David versus Goliath: How FMCG start-ups are taking on established behemoths

They may not boast huge marketing budgets, nor a decades old presence, or even a truckload of products and offerings. But for start-ups in the highly crowded and competitive fast moving consumer goods (FMCG) space, carving a niche for themselves entails leveraging the power of the latest technologies.

Backed by enhanced demographics, rising disposable income levels, changing consumer tastes and preferences, and the growth of organized retail, the FMCG sector is racing ahead. Research by industry body Assocham and TechSci reveals that the FMCG market in India is slated to zoom to $104 billion by 2020, from about $49 billion in 2016. And start-ups believe that technology lies at the core of their growth and expansion.

Vikas Lachhwani, co-founder of the caffeinated personal care brand MCaffeine, says the FMCG space has always relied on a cycle comprising ‘awareness, trial, adoption and recall’ to take products from launch to maturity. “This entire journey is front-loaded, which essentially means that a bulk of the effort and resources are concentrated in the early cycles of product launch. A lot of efforts there can be termed as carpet bombing. Start-ups have limited resources and there is an inherent need to disrupt this cycle to stay relevant in the market.”

Thus the need arises for start-ups to be agile and to react faster and more decisively, say experts. Compared to the larger brands, start-ups are required to evolve themselves on a real-time basis by tapping on the information that floats in social media and building their brands.

Lachhwani says that unlike a decade ago, when launching a brand meant setting up multiple geographies and investing in distribution, today, “with centralized warehouse management and effective customer tracking systems, the game has shifted.”

Backed by technology, analytics and agility, even a complex sector such as FMCG creates a level playing field for start-ups, say entrepreneurs. “Amongst its other multiple advantages, technology allows start-ups to tailor business processes to best serve customers, reduce costs and wastage, obtain greater scale, consistent quality, enhance customer experiences and cater to the market in a more effective manner and within a shorter timeframe,” feel start-up founders.

Says Anuj Rakyan, Founder of Raw Pressery, “As a pioneer of cold-pressed juice technology, we realise that consumers constantly look for brands that they can trust. Hence building trust through technology has become an area of importance. Technology that provides critical information and establishes 100% transparency will be a crucial space for start-ups in the FMCG market.”

Rakyan says that for Raw Pressery, technology has been an integral aspect, right from the stage of juice production to the end-delivery to the consumer. “Technology drives juice extraction through cold-press and natural preservation through High Pressure Processing. Robotics and Inventory automation ensure proper warehousing. Our supply chain has also seen a great degree of digitization which helps in exercising control over costs, quality, temperature and time. This helps build trust through tracking and traceability.” Moreover, within retail too, says Rakyan, the company is closely working with tech-developers to create heat-sensing devices that help maintain chiller temperature. “Data from technology applications help map the product journey for the consumer from the farm to the table. This helps in building trust through transparency while also being a great product differentiator,” adds Rakyan.

Meanwhile, Fingerlix, which is in the ready-to-cook foods space, has been utilizing technology to enhance its logistics and limit wastage to a minimum. Says the founder Shripad Nadkarni, “Since Fingerlix is in the fresh food business with a limited shelf life, technology plays a critical role. Especially in the areas of demand forecasting & inventory and in logistics. Technology is used for the optimisation of logistics. We would look to leverage Artificial Intelligence for demand forecasting very soon.”

At MCaffeine, says Lachhwani, they make use of customer relationship management systems to aggregate all customer related information. “We keep a track on all consumer feedback that is received through multiple channels and integrate it. Analytic tools like ‘R’ are used to understand and process the information and to generate insights. We believe the only way to grow is through intelligent insights,” says Lachhwani.

The start-ups seek growth opportunities to thrive in the market. Without revealing too much on their expansion fronts, they say that they expect growth on the sales, product and channel fronts and would launch innovative products through omni-channel routes.

A LEVEL-PLAYING FIELD

• Backed by analytics, even a complex space creates a level playing field for start-ups
   
• They would launch innovative products through omni-channel routes to grow