Optimism plays a big role in the consumption pattern of a nation. A recent article in the Economic Times spoke of the faltering consumer goods segment in India especially the western and central part of the country. April 2021 saw a surge in the second wave and shrunk the FMCG sector painfully by 16%. A mini lockdown state imposed by most states hampered the consumption pattern of most Indians. Covid-19 created havoc in the minds of consumers who were engulfed with the scare of the more dangerous second wave. With India having seen a longer lockdown during 2020 it is interesting to know what has caused such a deep-rooted negative impact on FMCG during April 2021. In my opinion, these could be the probable causes -
1. Fun replaced by Fear – Last year when the lockdown was imposed the morale of the average consumer was very high. The experience of being locked down for the very first time, spending quality time with the family, having ‘fun’ doing household chores and re-visiting old passions kept social media ticking with happy insights and positivity. This year-round the fun seems to be replaced by fear. Most conversations are about the grim situation of the pandemic, lack of oxygen and the unavailability of hospital beds. The pressure of being prepared for the pandemic has vented out the pleasure of lockdown as seen last year. This has directly resulted in reduced consumption of everyday basics.
2. Financial Survival – With health care accounting for a sizeable share of the wallet and the looming uncertainty of Covid-19 all sectors of society have become cautious about their spending. Baking projects, beauty DIYs and pleasure cooking has taken a back seat. Most people are in a saving mode this quarter which has also contributed to a hit on the FMCG sector.
3. Disappearance of Discretionary Spending - Discretionary segments have taken a massive blow as the attention of consumers has been diverted to essentials rather than non-essentials. The personal care segment has seen the steepest fall of 30% as priorities have changed in the consumption pattern across the nation.
4. A change in Social media pattern – Aping plays a very big role in the mindset of people. The trend on social media has changed drastically from a fun, jovial and optimistic 2020 to a worrisome, pathetic and uncertain 2021. This has majorly impacted the thought process of consumers who are in the mood for compassion and mindfulness instead of mindless indulgence. Spending has been replaced by acts of service which have further reduced the demand for FMCG goods.
While we understand that we’re in the midst of tough times we acknowledge that this trend is temporary. The impact of world-shaking events hasn’t been uniform. Some companies have been among the hardest hit, suffering massive sales declines and laying off thousands of employees during lockdowns, whereas other companies like us have strategically managed to stay buoyant and positive. At the Montage Group, our highest priority topics have been - Survival, safety and good health of all our stakeholders including factory workers, employees, officers, suppliers, distributors, customers among others. With our focus on managing cash, building resilience into the supply chain, and setting up control towers and “nerve centres” we are determined to overcome all tides and quickly tread on the path to recovery.