What should the sector expect over 2021 with lockdowns easing?

This blog is about how lockdown easing is expected to impact sales in different sectors.

Over 2020, we saw significant increase in food & beverage sales and cleaning products.

Sales in the make up and hair care sectors was lacklustre.

This was driven by lockdowns causing consumers to stay at home. As they were not able to go out to a restaurant, they shopped at grocery stores for different foods and beverages. Due to the very same driver, sales of make-up and hair care brands decreased significantly.

Increased sales of cleaning products in 2020 was driven by an increased consciousness of hygiene due to the pandemic.

As we look at 2021, with successful vaccination campaigns and with lockdowns easing, we expect make up and hair care sales to increase in anticipation of and due to social activity. As restaurants, bars and cafes opening up, we expect grocery sales of food & beverages to decline slightly. But the sector is expected to retain a major share of the gains from last year as people cautiously venture out as lockdowns ease.

The one sector we expect will retain the increased sales from 2020 is the cleaning products sector. As people go out and enjoy the return to normal, to keep safe, we expect consumers to buy and use more cleaning products than they used to pre-covid.

If you’d like to learn more and understand how individual categories may be impacted by the easing of lockdowns, email me on veena@salesbeat.co

Procter & Gamble or Coca Cola?

Did you know that Procter & Gamble pioneered soap operas? While ‘Painted Dreams’ is considered to be the oldest soap opera program (on radio), it wasn’t until P & G launched ‘Ma Perkins’ on radio in 1933 that the term was coined. 

In case you are curious, the story revolves around a widow forced to juggle financial and family problems, while at the same time promoting Oxydol, P & G’s laundry detergent. 

This was just before WWII. By the start of the war, P & G was producing more than 21 different radio soap operas EVERY WEEK. Another significant event in 1939 was the launch of the TV. Within 5 months of launch, P & G aired its first TV commercial. They also continued producing soap operas for TV. By the end of the war, P & G’s revenues had reached nearly $350m. 

(Interesting fact: Neil McElroy, one of the marketeers behind these innovations, later became the US Secretary of defence. He also pioneered brand P & Ls in the CPG industry.)

Getting back to ad spend, very similar to P & G, Coca Cola launched one of its most effective campaigns around the same time, during the Great Depression – The pause that refreshes. During the first year of this campaign, sales is said to have doubled. And then WWII happened. Coca Cola continued its ad spend during this time, and the then company president, Robert W. Woodruff even declared that any American soldier could get a coke for 5 US cents, regardless of its actual price.

Coca Cola’s ads during this time focussed on the softer sides of conflict; on Coke’s ability to bring people and nations together. The ads showed American soldiers drinking Coke and laughing with British, Soviet, Polish, Brazilian & Chinese soldiers, with a caption around ‘ Have a coke’, with messaging around solidarity.

Fast forward nearly 80 years, we have another crisis and the two companies have diametrically opposite strategies for ad spend. 

The Coca Cola company has decided to suspend all its marketing activity in several of its markets during Covid. 

Here’s a direct quote from The Drum on what drove this decision, “We’re being … mindful about the right level of brand marketing and new product launches given the consumer mindset across market,” Quincey told investors yesterday (21 April). “We’ve developed and determined that in this initial phase there is limited effectiveness to broad-based brand marketing.”
“With this in mind, we’ve reduced our direct consumer communication we’ll pause sizable marketing campaigns through the early stages of the crisis and reengage when the timing is right. These plans will vary from market to market with our earliest reengagement focusing on the recovery in China.

At the same time, Procter & Gamble is investing in marketing during this period. 

Again, a direct quote from The Drum, “We need to work hard to ensure that we maintain mental and physical availability to the greatest extent possible, so that those consumers return to their beloved and trusted brands – which are ours – as they’re more fully available.”
“There’s a big upside here in terms of reminding consumers of the benefits that they’ve experienced with our brands and how they’ve [met] their family’s needs, which is why this is not a time to go off air.”

We, at Salesbeat, think P & G’s approach is more likely to succeed in the medium to long term. Once lockdowns ease and Covid passes, consumers will remember who have been with them through this crisis. As the saying goes, ‘Out of sight, out of mind’. 

What we are going through currently is a war after all, only this time with an invisible enemy.

Fast moving consumer goods/consumer packaged goods, Covid 19 and lockdowns

There are several conflicting opinions on which consumer packaged goods (CPG) brands will emerge stronger after this pandemic – those that are start-ups or those backed by large companies. While direct to consumer (DTC) brands are thriving, large brands, especially those in the personal care, home care and hygiene sector, are indeed seeing a spike in demand due to their credibility. This has led to empty shelves at supermarkets, where some of these brands have run out of stock. 

As most large companies rely on just in time manufacturing (or as close to it as possible) to keep their working capital efficient, they are currently working on alternative plans to source and manufacture their products. And this will delay them, more than this will delay start-ups.

While start-ups are also facing the same problem, they do not need to adhere to the same processes for approval of new suppliers as do the large corporates behind large brands. This pandemic will be a true test for large CPG companies who have been focussing on driving agility in their organisations.

So, on the supply side, start-ups are likely to have their suppliers lined up vs the large companies.

On the sales side, CPG companies seem to have furloughed most of their sales teams during the epidemic, regardless of whether they are start-ups or well-established large companies. However, we have noted that these companies have retained a skeletal sales team, usually senior commercial/sales directors.

At start-ups, these senior salespeople have as strong a relationship with buyers as do their teams. However, at large companies, senior directors have evolved into more people managers than active salespeople. This, combined with a start-up’s natural agility, has resulted in most start-ups maintaining their relationships with buyers at supermarkets while remaining relevant to consumers through social media. 

Large companies, however, have less contact with buyers and their social media strategy has not changed significantly from before lockdowns.

Once lockdown lifts, there will be a race to the finish line with brands in fierce competition with each other to make their annual targets, or finish as close to annual targets as possible. It will be critical to ensure that all orders are captured and that there are no disruptions in supply chain. Any and all feedback on brands from buyers will need to be acted on according to consumer priority and communication between sales, marketing, supply and finance will be key. 

You may be thinking that it sounds like large companies will need to start operating like start-ups and you’d be right in thinking that!

Much like the brands that won after wartime (the ones that remained relevant and available to consumers during those times), the brands that win after lockdowns end will be those that maintain a presence at stores, maintain their relationships with buyers, and maintain or even increase their presence on social media.