FMCG companies get battle ready for localised lockdowns


Once bitten, twice hyper-prepared. Consumer goods companies said they have put their teams on hyperalert to ensure unhindered functioning of supply chains, distribution of goods and manufacturing – all to mitigate unexpected and sudden disruptions as states opt for localised shutdowns and curfews amid a second covid wave.

“We have put our teams on hyperalert; we are ensuring that inventory stocks are as close to demand centres as possible, supply cycles are quicker and in higher quantities,” said packaged water company Bisleri International chief executive Angelo George.

With the Maharashtra government announcing strict weekend lockdown and new restrictions including night curfew in the state late on Sunday, companies said they would require clarity on whether all daily use items have been classified as essentials, as was the case last year. “The industry will need further clarity on what all qualifies as essentials, with the new restrictions now,” George added. Essential services have been exempted from the night curfew.

Executives at large FMCG companies said they have stepped up supply chain agility.

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They are moving to a more decentralised and localised approach to minimise disruption on supply of key raw materials, and are ensuring adequate buffer stocks to prevent any unforeseen stock outages.


“We have reduced replenishment cycles of inventory from manufacturing plants to retail points of sale by half — it is about five days now, from the standard industry average of 8-10 days,” said Mayank Shah, senior category head at the country’s largest biscuits maker Parle Products.

“We are optimising inventory management and ensuring we maximise production across our plants, so we are prepared for any sudden disruptions,” said Sunil Kataria, CEO, India & SAARC,


Executives said besides better overall preparedness, they are also banking on sales through e-commerce and hoping for fewer curbs by authorities on interstate movement.

chief executive Mohit Malhotra said the company is applying learnings from last year on streamlining supplies and production in territories where curbs have been put in place. These include supplying in excess and increasing frequency of supplies to distributors in impacted markets.

The FMCG sector had reported 6% growth in the quarter ended December 2020, the fastest in 16 months, according to research firm Kantar Worldpanel.

But the resurgence of the pandemic is threatening to set back some of the recovery, analysts said, adding that even less strict lockdowns and social distancing norms could hurt sales, especially for discretionary categories or those which rely heavily on out-of-home consumption such as soft drinks, hair-colours, detergents and deodorants.

Commenting on the closure of restaurants and bars in Maharashtra announced late on Sunday, Hotel and Restaurant Association of Western India (HRAWI) senior VP Pradeep Shetty said: “We are doomed if we are expected to be both, shut for business and not receive any relief. The government has to meet us somewhere in between, take care of salaries, unburden owners of property tax, waive off statutory fees, and not generate electricity and water bills until the industry becomes completely operational again.”

ICICI Securities analysts Manoj Menon and Karan Bhuwania wrote in a report on April 2 that “companies with longer supply chains, or those with consumption markets being far away from production hubs, may face supply challenges. FMCG companies will likely again face challenges in demand planning, as they have to ensure availability of relevant stocks at point of purchase, which may get further complicated in case of household pantry filling”.

Credit rating agency ICRA flagged in a March report that uncertainty related to the near-term outlook has risen considerably, following the spate of new Covid-19 infections, which have necessitated localised restrictions. “If this trend proliferates, it would temper the extent of the base effect-led recovery that is anticipated in the immediate term, and may reignite supply-side disruptions,” the ICRA report added.


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