Festivals in India are known to lift spirits and bring joy to people from all walks of life. For consumer businesses, the festival season is more significant because yearly targets loom large in this period. The GST collection for October has already touched the pre-pandemic levels of over Rs. one lakh crores.
Speaking of the demand during the festival season, Jeevaraj Pillai of Uflex said, “Overall, we expect the demand to go up in certain categories like staples, sanitation, pharma products, and average demand for cosmetics, high-end perishables and other non-essentials. However, the end consumer is still not feeling confident about their purchasing power due to the on-going pandemic and would rather keep their expenditures to a minimum.”
Consumers’ buying behavior
The Covid-19 pandemic has brought significant changes in consumers’ buying behavior. The necessities have become the main focus, and non-essentials have been deprioritized. Also, safety, hygiene, and wellness have become permanent factors to consider before making any purchase. Pillai added, “The spends on luxury goods took quite a hit, and although it will take longer to come back to its pre-pandemic levels, we can see a marginal pick up in it during the festive season. Furthermore, consumer values and perspectives are evolving as the younger generation becomes a larger and more significant portion of the workforce.”
Pillai says that most of Uflex’s FMCG clients target only linear growth without any particular focus on new products and features during this festival season. He also sees a shift from unit-packs to value packs.
“While sustainability goals got pushed to the back burner during the pandemic, we are now seeing consumer packaged goods (CPG) brands recommitting to these goals, and they prefer to work with companies that can help them achieve these. Irrespective of the festive season, sustainability will drive the conversation in the industry hereafter,” states Pillai.
UFlex has been scaling its investments in products and technologies to offer a green solution portfolio and address plastic waste. “Our portfolio of multilayer packs is recyclable. UFlex also recycles PET bottle waste to make packaging films out of it and further uses those films to make labels and packets, thereby creating a circular economy.” He explains that the company’s approach would continue to be driven by innovating and improving its product portfolio with a high sustainability quotient while being economically viable.
Impact of Covid-19 on business to date
Covid-19 had brought various industries to a halt and impacted the global economy substantially. “During the lockdown and border shutdowns, the consumption levels for life-sustaining commodities such as food and medicines increased manifold, leading to hoarding of stocks, hence the packaging industry that serves these essential industries of FMCG and pharmaceuticals were not affected. On the contrary, packaging companies like ours that were able to service the essential commodity industries to ensure the supply of goods to the public at large witnessed higher demand,” he said. “Since packaging is deemed an essential services segment, our plants were running with minimal staff strength and maximum-security measures.”
At the beginning of the pandemic, Pillai said the demand curve surged from panic buying and hoarding. “As normalcy set in after the lockdown was lifted, we observed the demand coming back to normal. Overall, our business grew as the demand for packaging also increased due to the safety and hygiene factors attached to packaged goods.”
Considering the overall market sentiment, Pillai expects demand to remain constant or experience a slight uptrend without any drastic shifts over this festive season.
Economy and industry recovery
“Packaging is an essential industry that binds the world together and has truly been a forerunner of the economy and consumption. It is important to understand that packaging serves as a gateway to ensure safe consumption and is necessary for people, especially given the fear of spreading the virus. This is the reason why we haven’t seen the industry affected much as other segments.” Uflex has diverse clients, including leaders from pharmaceuticals, FMCG, and dairy products.
“With the effect of the pandemic starting to wane and the festive season approaching, we have started to see green shoots of recovery in certain industries that are recovering like white goods, automobile, and retail. However, aviation, travel, and tourism are likely to remain affected till the vaccine is introduced, and the world is free of Covid-19,” he concludes.