The FMCG (fast-moving consumer goods) sector is the fourth largest in the Indian economy. With a large consumer base, it offers one of the world’s biggest markets with high potential growth in semi-urban and rural areas. Given the large consumer base, the Indian market is not difficult to penetrate, but the bigger challenge is to maintain one’s market share and then thrive. When it comes to eco-friendly products, the challenge becomes ten-fold. Other than maintaining a cost-effective production and distribution cycle, businesses must also create awareness about their product.
Despite these immediate challenges, the long-term growth of eco-friendly products seems increasingly promising. With rising awareness of sustainability and increasing competition from global brands, adapting eco-friendly products may be the only way to go as we step into the future. A WWF (World Wide Fund for Nature) report on promoting environmental sustainability in the Indian retail sector points out the necessity of encouraging sustainable practices not just as a means to create a more nature-friendly ecosystem, but also to counter global organizations that have taken the lead in the area.
Sustainability in FMCG & Retail
What does sustainability in FMCG and retail entail? In simple terms, it is the implementation of sound eco-friendly practices that reduce any harm to the environment and help conserve natural resources. It extends from procurement of raw material to manufacturing practices, packaging, and distribution. The key sustainability practices adopted by global businesses include reducing greenhouse gas emissions, energy conservation, water conservation, appropriate packaging, waste reduction, and recycling.
In India, many FMCG companies have taken the lead with innovative measures, such as increasing the use of solar energy in their operations. The leading organizations start with careful procurement of raw materials. For instance, many eco-friendly products today are made from plants that are readily available and abundant in India, such as sugarcane, bamboo, wheat, rice, and corn.
One of the major concerns in the FMCG market is the packaging. Given its usage, it is ubiquitous and an essential part of our daily life. Single-use plastic packaging has a long-lasting carbon footprint and leaves a debilitating impact on the environment through landfills and by accumulating in oceans. The e-commerce industry, one of the fastest-growing industries and a major driver for the FMCG industry, has added to the problem as they rely heavily on plastic packaging to ensure secure and tamper-proof delivery.
D2C transportation allows for more responsible transportation with many companies adopting green packaging. The trick here lies in recycling. Other than using recycled materials, such as recycled paperboard, many companies are also encouraging consumers to recycle and treat waste more responsibly. Public awareness campaigns have played a major role here in educating people about the importance of recycling and educating them on the different means to do so.
Changing Consumer Perceptions
Ultimately, the need for sustainability will become more and more critical as consumers themselves lead the change. A recent Capgemini study shows a remarkable shift in consumer perceptions worldwide when it comes to sustainability. India was among the countries that were surveyed with Indian consumers showing a high preference for sustainable products. The study showed that 79 percent of consumers reported changing their purchase decisions based on inclusiveness, environmental impact, and social responsibility with 52 percent reporting an emotional connection with sustainable practices. 42 percent of people had already switched their purchases according to environmental, social, and economic impact with 37 percent of people showing a willingness to follow the same path.
Interestingly, the COVID pandemic seems to have increased the preference for sustainable practices, such as following responsible packaging. Indians also showed the highest preference for locally-sourced products with 84 percent saying that they would buy local goods instead of imported goods.
Accessibility and Affordability
Despite the rising awareness for natural and eco-friendly products for a healthier and cleaner lifestyle, this path is not without its challenges. The biggest of these is accessibility and affordability. In order to win the retail market in the eco-friendly FMCG sector, manufacturers have to make sure that their products are both easy to buy and affordable. Maintaining a high scale of production and streamlining distribution is one of the solutions. Beco has bridged this gap by offering affordable products with a D2C distribution system.
Buying sustainable products is one of the important steps that we can take to create a better and safer future for our children. Our small purchases have a big impact on our planet and it is the responsibility of each of us, businesses and consumers alike, who can start the change by being more conscious of our decisions. As more people gain this realization, we are bound to see more eco-friendly products in retail from both new players and old.