India’s fast-moving consumer goods (FMCG) industry, which stood at US$ 230.14 billion in 2023, is estimated to attain a market size worth US$ 1,288.52 billion by 2030, rising at a CAGR of 27.9%. Household and personal care products account for nearly 50% of FMCG sales, whereas food and beverage contribute 18-19% of sales. Despite such encouraging stats, the industry has its fair share of challenges. In this blog, we will highlight those issues. Continue reading!
Major Challenges Faced by the FMCG Industry
Storage Space Limitation
While FMCG brands continue to witness increased demand for products listed on the platform, the lack of adequate storage space is deterring the industry’s progress to an extent. Amid an expanding range of products and high consumer demand, FMCG companies are struggling to store adequate inventories at warehouses, leading to unorganised product sorting and delayed deliveries. As a result, many FMCG companies face the issue of over or understocking.
Seasonal Fluctuation
Customer demand does not remain the same throughout the year. It remains at peak at certain times and not so at other times. So, FMCG companies must forecast demand accurately to store enough at warehouses. This way, they can meet the increased demand for products and prevent unnecessary inventory pileup, which increases the storage cost for FMCG companies.
Limited Shelf Life Poses Quality Issues
Perishable FMCG products such as milk, bread and other food items come with a limited shelf life. Some of them are sensitive to temperature and other storage conditions. Ensuring optimum product quality and preventing wastage are crucial for businesses. However, some FMCG businesses go through improper product handling, suboptimal packaging and inadequate temperature control, resulting in spoilage and losses afterward.
The Challenge to Stay Relevant for a Wide Range of Customers
The success of FMCG companies depends on customer loyalty. From millennials to senior citizens, each age group purchases FMCG products and seeks enhancements to them as time goes on. Companies that make adjustments to the evolving consumer preferences on time fetch enormous success. The ones who stick to traditional practices record muted growth in a competitive market scenario.
India, currently, boasts of a young population with 65% of it falling under 35 years of age. However, as per the market report, it is anticipated that the country’s elderly population will likely rise by 41% to reach 194 million by 2031. To meet the demand of this loyal old-aged customer base, FMCG brands need to incorporate small changes in terms of ingredients used in the products. They would basically need to offer chemical-free products to attract that customer base.
At the same time, they need to focus on the younger generation by providing them with the products they need.
So, there’s a constant need to strike a balance when meeting the demand through products. It calls for calibrated market research to identify needs across different age groups and manufacture products accordingly.
Tight Regulatory Environment
As most FMCG products are sensitive to one’s health, there are inevitably a lot of safety and quality measures in place. Complying with these regulations is a must. Perishable food items, for instance, have certain expiry dates. So, companies need to ensure they sell their products before these dates while following the required compliance. Handling all these successfully remains a stiff challenge, particularly for new-age FMCG brands with limited operational flexibility.
Conclusion
The FMCG industry will need to devise effective strategies to beat the challenges that come their way. Companies need to constantly enhance their product portfolio and quality to keep delivering sound business. One more thing they need to work on is ensuring an adequate workforce at all times. They can ensure it by contacting reBLISS, a platform that connects businesses across industries such as FMCG with skilled professionals. Contact reBLISS today!
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