Indian FMCG firms slash product innovation cycles to three months as quick commerce drives 75% of digital sales

New Delhi: Rapid growth of quick commerce is forcing companies to shrink product innovation and launch cycles to three months or even a fortnight from 12 months earlier, amid intense competition from direct-to-consumer and regional brands, said chiefs of companies, which now count the 10-minute delivery platform as their fastest growing retail channel.

"Historically, when quick commerce had not taken off as it has today, you used to do product trials, test launches for three-four months, and then scale nationally which would take up to 12 months. Today, that cycle is three months, or six months at most, which is par for the course," said Sunil D'Souza, managing director at salt-to-tea maker Tata Consumer Products.

Platforms such as Blinkit, Instamart, Zepto and Amazon Now are contributing 75% of total digital sales on average at India's largest packaged goods makers, companies reported in their recent earnings statements.

Many FMCG cos reduce product innovation and launch cycles amid tight competition from D2C and regional brands

"In many categories, we're also fighting unbranded segments. There are a lot of times we are in competition with the retailer, for example, in dry fruits or pulses. You can do rapid testing, what works, what doesn't... and circumvent the whole cycle of distribution that had to be done earlier," D'Souza said.

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Apart from online-only products, pin-code specific products and those in two markets at different price points, are seeing an unprecedented surge, according to industry executives.

"We are working towards making innovation cycles short-from ideation to retail shelves to even one month, from three months currently," said Sanjay Sharma, managing director at MTR breakfast mixes maker Orkla. "While we have accelerated the processes, we are still working to make it even faster. We used to work on forecasting long-term sales; now there are multiple sales scorecards every single day-that's the role quick commerce is playing." In a June report, Redseer Strategy Consultants said India is witnessing one of the biggest shifts in food and beverage consumption, adding that purchases that were carefully planned once are now triggered by mood, context or occasion. "The consumer sends signals, and the category responds. For example, more than 20% of batter sales now come from quick commerce channels that barely existed at scale three years ago. The short shelf life of the batter category, a $400 million market, has always been dependent on frequent top-ups. But what has changed is the timing and reasons for those top-ups," the report said. "If there is no batter at 7:15 am, it's no longer a problem to solve in advance. It is a need met in real time. The weekly stock-up is slowing down. It's replaced with a stream of small, high-intent purchases. A chocolate at 9 pm. A protein shake after a workout. Coconut water just before going into the heat."

Parle Products' vice-president Mayank Shah said launches on quick commerce shelves, from ideation to retail platforms, are being turned around even within two weeks, depending on the category. "If required, we introduce products within days. It depends on the consumer's needs and what's trending at that particular time," he said.