The FMCG sector is one of the most important sectors in the Indian economy and the growth of this sector also plays a vital role in the economy’s growth. The FMCG sector is a consumer-centric sector as it caters to the everyday needs of the consumers.
FMCG products are those products that sell everyday goods and services at affordable rates and these products sell fast. Hence they are called as Fast Moving Consumer Goods (FMCG). There are various durable and non-durable products sold such as rice, sugar, cosmetics, medical products, detergents, toiletries, etc.
These products are used and required on a daily basis. Also these products provide a high turnover as the sale volume of these products is quite high.
Now, the FMCG sector is the 4th largest sector in the Indian economy given the entire population of India buys its daily essentials from this sector only. According to India Brand Equity Foundation, Household and Personal Care products account for 50% sales of the sector. Hence, this sector also provides employment opportunities in huge numbers.
COVID-19 Effects on FMCG Sector:
With the COVID-19 crisis adversely affecting businesses and other vital sectors of the economy, the FMCG sector is no exception to this. The FMCG sector is facing rapid global slowdown with the lack of customers to buy their daily essentials.
The Government has issued various guidelines to tackle the COVID-19 crisis with the help of social distancing and limiting the labour force to only a handful. This has adversely affected the FMCG sector as the production has now come to a halt and the number of workers producing the goods is not enough to meet the increasing need of these products.
Production of only essential items has led to stopping the production of other items in the sector as well. This has negatively impacted the revenues of the FMCG sector from other sources apart from the essential goods.
Food and Beverages Sector Doing Pretty Well!
However, looking at the bright side, all is not lost as the Food and Beverages sector seems to be doing pretty well! The reason is that due to the non-availability of fresh fruits and vegetables, processed and ready-to-cook foods are experiencing increased sales.
This has helped generate generous profits for the FMCG sector.
Restaurants and Retail Establishments Feel the Pinch:
The restaurants and retail food establishments, however, is incurring severe losses due to lack of customers coming to dine-in at the restaurants. Food shortage has also led to losses for these establishments as lack of availability of food vendors.
Lack of staff members due to social distancing norms has not only put the businesses in severe loss, but has also taken away the livelihood of the staff.
Medical Products and Organic Foods Big Gainers:
However, the medical arm of the FMCG sector is doing pretty well, thanks to COVID crisis. The reason is that customers are increasingly buying hand sanitizers and other medical products in large quantities to keep themselves safe in the pandemic.
Moreover, the organic food sector is also going great guns as people are increasingly demanding organic and nature-friendly products. For example organic food supplier Nourish Organic Foods Pvt. Ltd has seen a sales growth of 30% between February and March 2020!
Hence, the COVID-19 pandemic has been a bittersweet experience for the FMCG sector with some of its subsidiaries earning huge profits while the others facing severe losses.