FMCG - Consumption Revolution

Fast-moving consumer goods (FMCG) stand poised to reap the rewards of an upswing in discretionary spending, showcasing the potential for substantial growth within a moderate price range – spanning from a few hundred to several thousand rupees. Let's delve into illustrative instances:

- We all will recall the prominence of glucose biscuits such as Parle G, Milk Bikis, and Tiger – beloved staples of my generation. Yet, as the mid-2000s rolled in, their appeal gradually dimmed, yielding ground to the allure of premium alternatives like Good Day. In the contemporary era, these very consumers are gravitating towards indulging in upscale cookies. Companies are attuned to this shift, devising strategies to introduce premium brands by enlisting influencers and actors, all while honing their focus on a younger demographic.

- Reflecting on the 1990s, the introduction of the shampoo sachet emerged as a resounding success. Over time, the same cohort shifted to smaller bottles of shampoo. Now, buoyed by increased discretionary spending, they are readily opting for larger-sized bottles. This transition is poised to usher in a notable surge in volume for FMCG enterprises.

- In the bygone years, dining out was reserved for special occasions. Today, a weekly family meal at a restaurant has become the norm. Additionally, the advent of food delivery platforms such as Swiggy and Zomato has added a new dimension to consumption patterns, reshaping the landscape of eating habits.

- A shift in societal mindset is evident, particularly concerning recreational liquor consumption. Taboos surrounding alcohol have diminished, leading to the proliferation of premium and prestige liquor brands. Notably, some companies have reported a remarkable 15% surge in volume for premium liquor sales.

The advent of instant delivery, often within a mere 15 minutes, has significantly influenced consumer behavior. This acceleration in convenience has led to an uptick in orders for a diverse array of products – from essential items like milk and ice cream to more intimate selections like sexual wellness products.

Considering these evolving dynamics, several companies stand poised to flourish within this evolving landscape:

• Liquor and Tobacco: United Spirits, Radico Khaitan, ITC
• FMCG: ITC, Marico, Hindustan Unilever Limited (HUL), Dabur, Nestlé, Britannia
• Dining Out/Ordering: Zomato, Mrs. Bectors, Devyani International, Restaurant Brands
• Wellness: Mankind Pharma, Amrutanjan, TTK Prestige
• Retailers - Titan, Reliance Retail (currently unlisted), DMart

In essence, these trends illuminate a transformation in consumer preferences, setting the stage for these sectors to flourish in response to changing spending habits. Existing well-established brands are more likely to grow and thrive leveraging their existing manufacturing, distribution networks, and cash balance.