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FMCG industry

COVID-19 Impact: Market Assessment of the Changing FMCG Industry in the GCC Region

As the coronavirus pandemic hits the world, we can expect ginormous changes in consumer buying behavior. This will have a severe impact on retailers globally. Market assessment experts at Infiniti Research have closely monitored the changing FMCG industry patterns, this article outlines the specific challenges that the coronavirus outbreak could have on the FMCG sector in middle eastern and GCC countries.

GCC countries are already faced with a bleak economic growth pattern and several other economic challenges including sluggish GDP growth, declining oil prices, and regional turbulence. As the governments in countries such as the United Arab Emirates (UAE) and Saudi Arabia prepare to undertake measures to contain COVID-19, several businesses may be at risk. Retail industry experts at Infiniti Research have identified that there will be a huge surge in the demand for industries that fall in the ‘essentials’ bracket including packaged goods, consumer health and personal well-being, and home care products. For several other sectors, the situation could prove to be extremely tough. Infiniti Research has identified some key strategies for companies in GCC and other middle eastern countries to mitigate the adverse effects of COVID-19 on their business.

Companies in the FMCG industry that are more agile and responsive to the changing consumer demands are in a stronger position to recover faster from the existing crisis. Request a free proposal for deeper insights on how COVID-19 could impact your company and key strategies to prevent the crisis from turning catastrophic for your business.

Impact of coronavirus on the FMCG industry

How coronavirus will impact the FMCG industry in the middle east

Prices to remain stable

It is a known fact that middle eastern countries rely heavily on imported goods. From a consumer point of view, there is an increasing worry that retailers may choose to price gauge essential goods due to the current situation where market demand is much greater than the supply. However, governments have ruled this worry as unfounded and have urged retailers across the region to undertake measures to increase supply to meet the heightening demand. Furthermore, since there has been a sudden strengthening of the US dollar, and as several GCC countries are pegged on to it, the chances for prices in the FMCG industry to skyrocket are highly unlikely. However, in the long run, this may be largely dependent on the availability and adequate supply of goods.

Shift towards local production

Consumers are increasingly buying products that have longer shelf life fearing a global manufacturing and supply slowdown. As a result, in countries like UAE, apart from products such as pasta and rice that have a longer shelf life, the snacks and savories category in the FMCG industry has been witnessing steady growth.  In response to rising concerns, some of the top packaged food companies in the middle east have taken to social media to alleviate such growing consumer anxiety relating to product shortage.     

‘Cashless’ to become a prominent trend

The rising panic over coronavirus spread could result in consumers moving towards cashless payments and further stem digital connectivity in the region.   This trend could intensify as a greater number of people are staying indoors and the rise in the number of online prepaid orders. As a result, contactless payment gateways in the middle east can expect a surge in demand.

Single brand and luxury retailers at high risk

Coronavirus spread is expected to impact the sales of single brand and luxury retailers. Entertainment and leisure sectors are also expected to suffer dramatically as consumers will be less likely to purchase expensive tickets and the declining tourism will add on to the woes of companies in this sector. On the contrary, bricks-and-clicks stores like Sephora are likely to benefit from the reduced footfalls in shopping outlets and malls.

Want more insights on how to prepare your business to survive for the impact of the coronavirus outbreak. Get in touch with our market intelligence experts for comprehensive insights.

demand and supply

Enhancing Supply Chain Operations and Reducing Operational Cost by 27% for a FMCG Company – Demand Planning and Forecasting Analysis

FMCG Industry Overview

Fast moving consumer goods or FMCG market is anticipated to witness substantial growth owing to the surge in the trend of online shopping and rise in disposable income of consumers. Besides, the expansion of FMCG network in rural areas of developing countries is expected to contribute to the growth of the FMCG market. On the other hand, the entry of new players, inefficiency to deal with complex taxation structure, and lack of coordination between supply chain tiers are expected to hamper the global FMCG market growth. Owing to such challenges, companies in the FMCG market are focusing on providing customized solutions to customers and enhancing the customer experience to gain a significant share in the market.

This success story highlights how our demand planning and forecasting analysis helped a company in the FMCG market to tackle supply chain challenges coming their way and slash inventory cost.

There are several challenges that companies in the FMCG market will need to address to align the current demand and supply requirements. Our demand planning and forecasting analysis will help you to efficiently manage supply chain activities and plan inventory processes. Request a FREE proposal today!

Business Challenge

The client is a FMCG company based out of Germany. The company supplies food and beverage, personal care, health care, and home care products.

Our client, a FMCG company, wanted to streamline their supply chain activities for improving customer targeting, meeting market demands, and managing inventory requirements. Unexpected fluctuations in the product demand made capacity planning challenging for the client. Due to this, the client also faced difficulties in maintaining the right balance between supply and demand. This subsequently resulted in customer dissatisfaction, increased expenses, and loss of sale for the company. They chose to partner with Infiniti Research to leverage their expertise in offering demand planning and forecasting solution.

Other challenges that the company in the FMCG market encountered were:

FMCG market challenge #1: Lack of end-to-end visibility and collaboration in a multi-tier environment

The client noted that leading companies in the German FMCG market have already started leveraging multi-tier supply chain visibility techniques to enhance visibility into suppliers’ supply chain processes and get products to market more efficiently. The client, therefore, wanted to analyze their competitors’ supply chain processes and identify cost-effective technologies to gather actionable and real-time supply chain information.

FMCG market challenge #2: Lack of planning and coordination between supply chain tiers

The client’s lack of access to timely and accurate data from supply chain parties made it difficult for them to synchronize supply and demand. This also increased customer churn as the client failed to deliver products to the right locations at the right time. The company in the FMCG market, therefore, wanted to analyze factors impacting the product demand and build a contingency plan to tackle this challenge.

FMCG market challenge #3: Dealing with unexpected and seasonal changes in product demand

The unexpected and seasonal changes in product demand increased conditions of over-stock and stockouts for the client. This pressurized the company in the FMCG market to outsource work to third-party logistics providers during periods of high demand. The client, therefore, wanted to identify the right partners to support them in their operations during periods of peak demand.

Demand planning and coordination across multiple supply chain tiers are prerequisites to ensure that the right products are delivered to the right locations at the right time. Get in touch with us to leverage our demand planning and forecasting analysis to solve similar business challenges.

Our Approach

The experts at Infiniti Research adopted a five-phased approach that involved:

Market research study to analyze the German FMCG market. The factors such as FMCG market trends, market size, industry developments, and market potential for the next five years were analyzed.

Market opportunity assessment to analyze profitable opportunities in the German FMCG market. This phase of the engagement also involved analyzing factors impacting the product demand in the market.

Inventory management solution to analyze the supply-demand patterns for the past five years and identify periods where demand peaked or experienced a significant drop.

Demand forecasting analysis to evaluate the potential demand for products by considering the past sales data and market demands.

Competitor analysis solution to identify cost-effective technologies leveraged by the top companies in the German FMCG market to track the flow of inventory throughout.

Accurately forecasting, planning, and managing inventory is one of the biggest challenges faced by companies in the FMCG market. Our demand planning and forecasting analysis can help you to achieve these strategic objectives. Request for more info here!

Results Obtained

The insights obtained from Infiniti’s demand planning and forecasting solution helped the company in the FMCG sector to analyze the potential demand for products in advance and integrate supply and demand planning. Also, the client was able to build a contingency plan to better manage inventory activities. By identifying similar cost-effective technologies leveraged by their competitors, the company in the FMCG market was able to increase real-time visibility into their supply chain processes. In addition, the client was able to reduce communicating gaps between staff, drivers, and distribution center by having a proper track of the flow of inventory through and around the distribution center.

With Infiniti’s demand planning and forecasting analysis, the client was able to slash inventory cost and reduce time to market. In addition, they were able to identify the right business partners to support them at times of peak demand. They were able to reduce operational cost by 27% and profits by 13%.

Interested to learn more about our demand planning and forecasting solution and their benefits for your business?

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