Aisle Dispatch: March 2020
Lux, Lifebuoy loosing market share + COVID-19 a tipping point for local brands + few more stories on FMCG in India
Stories
Lux and Lifebuoy and flagship HUL brands in skin-cleansing category and they are steadily loosing market share in India. Last few quarters have been slow but that seems more like a convenient excuse, usual tried-and-tested methods of price reduction etc. do not seem to be working anymore. R&D spend for incumbent brands are abysmally low, so no new products make it to shelf on time. Rapid growth of e-commerce players such as Nykaa and Purplle is also driving away customers from traditional brands - the wide range of merchandise on offer compels the consumer to try!
Consumers preferences are changing fast, there are more consumer segments and new needs. New brands are very adept at spotting unmet needs and are launching brands that build an emotional connect with the consumer, align with their current needs and aspirations. Glance through the portfolios of the venture capital firms and you will notice a range of innovative, category creating brands. With access to capital improving, new insurgent brands will soar in the next few years.
Same old, same old in CPG does not work anymore - Today’s consumers want significant choice and are willing to enter into a dialogue with the brands. CPG brands have to embrace variability and a consumer landscape that demands infinite variety. Ability to customize products with agility is the winning attribute of CPG the supply chain.
Same old, same old in CPG does not work anymore - Today’s consumers want significant choice and are willing to enter into a dialogue with the brands - Josaphine Coombe, CMO Nulogy
Ecosystem partners are adopting digital strategies to collaborate better with the brands - planning and collaboration are key areas of digitization. The transmission of demand data from shelf to contract manufacturing is still evolving and can be much better.
Why venture capital became the most dangerous thing to happen to DTC brands - it is not right to blame it all on venture capital. Brand building takes time and right partners early on is essential. The core aspect everyone seems to miss (blame it on FOMO, YOLO whatever) is flawed business models.
In case of both Brandless and Harry’s there were fundamental flaws in the operations and customer acquisition which resulted in their downfall or struggle. Owning the customer relationship is key, outsourcing that to a Facebook or Google is not sustainable in the long run.
India is still nascent with respect to DTC or insurgent brands but founders are learning fast.
They (marketplaces) may stop giving visibility to you and promote own brands. There is, to an extent, mistrust among entrepreneurs. - Yogesh Kabra, founder XYXX Apparels
Lessons from Brandless shutdown! We can see a bunch of articles on why it happened and lessons. I liked this one from Ashwin Ramasamy, who draws some interesting lessons by comparing Brandless with ALDI. I have visited ALDI and LIDL (ALDI’s main competitor) in the past and agree with observations made in the above article. If you are curious about ADLI, do read this piece on how ALDI changed the way Britain shops.
Caught My Eye
Building a strong consumer brand, data-driven operations and shareholder value in India is possible. Done for decades by some of the best entrepreneurs and managers in corporate India. Unfortunately these stories are not as celebrated as valley stories. Saurabh Mukherjea tells us a story about how Asian Paints built a strong brand (monopoly business) and used big-data decades before it was fashionable. Watch it, amazing talk.