While floods have had a magnanimously devastating effect on Pakistans crops, livestock and infrastructure, FMCG (fast moving consumer goods) companies have also joined the squad of sufferers.
Supply-side disruptions are a major hurdle for key FMCG companies in the country, as flood waters prevent effective distribution of goods to areas in the Sindh and Punjab.
International media has cited Sarfraz Rehman, CEO Engro Foods, of pointing at disrupted milk supplies at his company, which have fallen as much as 15 percent, after floods affected operations at about 65 collection centers.
Milk prices have already risen considerably and are expected to ascend further by 6-7 percent. Consumers in Karachi are scavenging for certain milk brands in shops around the city as supplies are very limited.
Other packaged food and personal care products (such as soaps, washing powders, etc.) are also affected by supply-side disruptions and the loss of inventories in flood-affected areas, said a representative of a leading FMCG company. However, the quantum of damage is yet to be assessed.
Since relief goods are aimed more at being of utility to the people rather than being of a particular brand, from a particular company, relief workers prefer bulk buying of the relatively cheap, un-branded goods. Thats not to say that branded products are not purchased at all.
At the same time, the FMCG companies themselves donate products at subsidized rates for relief efforts, thus resulting in a slight hit to their turnover over a brief time span.
Despite that, major saviours have been the mega cities of the countries like Karachi, Faisalabad and Lahore, which house the factories of some of the major FMCGs. Because these cities have escaped the wrath of floods, the impact on earnings is expected to be largely contained.
Over a longer term, the revenues of these companies are likely to receive a boost as resettlement will propel several opportunities for market development amongst some yet-unexplored market segments.
"As awareness of the various products increases amongst the affected, who might not have used some brands earlier, growth spurt in terms of volume is likely to be witnessed," said Ali Abbas Mirza, a sales and marketing consultant.
Given an estimated recovery period of about 6-8 months, according to the National Disaster Management Authority, FMCG companies can start looking at flexing their market development strategies to capture a new segment for their products, despite the momentary hitches they are facing right now.
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