Slowdown hits product launches, innovations at consumer firms

New Delhi: Consumer companies are holding back on product launches and innovations as the prolonged economic slowdown weighs on both demand as well as their budgets, according to data by Nielsen, a global provider of information and insight into what consumers watch and buy.

Product launches across fast-moving consumer goods categories declined by 2.5% in 2012 and by another 6% earlier this year, said Ranjeet Laungani, vice-president and head (innovation practice) at Nielsen India. Laungani, speaking at Consumer 360—Stand Out, a day-long conference organized by Nielsen in Gurgaon near Delhi, said while consumers are cutting back on discretionary spending, companies are turning away from pathbreaking innovations.

“Of the 14,509 product launches during this period (2011), barely 31 were blockbuster innovations,” he said. “In the last few years, we see that the number of innovations are lower.”

Nielsen counts both incremental and breakthrough developments in a new product as an innovation.

Top executives at consumer companies admit to being cautious in launching new products. “We have, quite honestly, been a little conservative in expanding our portfolio. Again, the mood is a bit defensive,” Sunil Duggal, chief executive at Dabur India Ltd, said in an interview last week.

It’s not difficult to see why.

With prices rising unrelentingly and economic growth slowing to a decade’s low of 5% in the year ended 31 March, consumers, especially in the cities, have become wary of spending on non-essentials. “Needless to say, a lot of clients and key brands tend to have a knee-jerk reaction and take a pause (on investments). They monitor and then invest,” said Laungani.

Duggal agreed that Dabur pushed higher priced products in the market in the last two quarters. GlaxoSmithKline (GSK), too, launched premium products such as Sensodyne and Parodontax toothpastes. “It is important to understand what needs to be adapted to suit local tastes for innovation,” said Jayant Singh, executive vice-president at GSK, speaking at the conference.

Laungani added that shopper baskets (household purchases made by consumers) in India are upgrading, and so launches in categories such as personal and healthcare will increase.

Mumbai-based Godrej Consumer Products Ltd (GCPL) in the past few months introduced six products such as Crème hair colour and Good Knight Fast Card (a mosquito repellent). Sunil Kataria, chief operating officer (sales, marketing and SAARC), said the products were launched to fill specific needs and with a sharp differentiation. “Innovation is a very strong part of what we do,” he said.

According to industry experts, domestic companies are more conservative in launching products than their global counterparts. Speaking at the Nielsen event, Pratik Pota, chief executive and managing director at NourishCo Beverages, a joint venture between food and beverage company PepsiCo India and Tata Global Beverages, said Indian firms “have more patience and resilience while MNCs (multinational companies) move faster and are more restless about innovation. Leadership has to bring creativity and romance in innovation”.

 

 

AMIT KUMAR SINGH

PGDM 2ND