Accelerating analytics in CPG – the time is now!

The Consumer-Packaged Goods (CPG or FMCG – Fast Moving Consumer Goods) sector is excelling in Asia, particularly India: The Indian FMCG market has surged to US$56.8 billion since December 2022. With an estimated CAGR of 27.9% between 2021-2027, the industry is slated to reach US$615.87 billion. Diverse factors fuel this growth, including rising disposable income, growing urbanization, emerging rural markets, and the booming e-commerce sector. Despite global challenges such as supply chain disruptions, escalating costs, and changing consumer preferences & behaviors, the industry is thriving. Previous methods of attaining growth are changing, and Indian CPG players must examine best practices from their Western counterparts, chiefly leveraging data and advanced analytics. Confident business decisions backed by data: What should CPGs prioritize? The transition to data-backed decisions is being widely accepted across businesses globally; a Gartner report predicts that 65% of organizations will make the shift by 2026. The Indian CPG market, however, faces challenges due to a lack of maturity. The factors impacting this are data availability, IT & systems maturity, sales org structures & capabilities, route-to-market (RTMs), varying business models, and more. Therefore, a more custom approach to analytics is required for this market. While building foundational elements is critical, focusing on areas that unlock maximum business value is equally important. McKinsey states that businesses leveraging consumer analytics are 23 times more likely to outperform competitors and nine times more likely to excel in customer loyalty
Is this an area to focus on? With India projected to be the fastest-growing economy, boasting a growth rate between 6-7% in FY 2023-24, the country presents an enticing opportunity for CPG companies. While developed economies face a slowdown, CPGs are strategically investing in marketing strategies to cultivate customer loyalty in a market known for its price sensitivity.
Capitalizing on India’s High Growth: The dichotomy of high growth in India versus execution precision in the West underscores the importance of data analytics. Millennials and Gen Z consumers in India have emerged as the most influential ‘target consumer’ cluster for domestic and global brands. According to a Business Standard report, they account for 52% of the population and possess impressive purchasing power. This, coupled with India’s increasing prominence as a major manufacturing IT services & hub, has attracted significant investments.
The impact of digitization: A major development reshaping shopping behavior is the increase in smartphone penetration, set to cross the 100% mark by the end of 2023, up from 88.3% in 2020. This technological access and mobile-enabled payment systems create countless options for consumers and companies in the e-commerce space. In addition, a new form of e-com that involves prompt delivery of online orders, Q-commerce, is rapidly ascending in India. These companies like Swiggy, Blinkit, and Dunzo are playing with big players like Amazon, Flipkart, and Big Basket. The potential for exponential growth exists in the future of e-com and Q-com as technology and automation are crucial in optimizing supply chain operations. With these players moving to an app-based experience for their shoppers, they have also collected a huge amount of consumer/shopper data.
Enterprises that keep pace with digital advancements and harness data acquisition, automation, and attribution can stay ahead of changing consumer preferences, expand their market, and foster loyalty. The root of the problem is the current data strategy disjointed and fragmented. CPGs can ensure AI initiatives deliver better outcomes with a robust data strategy.
Addressing AI/Analytics Challenges: In the global market, there’s a growing focus on integrating Artificial Intelligence (AI) to drive performance. However, almost 70% of businesses report minimal or zero impact from AI. Moreover, 83% of executives tap into data as a competitive tool; piecemeal data management can become an Achilles’ heel. The Indian market, while in its nascent stage of AI adoption, has the unique opportunity to learn from the challenges faced by its Western counterparts. CPG leaders need a data strategy that doesn’t merely react but anticipates, creating a steady flow of clean, actionable data. To achieve this, they must establish a comprehensive data strategy and invest in technology and people. To it’s credit, the Indian tech start-up environment is up to the task.
Evolution of Analytics in Asian Markets: To drive the agenda of consumer focus and hyper-personalization, Indian CPGs can learn from more mature markets to avoid pitfalls and expand penetration with Consumer Data Platforms. Combining data from various sources, including e-commerce, q-commerce, primary research, social media, and more, can deliver critical consumer insights around changing preferences, brand loyalty, innovation, pricing, and promotion sensitivity. Generative AI tools will change business models, and one function that will benefit hugely will be marketing, whether it’s personalized content or inputs for innovation through consumer studies.
Conclusion: In order to build lasting brand loyalty, it is imperative to enhance the consumer experience, and consumer analytics play a vital role in this process.By seamlessly integrating consumer insights into products, channels, marketing strategies, and personalized communication, CPG brands can forge sustainable loyalty. The CPG industry in Asia holds immense promise, particularly for companies that harness analytics’ enormous potential. In this dynamic landscape, leaders must navigate swiftly, adapting their enterprises to consumers’ ever-evolving preferences through profound insights derived from data-driven strategies. This necessitates cultivating an agile, adaptable organization capable of embracing change. While the CPG industry poses unique challenges, a steadfast and judicious approach will pave the way for enduring, profitable growth. As CPG brands place consumer analytics at the center of their operations, they will have the opportunity to overcome challenges and shape a prosperous future based on unwavering customer loyalty.
(The author is a is a Jammu-based veteran, security and strategic analyst. The views, opinions, facts, assumptions, presumptions and conclusions expressed in this article are those of the author and aren’t necessarily in accord with the views of “Kashmir Horizon”.)