Dec 11, 2020
Responsive Supply Chains are critical to cater to the demand for Health and Hygiene FMCG products in the ‘New Normal’

'We are in the midst of unprecedented times,’ is the most commonly used phrase to describe COVID-19 pandemic. Much lesser spoken about is the ‘unprecedented’ agility of the Indian FMCG companies, in response to the pandemic-induced consumer demand of the now ‘health and hygiene conscious’ Indians.

As per an Economic Times Report, citing Nielsen data, more than 53 consumer products have been launched daily on an average since the beginning of the first lockdown in India - largely within the health and hygiene space. More than 9,700 products and variants were launched by the fast-moving consumer goods (FMCG) industry in the health and hygiene segment, from April to September 2020. A sharp 18-fold jump as compared to the preceding, pre-COVID six months. During the early days of the pandemic, there was such a surge in demand for these products that they went out of stock in no time. The rise in demand can be gauged from the fact that the hand sanitizer market saw a growth of 53% in February, 2020 during the early days of Covid-19 precautions in the country.

FMCG companies have been quick to capitalise on this crisis since the early cycle of the pandemic. With product launches and ramped-up production ranging from sanitisers, masks, soaps, immunity boosters to UV sanitisation box seeking to make up for the fall in the beauty and personal care segment.

ITC, which has launched 70 products during COVID-19 pandemic, also witnessed a surge in production by 275 times to cater to the increasing demand. Meanwhile, Hindustan Unilever also introduced 100 new products in the market in the past six months. Additionally, Dabur forayed into personal, and home hygiene segment with 40 product launches.

It is not just the FMCG companies, but the distribution channels (Stockists, Distributors, Dealers, Retailer) as well that have had to adapt and invest in these new products putting a strain on their already stretched financial situation. These long and treasured associations need to be managed with ‘kid gloves’ to ensure they are financially well supported to cope with the wavering business demand. The question on everyone’s mind, though not voiced aloud often is, ‘Will this makeshift evaporate in the New Normal’?

Thanks to the media coverage on COVID, today, people have become highly aware of viruses and broadly pathogens. The pandemic has contributed in making the masses health and hygiene choice conscious. Taking whatever steps possible to protect them from the infection. Moreover, products like hand sanitisers are now omnipresent in shops, public places, workplaces, malls and other common areas. Having a hand sanitiser handy is now as normal as having a water bottle handy. In light of this, it is unlikely that the freshly expanded health and hygiene market will dry-up post COVID.

According to reports by Financial Express, India's hygiene market may likely cross $15 billion by 2023, with hand sanitizers segment alone will be worth more than Rs 2000 crore by the year 2025. In his press releases, Sanjiv Puri of ITC believes that when the pandemic gets over, certain categories will settle at an elevated level. Awareness and importance of simple things like hand washing and cleanliness would continue to remain a constant practice. Sanitisers may not hold the same level of popularity, but it would surely be at an elevated level in the future. It now remains very intriguing to observe how the trends shape up.

At Finovate Capital, we are optimistic about the health and hygiene trends being long term and are actively focusing on supporting SMEs within this sector with their Working Capital requirements. We are constantly monitoring the consumer sentiment towards this sector to actively get insights into the post-pandemic behaviour. We are betting on a new India emerging in the New Normal that is more health and hygiene conscious to lead the fight against Covid-19 and any other challenges that we collectively encounter as a country in the future.

We have worked with our Financing Partners to create tailored programs for the FMCG Health and Hygiene segment. In case you are supporting this noble cause either as a manufacturer, stockist, distributor, wholesaler or retailer, you can learn more about our Working Capital solutions for your business here.