After 2 year lull, consumer goods companies gear up for flurry of launches

Consumer-facing companies are accelerating launches over the next 4-5 months with big back-to-back events between March and June this year - the IPL T20, General Elections and ICC World Cup. The flurry of launches comes after a lull of two years that saw the roll-out of the Goods & Services Tax (GST) and demonetisation, which impacted trade channels and liquidity.

Packaged foods company Nestle plans to launch two dozen products this year, beverage maker Coca-Cola is leveraging its sponsorship rights of the ICC and IPL to launch products in the peak season for soft drinks. Britannia is entering new categories to ride the buoyant consumer sentiment in the country, while makers of televisions and air-conditioners said they have started rolling out new products and investing in advertising to leverage the upcoming season.

“We expect double-digit volume growth with consumption picking up as we are in an election year. Products launches, accelerating innovation and premiumisation of our portfolio will be our core focus,” Britannia managing director Varun Berry said. Companies are also of the view that measures announced in the interim Budget on February 1 is expected to trigger rural consumption over the next two quarters.

Chairman of Nestle, Suresh Narayanan, said at a media round table last week that his company is evaluating launching two-three dozen products across categories in 2019. The maker of Maggi instant noodles and Nescafe, which crossed the Rs 11,000-crore sales mark last year, said it is focusing on volume-led growth fuelled by over two dozen potential launches it is currently evaluating.

“We expect the consumption sentiment to improve because of multiple macro factors. We will stay focused on innovation-led volume growth. That matrix will not change for us,” Narayanan said.

Industry executives said television makers like Sony, Samsung and LG too are lining up their biggest launches this year with multiple viewing events including election. Even smartphone brands like Xiaomi, Samsung and Vivo are going ahead as per plans.

“The lingering effect of demonetisation and change over to the GST regime in last two years is waning and sentiments will definitely improve after elections,” said Sony India managing director Sunil Nayyar. World cup cricket has always boosted television sales and with signs of an early summer setting in, durables will also get a boost which will improve cash flow in the market, he said. “With so many positive indicators, we would have our highest new product launches this year”.

A report by WPP-owned GroupM released two weeks ago forecast ad spends this year will be fuelled by the Cricket World Cup and Elections, and FMCG, auto, retail, e-commerce, besides tech/telecom are expected to contribute two-thirds of the ad expenditure in 2019. The report said India now tops the list of fastest growing ad markets globally, and said India's ad investment is expected to reach an estimated Rs 80,678 crore in 2019.

Tata-owned Voltas managing director Pradeep Bakshi said there might be some a brief impact in rural and semi-urban markets during elections, but there should not be much disruption if the weather remains hot.

For beverages companies which see sales peak in April-June quarter, Coca-Cola said it will leverage its 5-year global sponsorship partnership as exclusive non-alcoholic beverages partner of the ICC till 2023, and co-presenting sponsorship for IPL, with multiple campaigns backed by launches.

FMCG firm Emami director Harsha V Agarwal said the company will line up its summer launches avoiding the election days to duck any disruption. “Launches will be postponed at most by 15-20 days. Overall, purchasing capacity tends to improve in an election year,” he said.

Some companies like Sony and Godrej are also booking advertisement space and spots from now fearing rates going up during the election time and the World Cup. Godrej Appliances business head Kamal Nandi said brands are blocking spots since it could be a challenge to get good spots later.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/personal-care-pet-supplies-liquor/after-2-year-lull-consumer-goods-companies-gear-up-for-flurry-of-launches/68161829