MNCs to Drive New Product Launches in FMCG in the Near Term
MNCs to Drive New Product Launches in FMCG in the Near Term

Large multinational companies are likely to lead product development and launch more premium products in the market in the near future.

According to a report by ICICI Securities, several companies went easy on new product launches in the last two years given the pandemic-related restrictions as well as reduced consumer spending.

“We expect the new launches to be focused on premiumization in the near term. Companies may re-focus in the mass segment when the macro situation further improves. They will also likely look to manage inflation-led disruption in the (mass-end) price-point packs with bridge packs not really an NPD though and bridge brands – much more laddered architecture to drive upgradation," analysts at the brokerage said.

Even as market conditions have improved, companies and shoppers are now facing unprecedented inflation.

“We believe the MNC basket in consumer staples may potentially accelerate new product development (NPD) given the divergent strategies adopted by MNC and Indian players over the last two years. Multinationals (like HUL, Nestle India, and Colgate) went slow on new product development with a view that 2021-22 was a challenging year in terms of the supply situation, reduced consumer spending, and challenges with lower consumer footfalls, time at retail outlets," the analysts added.

On the other hand, domestic consumer companies like Dabur, Emami, and Godrej Consumer Products demonstrated higher new product development even beyond hygiene categories.

The report further added that Mumbai-based consumer goods maker Hindustan Unilever has already started increasing the pace of new launches.

“In the last six months, the company’s launches focussed in the premium beauty and personal care categories (including launches under Lakme), and foods. It had also launched powder-to-liquid handwash a few months back but that was more in response to competition, in our opinion. For now, we expect the new launches to be focused on premiumization. We expect HUL to drive innovation at the bottom end once the macro environment becomes more supportive," they said.

The report also pointed to Nestle India’s inclusion of the pet care business in the listed India entity and the introduction of the Gerber brand for toddlers.

Meanwhile, several domestic companies such as Dabur, Emami, and Godrej Consumer pushed out more products linked to immunity and hygiene. Marico and Tata Consumer Products have been launching new food products under the Saffola brand.

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