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Impact of COVID-19 on FMCG distribution: Tie-ups with food delivery and hyperlocal delivery apps

Updated: Oct 12, 2020

Author: Priyam Mukherjee

After the SARS virus pandemic in 2003, COVID-19 has caused a serious health crisis in the 21st century. This pandemic is not only a health calamity but also caused the global economic recession and weakened various sections of societies at its very depth. As the world is locked in their homes, several industries have been adversely impacted by the health pandemic and distribution challenges of the FMCG for last-mile delivery is one of them.

The recent data shows that the growth rate of the FMCG industry has dropped from 13.4% in Q4 of the financial year 2019 to 10% in Q1 of FY2020 to 7.3% and 6.6% in Q2 and Q3 of FY2020. Since the FMCG sector in India is the 4th largest industry sector with 3 major segment- Food and Beverages (19%), Healthcare (31%) and Household and Personal Care (50%), is observing a surge in the demand for products such as soaps, handwashes, sanitizers, disinfectants, wipes, masks, home cleaning products such as floor cleaners, kitchen cleaners, toilet cleaners along with food staples, and convenience foods such as instant noodles, biscuits, frozen foods, flour, cooking oils, instant mixes, and nutrition. But, the lockdown imposed has caused labour shortage due to migration and unavailability of trucks for distribution. Several distributors are locked in their homes and panic buying at the early stages of lockdown was also a state of concern among major FMCG players.

Thus, the FMCG majors in the country tie-up with the food delivery and hyperlocal delivery apps as an alternative in order to ensure the last mile delivery of essential commodities. In this, context, Marico and Godrej Consumers Products Limited (GPCL) have to tie up with food delivery partners Swiggy and Zomato respectively. Britannia has tied hands with Dunzo to deliver essential products such as biscuits, cakes, milkshakes, wafers, and ghee. ITC Foods has partnered with Domino’s Pizza, while Tata Consumers Product joined hands with Flipkart.

Sanjay Mishra, COO, Marico, India sales, and Bangladesh, stated that the tie-up with Swiggy and Zomato aims at resolving the supply chain disruptions and delivery operations issues caused by the pandemic.

Godrej Consumer Products Limited (GPCL) has also partnered with B2B supply chain start-up Shop Kirana and car rental Zoomcar. Sunil Kataria, CEO, India, and SAARC, GPCL stated that by engaging with Zoomcar they intended to access delivers of all possible essential commodities from personal care, hair care, home care, and household insecticides categories across cities of Mumbai, Nagpur, Pune, Madhya Pradesh, and Gujrat. He also stated, Shop Kirana will provide supplies of GPCL soaps to individual retailers.

ITC on the other hand converted its Himachal based premium perfume fragrances Essenza Di Wills and Engage plant into hand sanitizer under its disinfectant portfolio brand Savlon. Sameer Satpathy, Chief Executive, Personal Care Product, ITC Limited stated: “ This initiative reinforces our efforts to enable enhanced production and supply of Savlon range of hygiene products in the market which is the need of the hour to help fight the virus and contain its spread ”.

Apart from this, ITC has also partnered with community-centric apps such as Apna Complex, My Gate, No broker, and Azgo to deliver all essential products under its portfolios. According to the recent news, ITC has also partnered with Amway in order to launch and further distribute health care immunity products like B Naturals+ (orange and mixed fruit variant). These will also help them in competing with Dabur, Coca Cola, and PepsiCo. Hemant Malik, Divisional Chief Executive, ITC- Foods Division stated “ The partnership will ensure that the B Natural+ range reaches consumers through a credible and expert partner and to get quick consumer feedback. Initially, Amway is expected to accelerate reach to the consumers while the new range will also be available across all trade channels and e-commerce through our distribution network ”

Moreover, the leading skincare brand Nivea India, who recently started manufacturing hand sanitizer in its Sanand plant in Gujrat and launched it recently in the market has partnered with Swiggy and Zomato in order to deliver its hygiene products across 30 cities, including Delhi, Mumbai, Bengaluru, Kolkata, Jaipur, Bhopal, Indore, Raipur, and Kanpur.

In this context, Nivea India Sales Director Shailesh Viswanathan said that as a responsible skincare brand they will ensure that consumers have continuous access to daily hygiene essential commodities.

He further extended, “ In this time of crisis, we stand together and work together to ensure the safety of the consumers by delivering product safely and directly to the doorsteps”

According to the company, the consumers can place their orders for Nivea’s essentials hygiene products through Zomato or Swiggy app on their phones at ‘Nivea Care Shop’ under the grocery sections.

Thus, it can be concluded that the tie ups of the FMCG, food delivery and hyperlocal has built a completely new distribution business model for most of the FMCG. Companies like Marico and GPCL are even planning to continue these tie ups even after the lockdown in post pandemic era. A recent Nielsen report, stated that the overall e-commerce FMCG sales in the county currently stands 2% and is expected to grow 5% by 2022. Whether, the online home delivery of essential commodities will surge demand in post pandemic era or consumers will still like to visit the stores and kirana that is the big question. Well, the future is uncertain. History will definitely be re-composed.

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