FMCG witnesses bounce back to pre-COVID levels: Nielsen report

There was a clear prioritisation of FMCG categories by consumers during the lockdown period, and significant recovery with Unlock 1.0 in June.

The novel coronavirus (COVID-19) pandemic is an unprecedented event the world has rarely experienced; its spread is affecting consumer sentiment and purchase behavior across the globe. As with any pandemic, consumers have been quick to train their behaviour and align their buying and spending patterns for products and services.

As India moves through the Nielsen proprietary consumer behaviour thresholds many behavioural shifts are witnessed among its population. This report will talk about some market and consumer trends that the Nielsen teams has analysed.

COVID - 19 has impacted Asian markets in different ways

The pandemic has impacted different markets by its expanse of geographical spread, severity of lockdown, and market’s dependence on traditional vs organised retail channels. If we take China’s case, the severity of the pandemic was largely limited to one province where it was controlled effectively - this led to an early growth recovery for FMCG industry categories.

China has a higher contribution of organised retail channels (modern trade and e-commerce), as compared to India. The industry in India has witnessed a delayed growth recovery, in lieu of the lockdown for a significant period affecting manufacturing and supply chain; and a significant number of days when even traditional trade channels viz. grocers and chemists remained closed in April and May

India witnessed delayed growth recovery, butt the fMCG industryy exhibits signs of rebound in June to Pre-Covid levels

After a significant impact during the lockdown, the FMCG industry in India has recovered sharply in June - a recovery is driven by Traditional Trade channels. There was a clear prioritisation of FMCG categories by consumers during the lockdown period, and significant recovery with Unlock 1.0 in June.

Categories have had differential patterns of recovery over the last few months ‘Ghar Ka Khana’ continues to trend Ghar ka Khana & Do It Yourself (DIY) cooking trend picked during lockdown with restrictions around eating out and household help not being around. This led to continued sales for categories like Packaged Atta and retail packs of Edible Oil brands. These categories continue to be in the shoppers basket in Unlock 1.0 as consumers continue to be cautious.

Average monthly FMCG Value sales for pre-COVID period of Dec’19+Jan’20+Feb’20 taken as baseline (100) and subsequent months are indexed with baseline.

Heightened Hygiene is the new normal and products like soap and floor cleaner will continue to be in shoppers' priority baskets during the lockdown. These categories continue to command a higher share of wallet in the unlock phase and are firmly entrenched in the ‘new normal’ shopping basket. Beauty sees sharp recovery in June after a brief lull.

With the majority of people confined to their house, cosmetics and beauty categories were de-prioritised in the lockdown phase - categories like Deodorants, Hair Colour and Skin Care had witnessed significant slowdown. These categories have witnessed a sharp bounce back in June. Daily usage categories return to normalcy Categories like Toothpaste, Shampoos, Hair Oils that had witnessed rationalisation in the lockdown period, bounced back in June. Similar trend was witnessed for home care categories viz. Washing Powder and Detergent Cakes also.

EMERGING CONSUMER TRENDS

Consumers have had to adapt, change their perception and behaviour over the last few months - some of these changes may be here for the long term

1. Consumers Prepare For Uncertainty

Findings from a Nielsen study reveal that rising unemployment, salary cuts, and enterprise closure were leading concerns that led to contracted income in the majority of households . The online study across 22 cities, with over 1700 respondents was conducted during June 19-25.. This coupled by stress of remaining home bound is leading to health concerns - mental concerns came out to be on an upward proportion by 4 percentage points as compared to a similar study conducted in April’20

Consumers are staying away from discretionary spending, a trend that has significantly increased since the April study.. On the other hand, uncertainty and health concerns are prompting consumers to armour themselves for the future by spending more on fitness and health, education and financial investments.

2. Consumers Urge To Break Free With Safety And Immunity

In both the study rounds conducted by Nielsen in April and June, people confirmed high levels of adherence of precautionary measures against COVID-19. That said, there was a sense of freedom seeking tendency reflected in the June round when a 12-13 per cent drop was observed in norms like avoiding public gathering and washing hands multiple times.

These were seemingly compensated with other precautions like keeping safe distance and sanitisation. Another insight drawn from the study was that safety and immunity will remain embedded in consumer behaviour for a long time - a very high proportion of consumers are planning to continue these measures for more than six months. This behaviour is corroborated by high and accelerated sales growth of evolved hygiene categories like liquid toilet soaps, and immunity boosting categories like Chyawanprash and branded honey.

3. Consumers Cautious: Prefer ‘Contactless’, Home Delivery

Consumers in cities are preferring home delivery over in-person visits to the neighbourhood or departmental stores, and are consciously minimising interactions through ‘contactless’ options. This growing preference is facilitated by ecommerce platforms, online sections of modern trade outlets, phone/ whatsapp based systems and food aggregators’ delivery arms collaborating for consumer products delivery.

This consumer preference is also exhibited by expressions to further reduce physical contacts either in exchange of goods and articles. Two in every three respondents in the Nielsen study revealed apprehension of the vast majority for any form of long distance travel in the next six months

4. Home Cooking Becomes A Grounded Mindset

During the lockdown period eating out, food on order or household help for cooking was not available. People had no option but to switch their Chef Mode on, which complemented the need of the hour, when healthy & safe food, fresh ingredients and economical means were high on preference. Such forced cooking in some way busted misconceptions of the neo-cooks who believed cooking to be time consuming and cumbersome, thus not their cup of tea.

Social media conversations analysed on this subject reveals that there were enhanced interests around regional recipes, convenience, and options for novice; also a new cuisine - ‘Crisis Cuisine’ emerged as consumers remained homebound.

5. Consumer Sentiment on ‘Vocal for Local’ Showing Steady Growth

There is enough evidence from history that cultures at times of any crises lean back on their roots. Some of these moments are aptly channelised by political and mass leadership - ‘Jai Jawaan Jai Kisaan’, Green Revolution are a few of such events from modern Indian history. At the time of COVID-19, ‘Vocal for local’ is one such wave that has emerged and is building up - a trend observed in social media conversations.

Read the full report below.

NielsenCOVID-19 Evolving Consumer Dynamics - Edition 4 17July2020ff (1).pdf