PM’s ‘local’ appeal pivotal for future of homegrown firms: Nadia Chauhan

Published: May 18, 2020, 9:43 pm IST

New Delhi: In an exclusive interview with IANS, Nadia Chauhan, Joint Managing Director and CMO, Parle Agro, said that Prime Minister Narendra Modi’s encouragement and appeal to consider products manufactured by Indian companies will prove to be a pivotal point for the future of homegrown companies.

Chauhan said that the unprecedented blanket restriction on movement and adherence to safety measures have not only made e-commerce the go-to channel for consumers to purchase what they need, but have also accelerated the e-commerce category in a massive way.

She said while the universe of outlets for FMCG products in India is over 10 million, today there are only 10,000-15,000 outlets that are actively operating and are accessible.

While the FMCG sector has been more resilient, Chauhan said that business at large has been impacted due to the closure of a number of retail outlets.

Among the issues in the supply chain, Chauhan pointed out that reduced labour force is one of them since many have migrated to their hometowns and there are restrictions on the movement of people across states and towns.

“However, the main issue continues to be the closure of retail stores, which are our main consumption points. Retail outlets need to reopen for us to boost consumption and restart businesses,” Chauhan told IANS.

Here the excerpts from the interview:

Q: What are your views on “vocal for local” campaign and how does it stand to boost Indian brands?

A: We at Parle Agro have always demonstrated the eternal sense of pride being a wholly Indian company from the very beginning. That quality has always been reflected in the iconic brands that we have built from scratch. Whether it was back then when we owned Thums Up or today when we have re-built our business with Frooti, Appy, Appy Fizz and Bailley, we are four generations of Indians.

Our founder Jayantilal Chauhan was fondly called the ‘Father of Soft Drinks’ in India. With his son Prakash Jayantilal Chauhan (my father) at the helm of business affairs, the company has continued to grow. He has inculcated a culture of ambition and pride within the organisation and together we are the largest Indian beverage company.

Among the significant focus points from our Prime Minister’s address to the nation on May 12 was the focus on Indian companies and the key role they had to play in achieving the vision of self-reliance. His encouragement, appeal and emphasis to the nation to consider products manufactured by Indian companies will be a pivotal point for the future of homegrown companies in my opinion.

There are some fantastic Indian businesses and brands in the market today. Many of which would have flourished to a greater degree had they been given the type of support they are receiving today. I recall from my own experience, back when I had joined the company, when our people got offers and joined MNCs, I’d ask why — there was a general glorification of MNCs. Times have changed and so has the perception. Today, there is immense pride in being Indian.

With the influx of support echoing the ‘vocal for local’ trajectory from consumers and media alike, I hope we see this taking shape.

In the past, the government has had greater representation of businesses that are non-Indian in our sector. I do hope that we now have a louder voice and greater consideration so as to jointly build India.

Q: What are Parle Agro’s initiatives to tie up with e-commerce players for the beverages category?

A: E-commerce has always been an important platform for Parle Agro. However, it did not offer significant growth opportunities for beverages until now. The unprecedented blanket restriction in movement and adherence to safety measures not only made e-commerce the go-to channel for consumers to purchase what they need, but also accelerated the ecommerce category in a massive way. We foresee high potential for ecommerce in the future. Hence, we spearheaded with a strategy of partnering with national and niche players to strengthen our business while also creating significant business opportunities for our e-commerce partners as well.

At present, the beverage category contributes a low single digit number towards the overall business of e-commerce players. By collaborating with ecommerce platforms across the length and breadth of the country, we aim to help increase the contribution of beverages to the overall ecommerce business from the current minor share to a healthy 15 per cent contribution. We also have plans to introduce special SKUs and brands for this segment to cater to distinctive consumer needs.

Thus, while strengthening our own leadership in the category, we will also help e-commerce platforms capitalize on the beverage business. Parle Agro has a wide range of beverages that covers almost every sub-category of beverages other than dairy. From carbonated beverages to fruit beverages to water and soda, we cater to almost every beverage need of the consumer.

We have partnered with leading e-commerce platforms like BigBasket, Grofers, Milk Basket, Flipkcart super market and Swiggy. Tie-ups with Amazon, Zomato, Super Daily and Grocio, to name a few, are on the anvil.

Today when we look at e-commerce, we are not looking at it as a platform to leverage only during Covid-19, but as an important channel that will contribute significantly towards sales in the near future. Parle Agro has always invested in developing strong partnerships. Our collaboration with e-commerce platforms is with a long term vision that will help create value for all. This has always been the core of our organisation.

Q: FMCG is one of the few categories which was allowed to supply during the lockdown. Although there were logistics issues, has that improved consumption?

A: Yes, unlike many other businesses, FMCG did not come to a complete standstill. However, while the universe of outlets for FMCG products in India is over 10 million, today there are only 10,000-15,000 outlets that are actively operating and accessible. The heart of FMCG businesses is its distribution. Traditional trade channels and modern retail stores form the bulk of the sales. We are waiting for the time when it can all come back to normal.

In the current scenario of limited access to brick and mortar stores and people becoming averse to stepping out, online retail has emerged as the next best and effective mode of business. Our online sales through ecommerce grew by 300 per cent compared to the same last month. It has definitely provided business agility. However, business at large has been impacted due to the closure of number of retail outlets that are allowed to operate.

Q: As per a Nielsen survey, the value growth of the FMCG sector fell to its lowest in seven quarters due to the coronavirus pandemic. What is the outlook on the sector?

A: Almost every sector has been adversely impacted by the spread of the pandemic. However, the FMCG sector will be more resilient than the others and should get back on its feet quicker. The beverage sector too should spring up. We have already begun production and once distribution restrictions are lifted, we are hoping to steadily bounce back.

Q: What are the supply chain and logistics issues being faced due to the lockdown?

A: There are a number of issues that have risen in the supply chain and logistics due the lockdown. Reduced labour force is one of them since many have migrated to their hometown and there are restrictions on the movement of people across states and towns.

Another key issue is the varying transportation policies across the states. Procuring e-passes for every delivery vehicle for each state is time consuming and often delayed. There are also restrictions in the movement of vehicles with permission limited to just 2-3 vehicles per distributer. Depots in red zones cannot be accessed without stringent permissions, understandably so. And the work hours for CFAs are also limited thus creating a dent in moving goods in larger quantities. However, we have used the change in the store timings to our advantage. We are focusing on distribution during the early hours of the morning around 6 am to ensure that we are able to have our teams operate when it’s least crowded.

On the whole, we are running at reduced capacity due to the current issues in supply chain and logistics. However, we are hopeful and optimistic that restrictions will ease and mobility will improve soon.

Q: Are the relaxations made in the lockdown helping the functioning of the company and what is the status of the manufacturing plants?

A: The relaxations are helping the business to an extent. We have resumed operations of all our manufacturing plants while following the safety guidelines laid down by the government. We have our sales force operating in Government permitted areas, making deliveries wherever possible while strictly following the health protocols.

However, the main issue continues to be the closure of retail stores which are our main consumption points. Retail outlets will need to re-open for us to boost consumption and restart businesses.

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