to changing customer preferences and shifting market dynamics is to embrace technology disruption. At Nandu’s, we look at technology as the catalyst that has helped us, as poultry farmers, to take our produce directly to the end consumer. Technology adoption has been our biggest facilitator in transforming from a B2B business to a B2C and ultimately a D2C business,” shared Pasuparthy. 

“Nandu’s state-of-the-art technology stack comprises two main elements – an operational Enterprise Resource Planning (ERP) platform across the enterprise to ensure 100 per cent traceability and transparency, and our own point of sale system, developed in-house, to capture retail operations data at the stores and on the e-commerce platform. We are the first-ever meat retail brand in India that is investing in Mystery Audit System (MAS), which provides a tech-based evaluation system to assess and monitor the quality of services provided from the point of view of the customer, ” he added further. 

“Rage Coffee is innovating in functional food in the category of coffee snacking and beyond this in terms of R&D and distribution we are going big in HORECA. We have some institutional products that we have launched. In terms of marketing, we are reaching out to far more people. On a monthly basis we reach out to 50 million people online and with our offline distribution we are adding 6-7 new distributors a month right now,” added Sethi. 

Social media is becoming a new route for the brands to reach their customers, create much needed engagement and build a community of the customers. Nowadays, social media presence is turning into the revenue channels for the brands and brands are amping up their marketing spends on it. According to a report, 61 per cent of new-age brands are reaching their customers through social media platforms.

Prem Dewan, Managing Director, Devans Modern Breweries Ltd, a brand that offers high quality beers to the customers and major of their market is contributed through liquor stores talks about how their social media presence is important “The social media activities are limited to interaction with the consumers and reaching out to them. Since, we cannot sell directly to our consumer, we can only create awareness about our brand and probably tell them which is the closest shop or bar that they can find our product at.”

 “Nandu’s overall marketing strategy has been simple, yet effective. We listen to the consumers and cater to their needs in a meaningful manner that helps them. We launched a campaign called Nandu’s Home Chef’ in which we put together a series of easy-to-cook recipes in video format across all our social media platforms. As part of the campaign, we also conducted live online sessions with chefs to help people hone their culinary skills and add variety to their home-cooked meals,” says Pasuparthy. 

 Social media is a tool to engage with current brand lovers and a great medium to reach new consumers. To this end, we post engaging content across our social media channels with an aim to connect with consumers and boost customer discovery. Fortunately, our category inspires an immediate connection and quick engagement with the consumer, which gives us the space to have fun with social media and delight our followers. We will be focusing on this going forward,” says Suwal.

The Road Forward 

The good news is that the business now has largely stabilized and now become immune to COVID like distributions. The FMCG sector is expecting an exponential growth which will be contributed by several factors such as e-commerce, technology and understanding the new conscious customers. E -commerce for FMCG will reach US$ 400 billion by 2022, which will represent between 10-12  % of the global market for such products, as per Nielsen estimates.

Here’re are the expectations from the brand- 

House of Candy

As far as the candy industry is concerned, the market is predicted to grow 2.8 per cent for chocolates and 3.7 per cent for non-chocolates candies through 2022. At present, the brand is celebrating the glory of 200 stores and kiosks and is planning to open 100-150 more outlets and kiosks in the coming year.

Eggoz

The brand is very positive for the year 2022 with expansion plans in the pipeline. “We would be expanding into new markets and we look forward to creating an impact in the segment,” says Negi.

iGRiD

iGRiD intends to add another 200 products in the coming year and expects to increase the revenue by 3X.  

Devans Modern Breweries Ltd

For Devans Modern Breweries Ltd, beer sales have been quite robust during the recent months. There is a huge pent-up demand for beer which is likely to open up in the summer of 2022 after the loss of two summers due to the pandemic. 

“Consumers are shifting to premium products, and we are bound to gain as we have premium products in all segments. We also now have a couple of brands in the premium segments where we have no competition as on date,” adds Dewan. 

Nandu’s 

For the brand, 2020 was all about learning to navigate through the pandemic, and 2021 forced them to reconsider the assumptions and expectations as individuals and as business entities. 

“One of our areas of priority for the coming year would be expanding our presence in other geographies. We recently forayed into the Hyderabad market and intend to continue with the same pace in the coming months,” says Pasuparthy. 

Rage Coffee

The brand is very much excited for 2022. It is expected to manifest a growth of 10X in the coming year. The online channels have been booming for the brand and the marketing alongside the R&D team is utilising the relentless efforts to understand the market. 

PRASUMA 

Considering the trends witnessed in 2021 and the burgeoning demand from every corner of the country, PRASUMA is expecting 2022 to be another favourable year. “Indian consumers are evolving in terms of tastes and preferences. They are looking for exceptional flavour and unmatched hygiene from their food products,” says Suwal. 

Whitecub

Whitecub aims to expand their product portfolio to fill the void in the underserved market of dairy free products. The launch of sprinkler parmesan cheese, mozzarella cheese, cheddar cheese and milk are on the anvil. The brand is  also working to open delivery operations in major metro cities like Bangalore, Mumbai and Kolkata soon.