Consumer brands in the era of coronavirus

Health, innovation and convenience are the key themes for success

By Mike Jewell

2020 is the most extraordinary of years. The coronavirus pandemic is reshaping economies all over the world and I defy anyone to predict accurately when we will arrive at that point where we can say that the crisis is over and normality, in whatever form it takes, has returned. The entire global society has been affected and our attitudes and everyday behaviour reframed. Purchasing patterns have changed, some categories and brands have benefitted, others have suffered, but will things get back to the way they were before or will all or some of the changes become permanent?
 

The Worldpanel division of leading research company Kantar has recently published its annual Brand Footprint analysis, which reveals how consumers around the world are buying fast-moving consumer goods (FMCG) brands and what opportunities exist for brands to improve their positions. Kantar looks at what happened in 2019 and, against that backdrop, has also identified the trends that have become evident since the onset of the crisis.
 

In Kantar’s view, it is still too early to make any firm conclusions about the long-term impact Covid-19 will have on consumer preferences and behaviour. Care must be taken when looking at current patterns, since there is always a tendency to overestimate the short-term effects while underestimating the true structural changes that will be revealed over time.
 

Currently, there are three principal trends being observed in almost every country (Kantar’s Brand Footprint covers 52 countries):
 

People are shopping less often, but buying more per visit. Consumers' personal care routines have changed, or been paused, driven by fewer social interactions. E-commerce has exploded and is competing strongly with bricks-and-mortar stores; and home delivery is replacing out-of-home consumption occasions.

One further major influence on household purchasing is rising concern over personal financial circumstances, particularly as the prospect of the pandemic taking more rather than less time to resolve becomes more likely. Covid-19 has had a profound impact on shoppers’ livelihoods, with millions worldwide being pushed into poverty and the outlook remains uncertain, even for those who are able to keep their heads above water. Consumers will be more careful with their expenditure and heightened price sensitivity may lead to more bargain hunting, potentially impacting the trend towards premiumisation which had been growing across Asia.
 

The initial effect of the onset of the pandemic across the globe, with the government-imposed lockdowns in many countries and self-imposed behaviour changes such as we have seen here in Taiwan, was a boost for the FMCG sector in the main and for many manufacturers and retailers operating within it. In Taiwan, Kantar observed 4.6% annual growth in the first quarter this year and, although the second quarter was tougher, with an overall decline in GDP, FMCG sales remained robust, growing by 2.9%.
 

However, as behaviour has changed, so has the balance of buying habits and the performance across different product categories has not been uniform. Kantar has pinpointed four broad scenarios facing FMCG brands under the influence of lockdown and/or government advisories:
 

1. Increase in demand directly linked to Covid-19: In this case, categories have grown through a true increase in demand; they tend to be products focused on hygiene, such as handwashing and household cleaners.
    
2. Increase in demand from spending more time at home: These categories have benefitted from occasions transferring from out-of-home to in-home, predominantly health care items and especially foods, such as frozen food, health food, dairy products, quick noodles and instant noodles and cereal drinks.
    
3. Short-term stockpiling: Categories where the products tend to have a long shelf life and remain essential, such as fabric detergent and, of course, toilet paper!
    
4. Reduced consumption at home: These categories have seen a pause or reduction in usage, since they are considered non-essential. In Taiwan there has been a decrease in buying cosmetics and personal care items, as well as alcohol.
    

It is important to remember that the category patterns described here are strictly related to the early stages of the coronavirus crisis and especially to the period of lockdown or early consumer reaction to the changed circumstances. New patterns will arise as long-term changes are revealed. For now, it is fair to say that we have probably never seen so many people trying something new, be it a new retail channel, new routines (whether in cooking, eating or personal care), or new brands. What we need to do is observe and understand how much, if any, of this behaviour will stick, as the “siege mentality” morphs into acceptance of the “new norm”.
 

Within categories, individual brands go their different ways, but, while it is hardly surprising that it is easier to grow in an expanding segment, the sheer scale of the disparity between increasing and declining categories is staggering – a brand is five times more likely to grow in an expanding category than in a shrinking one. Nevertheless, it is still possible to be successful in a declining sector, but Kantar notes that it tends to be the biggest brands which are currently winning in all categories in Asia, in line with the global picture. Nearly all leading brands are being chosen at a faster rate than the average category growth rate. Just one example is the wet wipes/tissue category in Taiwan, which has grown by 49% during the Covid-19 period, but the leading brand, KNH anti-bacterial wipes, has jumped by 81%.
 

Perseverance in times of uncertainty

After reviewing the extraordinary local, regional and global situation in 2020, in the context of where FMCG markets ended up in 2019, Kantar’s Brand Footprint draws the following conclusions.
 

As the spectre of the pandemic continues to hover above all nations, with no apparent end in sight, it is critical for brands to understand the shift in consumer behaviour and adapt their strategy accordingly.
 

Given the rise of online shopping, some brands are leveraging the momentum by increasing their digital presence through online touchpoints and social platforms. Even more so, some brands are providing their own home delivery service to expand their reach and meet the consumer need for less human contact.
 

Brands are also getting creative with their communications, promoting positive messages and meaningful activities to support and engage with consumers. And while digitalisation is massive, brands cannot overlook offline stores. It is important that brands and products are available, accessible, and visible across channels both online and offline, to reach as many shoppers as possible.
 

It is important that brand owners ask themselves where their category fits in today’s market. They must analyse how the profile of their consumers has changed, as well as the occasions and needs available to drive more relevance within their category. The inevitable economic recession both now and post pandemic will introduce new variables into brand planning, in terms of recognising and adapting brands and offers to continue serving the greater population. Big brands remain big due to penetration and reach. Hence, brands will need to consider if there are any new calibrations that will need to be adopted in the areas of pack and pricing strategy to meet new consumer realities and retain their strength.
 

Despite the many challenges that Covid-19 has presented across all industries, as long as brands can remain innovative and agile, they have a great chance to create future success in post-lockdown and beyond.