E-commerce, driven by fast-paced commerce, is emerging as a ‘high-growth channel’ for FMCG companies

FMCG players are witnessing strong growth in the overall e-commerce segment, led by QSR platforms. Companies like Dabur India, Nestle India, Hindustan Unilever and Tata Consumer have reported high double-digit growth in the e-commerce channel in their Q1 earnings. A recent report by Kantar also noted that consumers in nine major metros are increasingly adopting the e-commerce and QSR mode, driving the premiumisation trend. In fact, QSR is growing at a faster pace.

• Also read: FMCG companies report decline in beverage sales in Q1

Dabur India, in its investor presentation, said the company saw around 20 per cent growth in e-commerce and 70 per cent growth in Q1FY25. During the earnings conference call, Mohit Malhotra, CEO, Dabur India, said, “The e-commerce channel is flying for us. We have the structure and the playbook to take this business on a high-growth path. Quick commerce currently constitutes 30-35 per cent of our overall e-commerce business. We are working with all the major players in this space and are developing a product mix and portfolio. It is a very high-growth channel for us.”

3x increase

During the Q1 FY25 earnings conference call, HUL management said e-commerce continues to be “a very strong growth engine” for the company, “growing ahead of the market and three times faster than modern commerce.” “Customer missions are different now, for example, in fast-paced retail and beauty retail. In general retail, a kirana store would have a different set of customers. So, the market is becoming more segmented and we have to be intentional and careful about how we design channels, in fact, we are now designing for customers,” the company management said.

Tata Consumer Products said it saw a 61 per cent growth in its e-commerce channel in the first quarter of the fiscal. During the earnings conference call, Sunil D’Souza, MD and CEO, said, “We have seen overall growth in e-commerce and within e-commerce, quick commerce has grown quite significantly. It is difficult to quantify what is quick commerce and what is e-commerce, but it has been said that e-commerce is growing at 61 per cent and about 35 per cent of that is from quick commerce.”

In a first-quarter earnings statement, Suresh Narayanan, Nestle’s chairman and managing director, said: “E-commerce maintained its upward trajectory, contributing 7.5% to domestic sales and growing by double digits.”The packaged food company said it saw “strong growth” in flash trading in the June quarter, driven by brands like Kitkat, Nescafe, Maggi Masala-ae-Magic, Milkmaid and its ready-to-drink portfolio.

According to a recent report by Kantar, household penetration in the nine largest metros for QSR was estimated at 31 percent, which was higher than e-commerce (19 percent) in the 12 months ended April 2024 compared to the previous year. It also noted that the QSR channel is driving the adoption of premium products and larger pack sizes.