COVID-19’s impact on the consumer landscape in India have given rise to new trends that consumer-packaged goods (CPG) brands must embrace, according to analysis from Kearney.

“While there is a clear cascading impact of consumer trends in channels and supply chains, there are some independent trends and back-end implications that we can expect in the post-COVID environment,” said the consulting firm.

Demand surges for affordable health, hygiene, and organic products

Despite the substantial premium that comes with these products, the naturals and organics trend has been gaining traction in India’s CPG space, with an overall CAGR of 18-25%. COVID-19 will fuel health-focused demand as consumers move toward prevention: seeking immunity from consumables, hygiene from personal and home care, and chemical-free from personal care. The firm noted that the trends will also drive the transition in consumer preferences from private labels to known brands.

However, the pandemic also induced a conservative and savings mindset, making affordability an increasing important aspect. Companies that can position health-branded products in the affordable, mild-premium range of 10-20% are likely to win in the new normal. Taking a cue from China, local skincare brands such as Inoherb and Chando have already launched products that promote a healthy and holistic lifestyle. A study by Kearney found that, more than 60% of consumers say they are willing to pay 10 - 20% more for healthier products.

Expert communication will drive trust in a brand

Many consumers are seeking trustworthy brands that do good, as the pandemic amplifies consumers’ desire for trust in times of vulnerability and uncertainty. Brands will need to communicate with emotion, compassion, and facts about how they are offering solutions that will impact people’s lives. In addition, consumers will seek brands that display real expertise, no frills, unprejudiced patriotism, and social care with a sharper value proposition.

Premiumisation will earn support as consumers indulge in retail therapy

As eating out and travelling continue to remain depressed in the medium term, select premium and indulgence categories will see an uplift, said Kearny. Retail therapy will see a surge as people seek outlets during this stressful period, from ready-to-eat meals to self-indulgent large purchases.

The study found that 80% of consumers are spending more money than usual to pamper or indulge themselves. More than 70% of Chinese consumers think grooming routines are a good way to reduce stress during the lockdown. In the United Kingdom, luxuries such as premium skincare and sparkling wine are the biggest winners as nonessential products for lifting people’s moods during tough times.

Reaffirming value offered for the price charged becomes a focus point

Availability issues during the lockdown have forced many consumers to try new brands—often a lower-cost alternative. According to an Ipsos study, about 60% of Indian consumers have tried a new brand or product in the past four to five weeks because their regular ones were unavailable. If they perceive these new purchases to be just as effective, these sales will likely result in a permanent conversion.

About half of the respondents in Kearney’s study are willing to move to a lower-cost alternative if it offers similar quality as their usual purchase. Pandemic-induced financial insecurity will give an added boost to this experimentation behaviour—making it crucial for brands to manage their perceived brand value with explicit branding of differentiating features.

Sourced from Kearney