Multinational FMCG brands outpace domestic peers in consumer reach

56% of multinational brands have improved their y-o-y ranking, compared with only 47% local or home-grown brands

Even as the herbal revolution in India has forced multinational consumer goods companies to reformulate their strategy, they are doing better than domestic brands when it comes to consumer reach.

A recent study by market research agency IMRB of the country’s top 50 fast-moving consumer goods (FMCG) products shows that 56 per cent of multinational brands have improved their year-on-year ranking, compared with only 47 per cent local or home-grown brands.

IMRB’s ranking measures a brand’s consumer reach points (CRP). “The CRP is measured by looking at how many households are buying a brand (penetration of a brand) and how often they are buying it (frequency of purchase),” says Varun Sinha, group business director, IMRB Kantar World Panel.

The greater the penetration, higher is propensity of a brand to improve its ranking on the list, Sinha explains. It is led by a combination of factors, including distribution and marketing push.

At a time when the Rs 3.2-lakh crore domestic FMCG market has to contend with a slowdown as well as the rise of Patanjali Ayurved, the FMCG venture promoted by yoga guru Ramdev, domestic as well as multinational consumer goods companies are having to push harder on distribution and marketing fronts.

“While most companies, both international and domestic, in FMCG are aggressive, MNCs have that slight edge because they can dip into their parent’s vast resources in terms of learnings and insights. Functions such as technology and R&D are globally aligned, helping them to raise their game quickly,” says G Chokkalingam, founder and managing director, Equinomics Research & Advisory.

Of the 16 multinational brands on IMRB’s top 50 list, for instance, Unilever’s three brands Lux, Vim and Pond’s have moved up one position, while five including Rin, Surf Excel, Close-Up, Dove and Sunsilk have moved up two notches. British consumer goods major RB’s (formerly Reckitt Benckiser) flagship brand Dettol, on the other hand, has moved up four positions.

Brands that maintained their ranking on the list include Unilever’s Clinic Plus, Lifebuoy, Brooke Bond and Procter & Gamble’s Head & Shoulders. While those that shrunk include Colgate and Tide from Procter & Gamble. Maggi, which is a Nestle brand, dropped ten spots in the aftermath of a ban on its flagship noodles last year.

Experts say that with growing competition, especially from regional players, multinational FMCG companies are expected to increase their focus on improving penetration, particularly in smaller markets.

At Hindustan Unilever’s annual general meeting on June 30, chairman Harish Manwani said the company would continue to combine best technology, global capabilities and innovation to improve reach.

“Today, nine out of ten Indian households use HUL products,” he said. “HUL’s distribution reach ensures that its products are available everywhere across urban and rural markets,” he added.

Two years ago, HUL set up 14 regional clusters to “win in many Indias”. This was in contrast to the four-region model — north, south, east and west — that has traditionally dominated FMCG.

According to analysts, of the estimated nine million retail stores in India, HUL alone reaches around 6.3 million outlets. Kolkata-based ITC, maker of cigarettes and other FMCG products, reaches close to 4.5 million outlets.