Economy slows down; FMCG brands gain market share!

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Blessing in disguise! This is holding true for established FMCG brands in the Indian market, most of them gained on the market share though economy has slumped. Consumer’s preference to stick with established and proven products during a economic lull period led to this better performance of these brands. Consumers dont like to experiment and try out new products during this time, it has gone in favour of these established brands like Gillette, Colgate, Mondelez and Dabur. The interesting trend is purely a result of consumer’s risk averse psychology when they have less money to spend.

Now this is not a trend seen in some segments, it is seen across many consumer product segments ranging from tooth paste to washing powder to chocolates and cosmetics. However in certain segments the impact seems to be more. For example Dabur recorded 54% market share for its Real Juice, a health conscious product line though it has a premium pricing compared to other products. Overall, however the FMCG market in India has gone down by 6% in January-March quarter. Smaller firms are struggling in the wake of inflation to keep their pricing points, where as bigger firms have tried to spend more on promotion and product innovation.

Colgate and Godrej are riding high on innovation, the company sources confirmed higher turn over for their new innovative products; that helped them keep the competition at bay. These new products are almost contributing one-third of their total sales. Economic slump is not always bad, it helps in market consolidation and forces companies to innovate and promote aggressively as consumer demand is less. It is a classical case study on how consumer behavior during economic slump affects the market players.

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