I had gone to a modern trade outlet on Sunday and I was amazed to see so many new brands in FMCG space.
These brands are slowly catching the eye of the consumer as they are offering something unique to them.
These start-ups are able to spot the shift in the consumer mindset and are developing their products accordingly.
As a result of that FMCG space has become the most exciting category.
Some trends are dominating the market as never before.
“Am I healthy?” trend
This biggest trend going around in the world today is Health.
Organic food, health shots, superfoods, gluten-free foods, baked snacks.
And Indian consumers have also embraced this movement wholeheartedly. The growing awareness among people about health has made them look for the options which are healthy, free from GMO’s and pesticides.
Consumers are becoming passionate about health and have resonated with this new idea of a gluten-free diet.
Red wine, gluten-free snacks, flavoured water with vitamins, baked yoghurt is your new category.
Are companies ready to face this new customer?
Are Processed Foods good?
As the big FMCG players are reaching out to the rural markets in order to enjoy economies of scale, the consumer at the top of the pyramid is not being addressed. That is where many start-ups have found the gap and they are trying to fill it in through their innovative products.
These products are catering to convenience, authenticity and hygiene factors. They are trying to give their consumer the real experience by communicating things like place of origin, how it is grown and processed etc.
Few such examples are Extra Virgin Olive Oil from Greece, Epigamia, ID Fresh, Yogabars etc.
Although the weightage of processed foods in the market is small still they pose a huge potential for the future.
Be Vegan, be smart
Being Vegan is the fastest trend catching in western countries and has reached Indian markets too.
This entire movement is driven by the philosophy of preventing cruelty to animals.
Vegans do not eat any meat and dairy products.
A country like Israel has more than 5 percent of their population who are vegans. Similarly in the US, and European countries like UK, Germany and France, this movement has picked up speed.
And Vegan movement in FMCG space has opened a new window of opportunities for start-ups.
Packaged vegan food, vegan restaurants, vegan clubs, Mock meats (food products which taste like meat products but are made from plant-based sources) will open a new category for start-ups.
Some start-ups are promoting their products based on ethics.
Associating them with the Fairtrade movement and ensuring fair wages for farmers has worked really well for them.
This inclusiveness appeals to consumers and gives them a positive feeling when they buy a product.
Consumers want to buy products from the companies whom they perceive to be ethical
Challenges they have to face:
1. Getting into Retail:
Getting into the offline Retail market is the biggest challenge for them because of the disaggregation of trade.
Low initial sale volume coupled with high cost of the sales team can be demotivating to newcomers
So they start off as an Internet brand.
But the internet has its limitations and you can reach a small percentage of your target audience
2. Right Talent:
Right talent is a major issue for them.
It is always difficult to survive without a strong team.
And economies of scale can’t be availed without a strong and effective team in place.
And there is always an element of risk in associating with start-ups.
3. Lack of new Technology:
Technology in FMCG manufacturing is mostly imported from advanced countries.
This adds up a huge cost and many of start-ups find themselves not in a position to invest in the latest technology.
So they end up with the out-of-date technology available.
Some who understood these challenges have come up with interesting solutions.
Many companies are emerging as Sales and Distribution network which are ready to extend their helping hands towards these start-ups.
They get onboard with these start-ups and take complete care of sales and distribution for that particular brand.
Such collaborations will definitely help them to reach next level.
For start-ups, FMCG will be the most exciting space to be in near future.