The Impact of Coronavirus on Indian FMCG Industries

June 2020

This report examines the early impact and short-term outlook for the Coronavirus (COVID-19) global pandemic on the fmcg and services industries in India. The initial spike in demand for essential categories is expected to normalise post lock down, and industries requiring discretionary spending will be heavily impacted. In addition, consumers’ lifestyles, food habits and buying behaviour are likely to undergo a paradigm shift.

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Key Findings

COVID-19 has added to economic woes

COVID-19-led stringent lockdown has restricted economic activity across the country and has impacted the economy’s growth even further. The lockdown which began 24 March has restricted manufacturing activities and disrupted the supply chain across industries bringing the economy to a standstill, with the recovery post-lockdown likely to be slow.

Home seclusion drives demand for essential products

With people restricted to their homes coupled with limited access to foodservice, consumers are cooking more at home which has increased the demand for packaged food and home care products. Concern about infection will keep consumers under home seclusion post-lockdown as well and contribute to demand for these products remaining stable.

Consumers to spend more cautiously on non-essential items

Discretionary categories to see biggest impact during and post the lockdown. Furthermore, the economic impact leading to salary cuts and increased unemployment levels will make consumers more cautious about their spending on discretionary categories at least in 2020.

Increased focus on hygiene and personal wellbeing

The heightened awareness of personal hygiene and health, due to fear of contracting the virus, has led to a surge in sales of personal and home care products including liquid hand wash and sanitisers, laundry and surface care. Consumers are also paying more attention to their health, which is aiding the demand for immunity-positioned supplements.

Consumer shift in channel preferences will be evident

Consumers will continue to avoid crowded places and look for safer access to products and services in 2020. While traditional grocery retailers will see a short-term spike in demand due to ease of access, e-commerce will benefit in 2020 and beyond as more consumers start to shop online.



Key findings
India puts its people ahead of economy in fight against COVID-19
Indian government classification of essential vs non-essential fmcg

Economic Outlook

Indian GDP growth downgraded to 2% in 2020 under baseline scenario
The COVID-19 pandemic impacts both supply and demand
Our view in short
Severe shocks in the short term will lead to slow long-term recovery
RBI’s monetary policy instruments to ease liquidity pressure
Fiscal stimulus package from the government for low-income families
5-part stimulus for liquidity infusion and support on stressed sectors
COVID-19 highlights need for supply chain diversification

Industry Impact

COVID-19 has a mixed impact on Indian FMCG industries
COVID-19 impact at a glance: essential categories, retail sales
Absolute value change in market sizes due to COVID-19
Home seclusion to have mixed impact on packaged food
Universality of tea and coffee keeps categories insulated
Limited shelf life poses big risk to existing stock of soft drinks
Home care gains prominence on account of increased usage occasions
Brand owners focus on making liquid soap accessible and affordable
Short-term boost in OTC sales and long-term focus on preventative health
COVID-19 impact at a glance: non-essential categories, retail sales
Lockdown and weakening consumer sentiment to impact fashion
Heavy reliance on Chinese imports to impact electronics and appliances
Real estate slump to severely hurt home and garden industry
Ban on manufacturing and sale impacts alcoholic drinks heavily
Beer across categories and on-trade among channels most impacted
Tax hikes and zero availability in retail impact legitimate cigarettes sales

Channel Preference

Non-grocery specialists need to re- strategise the store locations
Consumers’ shift to e-commerce channels is more permanent


The 5-step consumer progression of COVID-19 in India
Long-term shifts in consumer behaviour and preferences

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