Consumer Staples

<h2 style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry? </span></h2><p style="text-align: justify;">I started my career in 2002 after completing my Graduation from Calcutta University. I started as a sales officer at Agro-tech Foods and worked in Odisha. In Dec 2005, I Joined Nestle India in Kolkata as a Sales officer and in a very short span of 2 years I was promoted to sales executive and during my tenure with Nestle till 2012 I got one more promotion and worked in all the eastern states starting from west Bengal, Odisha, North-east and Bihar.</p><p style="text-align: justify;">In 2012, I joined Parle Biscuits as Area Manager, taking care of 3 states, West Bengal, Bihar, and Northeast, and I was also instrumental in launching their snacks business under the brand " Parle fulltoss &amp; Parle wafers ". I then moved to Bangladesh for 2 years, where I joined Pran-RFL group as their country manager in the confectionery business vertical and drove business to new highs. I worked directly in coordination with the Managing Director, and during this tenure, I got the opportunity to launch new product ideas in the Bangladeshi market. I was also posted for 1 year in the Northeast, where a factory was set up and became fully functional during my tenure in 2015.</p><p style="text-align: justify;">After about 3 years with Pran, I returned to Kolkata to join Khadims in the footwear distribution business as a National Sales &amp; Distribution Manager, taking care of the entire India for 1 year. In 2017, I joined Patanjali and as a Zonal Manager, I worked with them for 4 years in cost-centric operations in two states, Odisha &amp; West Bengal, in their Food division. I was instrumental in the company's rural distribution expansion. The business grew 3-fold in 4 years.</p><p style="text-align: justify;">During 2021, I joined Guiltfree Industries, a producer of health snacks and RTE, to expand the distribution in West Bengal. I was with them for years and was in the leadership role, instrumental in bringing the brand from No.5 to No.2 in the region. I joined Capital Foods as a Regional Manager for Eastern India and expanded their dealer distribution network before the company sold out to Tata Consumers.</p><p style="text-align: justify;">During my last assignment, which was with Devyani Food Industries, I was a Regional Manager in their Frozen food business, taking care of Odisha, West Bengal, and the Northeast. It was a Profit Center role with entire responsibility of a P&amp;L. So, to summarize, I have worked in Major states across India with more emphasis on Eastern and South India in Food FMCG consumer segments, along with frozen and Footwear segments, in both frontline to senior leadership roles.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q2. Which product categories within the FMCG sector are experiencing the highest growth rates, and what factors are contributing to this trend?</span></h2><p style="text-align: justify;">The FMCG segment categories can be broadly divided into two: one is the Mass segment and the other is the niche segment. In the recent 5 years, the major growth drivers have been the Niche segment, both with volumes and revenue margins.</p><p style="text-align: justify;">Though a few of the mass segments have held the growth, the majority of the categories have either given low single-digit growth or declined after the COVID era due to a reduction in rural consumption. Urban consumption eventually held steady, and in the coming years, we expect rural areas to boost consumption and drive the mass segments.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q3. What is the current market share distribution among India's leading quick commerce platforms, and how is this impacting FMCG sales channels? </span></h2><p style="text-align: justify;">The Quick Commerce (Qcom) segment has rapidly grown during the last 3-4 years, thanks to urbanization and the COVID-19 effect. Though the growth rate in this segment is exponential, the current contribution is in the low teens and is more concentrated in the tier 1 cities. The growth is now expanding to the tier 2&amp; 3 cities, and I am expecting this to cross 25% contribution in the next 2-3 years.</p><p style="text-align: justify;">Though the FMCG sales channel is not being majorly affected, certain companies are forced to segregate product SKUs and segments between the different channels, like the retail, MT, and Qcom to avoid major conflict of interest. Still, a major portion of consumers prefer to visit the corner store or like to feel the product before buying it, which is missing in the Qcom platforms.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q4. How is the trend of premiumization influencing consumer purchasing behaviour in urban India, and what implications does this have for FMCG brands? </span></h2><p style="text-align: justify;">The evolving trend of consumers to prefer health over taste and brand over other factors has led to the rapid premiumization of the FMCG brands. The Urban consumers of tier 1&amp; 2 cities are ready to shell out a bit extra for a specific preferred brand or a product that offers better consumer satisfaction. Thus, most of the leading FMCG companies are increasing the offering of the niche segment. This is indirectly impacting positively to the profitability of the companies in the longer run.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q5. What challenges and opportunities do MNCs face when expanding their operations in India, considering regional preferences and competitive local brands? </span></h2><p style="text-align: justify;">India is a country of diverse cultures and preferences. Thus, while expanding in India, the local players give a very strong competition to the MNCs in terms of availability and taste preference as per regional and state-specific choices. Also, not to forget that India is geographically large and many of the states have a very scattered population distribution and to add to that the spending capacity is also variable from state to state and from tier 1 cities when moving to tier 2,3 &amp; 4 cities. One more thing is the cost of distribution and the distance from the manufacturing facilities plays a major role in terms of being competitive in the price aspect.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q6. How are evolving consumer preferences towards health benefits, convenience, and product quality influencing purchasing decisions and brand loyalty in India's FMCG sector? </span></h2><p style="text-align: justify;">After the covid year, the awareness of health and quality of the products has risen manifold. The convenience was always a factor even before the covid era, but the Qcom rapid expansion has worked as a catalyst in developing the convenience part. The consumer is now more influenced by the Health and Quality aspect while deciding a brand and shifting towards it. This evolution was never so rapid before the covid period.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management? </span></h2><ul style="text-align: justify;"><li>Size of the segment we are planning to enter</li><li>Key markets that is been targeted</li><li>Manufacturing facilities and the supply chain network that has to be worked before the launch</li><li>Pricing and the value proposition</li><li>What are the channels that we are planning to launch like the MT, GT, QCOM?</li><li>Are we tying up with big chains to make our products available to a wider consumer base?</li><li>What is the marketing strategy?</li><li>What is the sales strategy and the distribution plan?</li><li>What is the marketing strategy?</li><li>How are we planning the Gross profit on the product, and what is the break-even cycle plan?&nbsp;</li></ul><p style="text-align: justify;">These are the few questions that I will have in mind. But again, the sub-segment in the consumer space will decide other finer detail questions before the final launch plan is made.</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>