COVID-19 lockdown in several states disrupt FMCG firm’s momentum

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FMCG organizations, which saw sales before recovering COVID-19 level in June, are questionable if a similar momentum could be kept up in July because of discontinuous and confined lock-downs in several parts of the country which have affected manufacturing and supply chains.

As the industry waver between lockdown and reopening in many states, Organization such as ITC Limited and Godrej Consumer Products Ltd are banking on inventories stocked up to maintain supplies to the market.

They anticipate an effect on their July production, with some of their local production units due to restriction of labor movements apart from their warehouses as well as vendors coming into the intermittent lockdown zones, which are being proclaimed by states to control the spread of COVID-19 cases.

Godrej Consumer Products Ltd (GCPL) chief executive –  India and South Asian Association for Regional Cooperation (SAARC) Sunil Kataria told Press Trust of India(PTI) that “This is a very tricky situation and there is no debate in that this discontinuous lockdown, which is creating a disturbance in some kind of rhythm which we have got into the supply chain”.

To add-on, he stated that this is a “very fluid situation” as “unpredictability is quite high” about a specific region or area and “These are unpredictable lockdowns and the prior lockdown was a pan India lockdown which is for the entire nation. Presently, these lockdowns are extremely dynamic and fluid as they are happening in very select pockets. Presently you don’t know about the pockets of yours, which would be affected or not. Moreover, some are for 10 days or 15 days and uncertainty is very high.

ITC Limited spokesperson stated that “The lockdown reported in various states, which is required to contain the increasing spread of the pandemic, can cause temporary and localized interruptions to manufacturing and the supply chain”.

 FMCG players had created momentum by starting to re-establish their supply chain in May and gradually ramped up as markets reopened.

When inquired as to whether there could be an effect on the organization’s July production, he said, “By end of June, (the company had reached) around 85 to 90% production but July would be different compare to previous because of several lockdowns happening. And moreover, he stated Godrej Consumer Products Limited (GCPL) has a “decent amount of inventory to take care of that disruption”.

Correspondingly, the ITC Limited spokesperson said the Kolkata-headquartered company is taking efforts to confirm enough amount of stock availability of its FMCG items in the market over these states.

According to industry specialists, FMCG companies ought to be prepared to deal with the impact of such localized and discontinuous lockdowns as these are likely to proceed until there is a decline of the COVID-19 cases in the nation. Another aspect of these localized lockdowns is the impact on the labour movement to factories.

“We were going for the nearby workforce as vagrant workers were not accessible. But unfortunately, this intermediate lockdown has made its very own different issue,” Kataria said, adding while the labour shortage was high in May month it had improved in June month.

According to the report from the data analytics firm Nielsen, the FMCG sector has reached pre-COVID-19 level sales in June month.

Though the nation is presently going through Unlock 2.0 phase many state governments including West Bengal, Bihar, Tamil Nadu and Assam have imposed local lockdowns. Besides, several cities such as Pune and Bengaluru are also under lockdowns after a rise in the number of cases.

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