Executive Summary:
In an era marked by rapid market changes and heightened consumer expectations, Fast Moving Consumer Goods (FMCG) companies face unique challenges. This article distils insights from industry leaders and our expertise at Delta Innovate, offering actionable strategies to navigate supply chain disruptions, embrace sustainability, and leverage digital transformation. We aim to provide FMCG brands with the tools to thrive in a dynamic global market.
As the third instalment of our webinar series ‘The Innovator's Forum: Elevating Customer Value Propositions,’ we brought together leaders in the industry for a 90-minute webinar, ‘Resilience and Relevance: Adapting FMCG Brands for Tomorrow's Market.’
We assembled FMCG experts:
Eyassu Menelik, Co-founder of MyStock
Matthew Davey, CEO & Co-founder of TUNL
Candice Schooling, Head of Sales at Rainmaker Media
Defining Fast Moving Consumer Goods (FMCG)
During our discussion, when we refer to fast moving consumer goods (FMCG), we are referring to any consumer packaged goods (CPG), which are products that are in very high demand.
These products are often sold quickly and are widely considered affordable - they are “fast-moving” as they are quick to leave the shelves of a store or supermarket as they are used by consumers regularly.
Examples of Fast Moving Consumer Goods (FMCG)
Consumer packaged goods (CPGs) in the FMCG sector are commonly classified into three main categories:
- Food and beverages (including groceries; carbonated soft drinks; alcohol)
- Home care (cleaning supplies)
- Personal care (toothpaste; deodorant; body creams)
Yet, as you will recognise in our webinar, we take a focus on the food and beverage sector, as well as touch on some aspects of the Slow Moving Consumer Goods (SMCG) industry, as well.
Fast Moving Consumer Goods (FMCGs) vs. Slow Moving Consumer Goods (SMCGs) Industry
Durable consumer goods, often referred to as Slow Moving Consumer Goods (SMCG) products, have a lifespan exceeding one year. This category includes household items such as:
- Appliances
- Furniture
- Home improvement products
Unlike the FMCG products, these items have a lower sales frequency and do not experience rapid turnover.
Given that we are now familiar with the terms used, let's dive into the insights learned during our webinar, ‘Resilience and Relevance: Adapting FMCG Brands for Tomorrow's Market.’
Key Insight 1: Expect Supply Chain Disruption
The FMCG sector faces inevitable supply chain disruptions, from global conflicts to economic instabilities. A 2020 McKinsey report stated FMCG companies can expect disruptions lasting one month or longer every 3.7 years.
Eyassu Menelik, co-founder of MyStock, highlighted that in recent years, global conflicts and the COVID-19 pandemic were huge disruptions, leading FMCG brands to rethink their entire business models.
Delta Innovate’s approach, centred around digitalisation and decentralised supply chains, has proven effective in mitigating these challenges. We have a history of demonstrating how strategic planning and digital solutions can transform disruptions into opportunities for growth and innovation.
Other supply chain disruptions include:
- Consumer Behavior Shifts: Consumer behaviour has undergone a monumental shift, driven by various factors such as economic insecurity, employment issues, inflation, and currency devaluation. Consumers are becoming more price-sensitive and are questioning brand loyalty, seeking value and quality at better prices.
- Private Labels Opportunity: Private labels have seized the opportunity to offer affordable quality, challenging legacy brands that may have relied on past brand equity. Consumers are demanding quality but at more competitive prices.
Suggested strategic approaches to combat supply chain disruption:
- Digitalisation: FMCG brands are advised to embrace digitalisation for transparency in the supply chain, although challenges exist in gaining accurate insights into consumer trends.
- Product Design: Brands should take ownership of product design, moving away from short-term gains and focusing on long-term brand equity.
- Decentralised Supply Chains: Platforms offering decentralised supply chains, especially in Africa, can help brands react quickly to disruptions by reallocating resources.
- Direct-to-Consumer Engagement: Brands should consider engaging directly with consumers to understand sentiments and improve the overall brand experience.
Overall, FMCG brands need to adapt to the evolving landscape by implementing strategic approaches that prioritise agility, consumer engagement, and a focus on quality at competitive prices.
Key Insight 2: Sustainability Has Varied Definitions
In 2024, sustainability is considered a significant aspect of global consumer decision-making. However, sustainability can be defined in various ways (and often is defined differently in other contexts).
Global Perspectives on Sustainability:
The global perspective on sustainability looks a little different to this South African stance, as other parts of the world will often take a direct focus on the Sustainable Development Goals (SDGs).
Sustainable Supply Chain Challenges in South Africa:
With a focus on the supply chain, Matthew explained the challenges of moving FMCG products within South Africa, sub-Saharan Africa, and globally, including:
- Physical distance to market
- Increased emissions
- Inflated costs
When it comes to the South African context, Matthew Davey, CEO and Co-founder of TUNL, suggested that sustainability be defined from a business perspective - where FMCG companies should focus on building sustainable businesses with profitability and job creation at the forefront.
Essentially, sustainability has a multi-dimensional nature, which also needs to consider disruptions like COVID-19 and geopolitical tensions that affect supply chains.
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