By: Shinta Widianti – PR Consultant of Fortune PR
The FMCG industry has been a key trendsetter for the economy. The media management – paid, earned and owned – has also been shaped by this Industry. Over decades, the PR industry has also been shaped by this very proactively growing sector.
The industrial growth of Fast Moving Consumer Goods (FMCG) in Indonesia during the third quarter last year increases up to 4.8%, outpacing the number of the 3% growth in Asia. Based on FMCG Sector Update 2016, Indonesia’s FMCG is one of the most attractive industries with over USD 10 billion in sales. This is in line with the growth of Indonesian middle class, with over 255 million people, and half of whom are in a productive age. The growth also expands to regions outside of Java as well as rural areas with the increasing demand for effective logistics in these areas.
Despite the positive trend, there are some variations in the growth of certain products, with food products scoring 38% of growth as of August 2016 compared to 12% of home care products. FMCG products successfully contribute 18.5% to national GDP in 2016, and this figure is expected to rise to 30% by 2030. But today, consumers are more selective in choosing FMCG products due to the increasing prices of the products itself.
The Challenges
The FMCG industry is currently facing a number of challenges. The first is the shrinking margins. With the drop of consumer spending power and the trend towards more economical brands, FMCG companies are being forced to look for innovative ways to reduce costs, eliminate waste, and enhance efficiency. Another factor is the power of retail giants. FMCGs are being increasingly squeezed by retail giants to give concessions on pricing, delivery and various other terms and conditions.
There is also increased competition from retailers as they develop their own label products and increase brand loyalty. As the competition heats up and new products emerge, it is a challenge for FMCGs to figure out how to stand out among others for the long-run. We can also see that the consumer behavior is shifting due to growing concerns over a healthy lifestyle. Consumers today are shifting their food preference and personal hygiene or beauty care.
The Opportunities
But opportunities are also present. The growth of digital provides variety of strategies to conduct new product launches, innovation in products, and consumer engagement using digital platforms. You can also engage e-commerce channels as an opportunity to grow. Sales of groceries through e-commerce platforms reached $48 billion in the 12 months to June 2016, according to a new report by Kantar Worldpanel. Global FMCG players like Unilever Indonesia has already engaged with e-commerce such as Blibli.com, Alfacart, Tokopedia, Lazada, and Shopee. This opportunity presents to us the potential to increase brand awareness and profit.
Moreover, it is important to note that there are three things that make up the future of FMCG industry which are digital-based sales, the transformation of retail structure, and consumer behavior towards a wide range of products. To succeed in the future, players in the FMCG industry must consider the availability of product, the type and the diversity of product, the price, promotion channels, innovation, and how to make consumers remember your brand.
Last but not least, here is a special message for PR pros working in the FMCG industry: It is up to you to figure out how to tap the digital consumers who provide a variety of social media channels to market our product. But on the other hand, we must also pay attention to the fact that the interest of today’s consumers can change fast. So it depends on how PR pros implement their creativity to introduce their products to the market, both for a new product launched recently, or even products that need rebranding.
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