FMCG firms cut product launches in 2013

The economic slowdown has taken its toll on the Indian fast moving consumer goods (FMCG) sector. Leading FMCG companies have become cautious and drastically cut down on new product launches.

"We have seen a consistent decline in innovations across all FMCG players," says Ranjeet Laungani, vice-president, Innovation Practice at Nielsen, a market and consumer research firm.

Indeed, this trend was visible last year as well. There was a 2.4 per cent decline in new product launches in 2012 but this year there has been a marked slump, says Nielsen.

Indeed, before the onset of the economic slowdown, FMCG companies were gung-ho on the Indian market.

About 10, 000 innovations were unveiled in 2010 and another 14,500 in 2011, according to Nielsen.

A BCG-CII report in 2012, estimated consumption in India to clock exponential growth and touch $3.6 trillion by 2020, from $991 billion in 2010.

But clearly companies have taken note of the underlying challenges and don't want to rush in blindly with new launches.

"India is a big and growing consumer market, but not an easy one. Understanding the size and shape of the prize and where it is hidden in the challenging fabric of India are the first steps to capturing it," says the BCG-CII report.  

According to Nielsen, it takes companies about 2.5 years from the concept stage to introduce an innovation in the market. But only a small number of innovations make an impact. Globally, about 10 per cent of new products manage to survive.  

Most FMCG companies in India are now pushing products deeper into the distribution chain to tap rural consumers.

It is likely then that these companies will focus on changes in packaging and pricing of products, along with new consumer insight-led modifications, rather than innovations for some time to come.