This week saw the fast-moving consumer goods (FMCG) industry take yet another step in the Direct-to-Consumer direction with Marico acquiring a 60 percent stake in Apcos Naturals, which owns the direct-to-consumer (D2C) brand 'Just Herbs'. This is the second such acquisition by Marico as it looks to create a portfolio of digital-first brands and it hopes that at least three will become Rs 100-crore brands in three years.
The D2C frenzy has been growing in India over the past few years, but it really got the push it needed following the pandemic. While there are over 800 D2C brands in India, FMCG majors, too, are hopping on the bandwagon.
Apart from Marico, Tata Consumer also recently launched a D2C premium coffee brand. Companies are also increasing their e-commerce presence with players such as ITC launching its own portal ITC e-Store, which it is now looking to double down in terms of its geographical presence in India. In fact, Marico too launched its own D2C platform called Saffola Stores.
This approach provides the firms with a cheaper way to reach out to the consumer and helps skip traditional trade channels and ensure better margins and direct engagement with consumers.
However, companies continue to flag demand and growth concerns amid the second wave. FMCG major ITC said, in its annual report, that the severe intensity of the second wave of COVID-19 has triggered a fresh round of disruptions leading to slackening in the recovery momentum. It said that with consumers switching to precautionary savings mode amid rising healthcare costs, on the consumption side, urban-led recovery may be relatively muted compared to the first wave, while rural demand is likely to be blunted as well with the virus spreading to the hinterland.
Interestingly, Ayurveda-based FMCG goods maker Patanjali claims that it was not impacted due to the pandemic and that it has clocked a turnover of over Rs 30,000 crore in FY21 and aims to make all group companies debt-free in the next 3-4 years.
The increased adoption of natural and ayurvedic products during the pandemic may have fuelled Patanjali’s growth with the company also launching an entire range of plant-based nutraceuticals.
However, this does come on the heels of the backlash that Ramdev has been facing for his comments against allopathic medicine, which he called a "stupid science". While the yoga guru withdrew his comments after widespread criticism, doctors have alleged that his dissing modern medicine could also be a way for him to try to boost sales of his own products.
Ramdev has also claimed that Patanjali aims to become the top FMCG player and will overtake Hindustan Unilever (HUL) by 2025. If and how the yoga guru achieves the same, remains to be seen.
Meanwhile, the retail sector continues to suffer the wrath of the pandemic. Raymond Group's chairman Gautam Singhania said in the company’s annual report that the first quarter of FY21 was the 'darkest hour' of the fiscal. The annual report added that even as consumer demand picked up in the second half of this fiscal, Raymond expects 'modest' growth for its fabric business.
The second wave, Raymond says, has further dampened consumer sentiments and discretionary spending. With clothing becoming a non-essential item through the pandemic, and discretionary spending coming down, the company said that demand has been impacted.
The retail industry was among the worst hit as stores had to shut yet again in April and May just as they were finding their feet post the first wave. Hopes are now pinned on the upcoming festive and wedding season along with a possible revival in consumer demand.
While most of the country has now eased restrictions, states like Maharashtra continue to keep curbs in place with non-essential stores, including apparel stores, malls, and restaurants, having to remain shut during the weekends.
Earlier this week, the Retailers Association of India (RAI) appealed to the Maharashtra government to allow malls and shopping centres to open at par with standalone shops and markets. It told the government that malls can handle crowds more efficiently than markets and hence should be allowed to operate.
"The Delhi and Haryana governments have supported the ecosystem by opening up malls along with other markets. We request the Government of Maharashtra to extend their support too. This will not only help save employment but will also pave the way for citizens to shop in a safe and sanitized environment," Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said in a statement.
Days ahead of this, the Hotel and Restaurant Association of Western India (HRAWI) also wrote to the Maharashtra government urging for revision in restaurant timings. The HRAWI asked the state government to allow restaurants to operate between 7 am-12:30 am on weekdays and weekends at 50 percent capacity.
(Edited by : Kanishka Sarkar)
First Published: IST