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Developing Brand Resilience: FMCG

Discover crucial trends and expert advice to remain resilient and relevant in the Fast Moving Consumer Goods (FMCG) industry in 2024.
February 5, 2024
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Head of Innovation

Executive Summary:
In an era marked by rapid market changes and heightened consumer expectations, Fast Moving Consumer Goods (FMCG) companies face unique challenges. This article distils insights from industry leaders and our expertise at Delta Innovate, offering actionable strategies to navigate supply chain disruptions, embrace sustainability, and leverage digital transformation. We aim to provide FMCG brands with the tools to thrive in a dynamic global market.

As the third instalment of our webinar series ‘The Innovator's Forum: Elevating Customer Value Propositions,’ we brought together leaders in the industry for a 90-minute webinar, ‘Resilience and Relevance: Adapting FMCG Brands for Tomorrow's Market.’ 

We assembled FMCG experts:

Eyassu Menelik,  Co-founder of MyStock

Matthew Davey, CEO & Co-founder of TUNL

Candice Schooling, Head of Sales at Rainmaker Media

Defining Fast Moving Consumer Goods (FMCG) 

During our discussion, when we refer to fast moving consumer goods (FMCG), we are referring to any consumer packaged goods (CPG), which are products that are in very high demand.

These products are often sold quickly and are widely considered affordable - they are “fast-moving” as they are quick to leave the shelves of a store or supermarket as they are used by consumers regularly.

Examples of Fast Moving Consumer Goods (FMCG) 

Consumer packaged goods (CPGs) in the FMCG sector are commonly classified into three main categories: 

  • Food and beverages (including groceries; carbonated soft drinks; alcohol)
  • Home care (cleaning supplies)
  • Personal care (toothpaste; deodorant; body creams)

Yet, as you will recognise in our webinar, we take a focus on the food and beverage sector, as well as touch on some aspects of the Slow Moving Consumer Goods (SMCG) industry, as well. 

Fast Moving Consumer Goods (FMCGs) vs. Slow Moving Consumer Goods (SMCGs) Industry

Durable consumer goods, often referred to as Slow Moving Consumer Goods (SMCG) products, have a lifespan exceeding one year. This category includes household items such as: 

  • Appliances
  • Furniture
  • Home improvement products

Unlike the FMCG products, these items have a lower sales frequency and do not experience rapid turnover.

Given that we are now familiar with the terms used, let's dive into the insights learned during our webinar, Resilience and Relevance: Adapting FMCG Brands for Tomorrow's Market.’

Key Insight 1: Expect Supply Chain Disruption

The FMCG sector faces inevitable supply chain disruptions, from global conflicts to economic instabilities. A 2020 McKinsey report stated FMCG companies can expect disruptions lasting one month or longer every 3.7 years.

Eyassu Menelik,  co-founder of MyStock, highlighted that in recent years, global conflicts and the COVID-19 pandemic were huge disruptions, leading FMCG brands to rethink their entire business models. 

Delta Innovate’s approach, centred around digitalisation and decentralised supply chains, has proven effective in mitigating these challenges. We have a history of demonstrating how strategic planning and digital solutions can transform disruptions into opportunities for growth and innovation.

Other supply chain disruptions include: 

  1. Consumer Behavior Shifts: Consumer behaviour has undergone a monumental shift, driven by various factors such as economic insecurity, employment issues, inflation, and currency devaluation. Consumers are becoming more price-sensitive and are questioning brand loyalty, seeking value and quality at better prices.

  1. Private Labels Opportunity: Private labels have seized the opportunity to offer affordable quality, challenging legacy brands that may have relied on past brand equity. Consumers are demanding quality but at more competitive prices.

Suggested strategic approaches to combat supply chain disruption:

  1. Digitalisation: FMCG brands are advised to embrace digitalisation for transparency in the supply chain, although challenges exist in gaining accurate insights into consumer trends.

  1. Product Design: Brands should take ownership of product design, moving away from short-term gains and focusing on long-term brand equity.

  1. Decentralised Supply Chains: Platforms offering decentralised supply chains, especially in Africa, can help brands react quickly to disruptions by reallocating resources.

  1. Direct-to-Consumer Engagement: Brands should consider engaging directly with consumers to understand sentiments and improve the overall brand experience.

Overall, FMCG brands need to adapt to the evolving landscape by implementing strategic approaches that prioritise agility, consumer engagement, and a focus on quality at competitive prices.

Eyassu Menelik, Co-Founder of MyStock, explains the expectation of disruption for FMCG brands.

Key Insight 2: Sustainability Has Varied Definitions 

In 2024, sustainability is considered a significant aspect of global consumer decision-making. However, sustainability can be defined in various ways (and often is defined differently in other contexts). 

Global Perspectives on Sustainability:

The global perspective on sustainability looks a little different to this South African stance, as other parts of the world will often take a direct focus on the Sustainable Development Goals (SDGs).

Sustainable Supply Chain Challenges in South Africa:

With a focus on the supply chain, Matthew explained the challenges of moving FMCG products within South Africa, sub-Saharan Africa, and globally, including:

  • Physical distance to market
  • Increased emissions
  • Inflated costs

When it comes to the South African context, Matthew Davey, CEO and Co-founder of TUNL, suggested that sustainability be defined from a business perspective - where FMCG companies should focus on building sustainable businesses with profitability and job creation at the forefront.

Essentially, sustainability has a multi-dimensional nature, which also needs to consider disruptions like COVID-19 and geopolitical tensions that affect supply chains. 

Key Insight 3: Hyper-Personalisation is Crucial

When considering the future of brand strategy and marketing in the South African FMCG industry, Candice Schooling, Head of Sales at Rainmaker Media, emphasised the importance of personalisation strategies. 

As customised experiences will be crucial in 2024 for brand success in both advertising and marketing, brands should channel their energy into developing hyper-personalisation strategies to effectively engage with diverse consumer segments.

Methods for Personalisation Strategies:

1. Integration of Human Intelligence, Data, and AI

Achieving effective personalisation requires the marrying of human intelligence, data, and Artificial Intelligence (AI). The combination of these elements is seen as essential for creating customised and personalised product recommendations and, in turn,  relevant branded content for each customer. 

Most specifically, leveraging the right AI tools (that track purchase history, browsing behaviour, and demographics) can be used to generate hyper-personalised recommendations and content, which is particularly important in the context of the diverse South African market. 

2. Brand Community Engagement Opportunities

FMCG brands need to create engagement opportunities with their audiences by establishing brand communities and collecting direct customer feedback. 

This includes hosting online polls and involving customers in decision-making processes, especially in a cost-effective manner such as surveys and online voting for smaller brands.

3. Partnerships with Influencers

FMCG brands are engaged to partner with local, micro, and nano-influencers as a cost-effective strategy to build trust and loyalty. People are also particularly eager to purchase when influenced by individuals they admire - making this strategy incredibly effective in the digital world of 2024.

4. User-Generated Content (UGC)

FMCG brands should focus on encouraging customers to share their experiences through user-generated content (UGC). UGC can be considered another form of customer testimony, just in varied types of feedback (as well as spanning channels and mediums). 

UGC not only serves as a cost-effective way to gather data and insights on particular segments and audiences but also helps shape future brand strategies by identifying what those customers are enjoying.

From direct engagement with customers to influencer partnerships, strategic and innovative personalisation strategies are crucial for FMCG brands to stay relevant and resilient in 2024 and beyond.

The Delta Innovate team recently worked with a large corporation to develop a user-centric AI chatbot model to replace their existing outdated AI bot. Having immediately focused their attention on deeply understanding the target audience (through interviews and research), our team understood how the target audience was interacting with people and businesses daily. Taking their findings, the team developed a conversational design model around how the customers spoke and wanted to be spoken to. The results? A resounding success.

“To quote Nelson Mandela, ‘If you talk to a man in a language he understands, that goes to his head. If you talk to him in his own language, that goes to his heart.’ Think about your customers, how they talk, how they want to be spoken to and the language they use to take your customer relationship to the next level.” 

- Nathan Mengel, Lead Venture Manager at Delta Innovate

Key Insight 4: ‘Test-and-Learn’ New Technologies

FMCG brands are encouraged, regardless of size, to explore new technologies with a ‘test-and-learn’ approach in 2024 and beyond. However, it is important to ensure the human creativity element is not lost in totality when leveraging these tools. 

Explore these technologies:

1. AI and Machine Learning Integration 

These technologies are applied to platforms to enhance data analytics and business intelligence. Many FMCG brands are already using these technologies but are encouraged to continue to do so, with full force. 

2. Utilisation of First-Party Data

Segmentation of your first-party data, which can have up to millions of data points already, is key to unpacking your personalisation opportunities in 2024, as segmented data allows for precise campaigns.

3. Emerging technologies of AR (Augmented Reality), VR (Virtual Reality), and AI tools 

These technologies help with personalisation, real-time optimisation, and fast-paced marketing campaign adjustments. Again, using a ‘test-and-learn’ approach is the best plan here, as everyone is learning how best to integrate this technology into their campaigns. 

An example of this is the use of a QR code in-store for parents to scan with their phone while shopping, which then leads them to an AR gamified experience for their toddlers, resulting in a distracted child while parents shop. In turn, this creates strong brand resonance and ‘talkability’.

Although leveraging AI for real-time optimisation and gamification is ideal, there is a continued necessity for human intervention in the creative processes of brand and marketing strategies. AI can be utilised to assist with creating on-demand content that resonates with targeted audiences, but cannot be used for anything and everything - human creativity is still crucial. 

“Remember that people buy from people.”

- Candice Schooling, Head of Sales at Rainmaker Media

The Delta Innovate Method

The Delta Innovate team advises leveraging an iterative approach to testing new technologies, thereby reducing OpEx risk while increasing the chance of a positive outcome. Firstly, our team recommends that desired outcomes are defined, then taking small steps to move towards that desired outcome by running small targeted discovery and ideation sessions. 

The product design team within Delta Innovate specialise in helping guide these sessions, crafting hypotheses and building out experiments to test your next idea.

Key Insight 5: African-market Strategies Require Trust and Community

FMCG brands which aim to launch into any African country’s market must consider that their current strategies may not be directly applicable or transferable to the new market.  

Eyassu Menelik, Co-founder of MyStock, explains previous downfalls of FMCG brands that have attempted to launch into new markets in Africa. 

1. B2B Marketplaces Fail

B2B marketplaces were initially seen as a solution to launching into African markets, but they proved to be capital-intensive and low-margin, with a need for physical assets and logistics. In turn, the B2B marketplace must be seriously considered before leveraging. 

2. The One-Size-Fits-All Approach

Applying a uniform strategy across diverse African markets simply never works. 

“You’re working with 54 very different countries, right? These are very different consumers, with very different demands. I think the ‘one-size-fits-all’ has been a reality check for some of the big brands.”

 ‍- Eyassu Menelik, Co-founder of MyStock

Various cultural and consumer differences across the continent mean that each of your campaign and launch strategy requires tailored marketing, specific to each country or region.

Solutions to Launching in New African Markets: 

1. Community-Based Platforms

Building trust and community relationships is crucial for success in African markets which means FMCG brands must utilise platforms that connect to specific communities (target audiences), such as church communities in Nigeria and Stockvel communities in South Africa.

In contrast to the West, where online reviews play a significant role, Eyassu emphasised the reliance on word of mouth in African markets. In turn, attempt to tap into existing networks to enhance your product adoption, and your ‘word-of-mouth’ credibility. 

2. Brand Audit and Emotional Connection

FMCG brands are recommended to conduct a brand audit to understand how consumers perceive them. An emotional connection must not be understated, as FMCG  brands need to establish a direct emotional bond with their consumers.

Eyassu explains the significance of consumers feeling respected, valued, and approached with explanations about products in the informal sector - as many individuals have reported a feeling of disenfranchisement in the past.

3. Find the Right Partners 

FMCG brands can find the right partners to deliver exceptional brand experiences. Where your brand doesn’t have access to customers or particular products, your partners may be able to support and improve your brand experience and emotional connection. 

4. Consider a Chief Experience Officer Role

If necessary, the FMCG brand should consider hiring a Chief Experience Officer to ensure a focus on consumer experience at the highest level.

FMCG brands must consider alternative strategies when launching into new markets to address the unique challenges in the specific market. Some of these include customer-customised approaches, community engagement, and inciting emotional connections. 

The Delta Innovate Venture Team has worked extensively in the informal sector and found that relationships are one of the most important contributors to a successful launch within the informal sector. If you or your team are not from within the area you aim to launch within, the Delta Innovate team highly recommends having someone on the ground who is integrated into the community. This individual would need to be highly motivated, engaged and incentivised by your project's success. 

“If your product does not ‘win’ the community, you can expect a consistent upward battle trying to penetrate the market so take the time to get boots on the ground and speak with your customers.”

- Nathan Mengel, Lead Venture Manager at Delta Innovate

Key Insight 6: Fast Moving Consumer Goods Trends to Expect in 2024 and Beyond

1. A Strong Focus on Sustainability

  • The continued emphasis on sustainability and environmental impact in the FMCG sector is expected, from sourcing to packaging and transportation.​​
  • For example, 80% of global consumers reported that they would be more trusting of a company if they were using regenerative farming (FMCG Gurus, 2023).

2. Maximising Value 

  • Approximately 53% of consumers worldwide are proactively seeking ways to decrease their expenditures on food and beverages (FMCG Gurus, 2023). 
  • Consumers are facing the economic impact, as a result of price inflation, and are actively working to curtail their spending in this category.
  • In turn, brand loyalty diminishes, making consumers more open to exploring alternative shopping options in an attempt to maximise value. 

3. Direct-to-Consumer (DTC) Continuation

  • The Future of Commerce Report 2024 reported that the United States (US) has the world’s highest share of direct-to-consumer brands. 
  • Many FMCG brands, globally, are also expected to embrace the DTC approach, with the aim of collecting more zero-party data, while driving personalisation and brand loyalty.

4. On-Demand Apps for Grocery Shopping

  • Online Food Delivery market revenue is forecasted to reach US$1.22tn in 2024,  with a projected market volume of US$1.79tn by 2028 (Statista, Online Food Delivery - Worldwide). 
  • As observed above, there is immense profitability in on-demand apps for grocery shopping, which has been seen in Europe and the UK.
  • This trend is expected to grow in South Africa and other African countries, too.

5. Localisation to Reduce Risks

  • Localisation (from translating and localising product materials, packaging, website content, and marketing materials to sourcing locally) to offset risks related to supply chain disruptions will see a rise in 2024 and beyond. 

“It is not unusual for localisation to improve sales by 40% to 50% while simultaneously reducing store inventories and markdowns. We consider our localisation capabilities to be one of our most powerful competitive advantages.”

- Boyd Rogers, VF Corporation’s president for supply chain

5. Digitisation and Artificial Intelligence (AI)

  • Although this shift began years ago, digitisation and the use of AI in the FMCG industry are expected to rise in the upcoming few years. 
  • For example, Nestlé’s 15,000 marketers, as well as agency partners, are required to run all creative assets through their AI system (that ranks content based on their suitability to different online platforms) to ensure that it meets requirements before being launched.

6. Continued Uncertainty

  • On a macro-level, uncertainty in 2024, especially with global conflicts and more than four billion people taking part in elections, FMCG companies are advised to expect the unexpected. 

Final Takeaways 

In response to the ever-evolving landscape of the Fast Moving Consumer Goods (FMCG) industry, the webinar 'Resilience and Relevance: Adapting FMCG Brands for Tomorrow's Market' highlighted insights for 2024 and beyond. 

FMCG brands must proactively address supply chain disruptions, adapt sustainable business models, and prioritise hyper-personalisation through AI and community engagement. The responsible integration of new technologies, coupled with community-based strategies tailored to diverse African markets, emerges as a crucial theme. 

Anticipated trends include the sustained emphasis on sustainability, the growth of Direct-to-Consumer approaches, and the rising influence of digitisation and AI.

In navigating uncertainty, a focused 'Nail it - Then Scale it' approach is recommended, emphasising exceptional products, category leadership, and targeted audience engagement.

What is next for the FMCG Industry?

At Delta Innovate, we believe the future of FMCG lies in adaptive, user-centric approaches that embrace both new technological advancements and the nuances of diverse markets across the globe. 

The Delta Innovate team recommends an iterative or ‘Nail it - Then Scale it’ approach, which has been leveraged across various industries and product strategies. This methodology has consistently reduced the risk of overspending as well as missing customer needs and requirements. 

As the FMCG landscape continues to evolve, staying ahead requires partnerships that understand industry trends while translating these into actionable strategies and plans. 

Partnering with the right team keeps FMCG brands at the forefront of transformation, empowering them with bespoke solutions. 

Let’s talk about why we believe so strongly in partnering with the right innovation team - Get in touch with us

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