in 2015, I did a post predicting trends for 2016 and then beginning of this year, I reviewed them.
A little late this year, but here are my predictions for 2017and I am expanding it beyond FMCG and Marketing. Will review them in about 9 months to see how accurate they turn out.
- Accelerated Rx-to-OTC switch of pharma brands: The National Pharmaceutical Pricing Authority (NPPA) became extremely active last year. In FY’17, a total of 620 drugs have been placed under price control. An estimated 18-19% of the Rs.111,022 crore (MAT September’16) Indian Pharmaceutical market (IPM) is already under price control. This segment under price control is estimated to grow at around 2-3% against 12-13% volume growth of IPM. Then, the central government came down heavily on fixed drug combinations (FDC) banning 344 FDCs (affected about 6,000 brands, 4% of IPM) which was one way the pharma companies try to beat price control. With screws tightening, for many players, the OTC sector, gives a leeway. While less profitable, it is still viewed as being immensely profitable by the industry giving them some control back on a few of these massive brands. If the brand is positioned right during the switch, it may even gives them a way to tap into the growing lifestyle ailments and health and wellness spaces. While this Rx-to-OTC switch is being talked about since mid 2000’s, I believe the environment will force many companies to accelerate their switches.
- Packaged Foods – start of the investments: Investors have to put their money somewhere! After e-Commerce and healthcare turning sour, FMCG foods seems to be the way to go. Quite a bit of action in this space already. Small firms and startups have got decent investments – Paperboat (already valued more than $100 million ); Veeba (raised $6 million); Cremica (raised $15 million); iD Fresh (valuation Rs.600 crore); Fingerlix (expects a valuation of Rs.100 crore). And big firms have / are entering the packaged and processed foods business in a massive way – Tatak (Sampann), Mahindra (NuPro), RPG (yet to be named packaged food foray).
- IoT / connected devices: I know it has been abused quite a bit but still… Fitbit, Samsung and Apple already have a presence in India though to a small extent. Other premium brands including Indian ones are making their entry into the wearables space. Then there is the consumer durable space. A few years back, Haier launched an AC with wi-fi capabilities that can be controlled with an app. Last year Livpure launched a similar water purifier which can be controlled by your phone. There are a lot of companies waiting in the wings with their home automation systems. It’s just a matter of time, we start seeing them in homes, albeit in the high end ones.
- Death of a Unicorn: Am sticking my neck out on this one. Yes, 2 more companies – Hike and Shopclues – joined the club taking it to 10 (12 if you add MakeMyTrip and Naukri from an earlier generation). But 2016, ended quite momentously for the startup space. The funding drought started which put an end to the splurging by all of these guys. Pretty much everyone in this club has been making humongous losses year on year. And, already Snapdeal is looking to Flipkart and PayTM to bail it out.
- Skepticism about manufacturers product claims: This one I borrowed but it goes with my prediction of the rise of the super regulator from last year. Growing awareness among consumers will make them suspect the story that a brand is putting forward making such claims. The time is also ripe for a program similar to China’s name and shame in India. It’s already happening to a small extent – NPPA has published list of hospitals and companies that overcharge on drugs, ASCI puts up names of companies that do false marketing. But these stories aren’t picked up by main stream media… sooner or later one is going to blow up and the government will be forced to act.
