FMCG firms brace for third wave of Covid-19

FMCG companies believe that their learnings from the past two experiences will help them tide over a third wave of the pandemic.

With Covid-19 cases on the rise in India, consumer goods companies, especially those offering food products, are gearing up for a possible third wave of the pandemic.

ITC, Parle Products, Bikanervala Foods, and Prataap Snacks are stocking up on their products, increasing their focus on e-commerce, and even launching larger pack sizes, expecting a surge in at-home consumption in the event of tighter restrictions or a lockdown. The companies are confident of tiding over a third wave after the experience of the past two years.

Learnings from 2020

“The ITC supply chain – given our experience of the first two waves, the robust SOPs created as a result of the same and having adequate inventory across various nodes in multiple geographies – is now in a much better position to address any challenges arising because of any restrictions,” an ITC spokesperson said.

States have started imposing curfews and restricting activities in a bid to curb the spread of the coronavirus after the emergence of the new variant called Omicron. India reported 33,750 new Covid-19 cases on January 3 and the total number of Omicron cases reached 1,700, the health ministry said.

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Most FMCG companies were caught off-guard when the first wave of the pandemic hit the country in March 2020 and a nationwide lockdown was imposed. While demand for FMCG goods, especially food products and essentials, surged during the period, companies were unable to supply them because production was hit by factory closures, and logistics suffered due to movement curbs.

During the second wave in 2021, the companies fared better, given the localised lockdowns and their preparedness. They expect a third wave, if it arises, to be of the same nature. FMCG reported a 19 percent contraction in the second quarter of calendar 2020, according to market research firm Nielsen.

“During the first wave, when much was not known about the novel coronavirus, there was lots of uncertainty and the impact was more pronounced in metros than in rural and smaller towns,” the ITC spokesperson said. “This has changed greatly in the second wave where we have seen more localised micro-lockdowns, clarity from the administration on lockdown restrictions, both of which led to faster unlocking and recovery in urban centres. We see this trend to continue and micro-lockdowns to be the norm if Omicron-led restrictions increase.”

To tap at-home consumption in case of a lockdown, Prataap Snacks, which sells savoury and sweet snacks under brands Yellow Diamond and Rich Feat, has launched larger pack sizes of its products. The company’s sales suffered during the first and second waves because it operates in the impulse purchase category.

“We have launched Rs 50 and Rs 100 packs of Chulbule and other namkeens and hope this will help us gain good sales in case of a lockdown,” said Amit Kumat, CEO of Prataap Snacks.

Stocked up

FMCG companies are stocking excess inventory across their channels and at various points in the distribution chain to avoid depletion of supplies.
According to Mayank Shah, senior category head of Parle Products, while the company usually maintains a buffer stock of two-three days at various points such as manufacturing units, distribution centres, depots, stockists and distributors, it is now keeping stock worth six-seven days at all these points.

“We are also stocking raw material and packaging material to avoid shortage of these products,” he added.

Bikanervala Foods is also gearing up for a third wave.

“We are working on having in place a strong vendor and supplier base, maximising supply continuity, raw material availability, planning for backup sourcing, flexible and mobile storage and re-thinking last-mile delivery. We have also strengthened the infrastructure significantly,” said Manish Aggarwal, director, Bikano, Bikanervala Foods.

A greater focus on e-commerce, companies said, will also help them. Since the onset of the pandemic, FMCG companies have realigned their strategies to include a larger role for online channels and some have even launched their own direct-to-consumer operations.