India ranking shrinks 6 percent year on year
The country and its brands plot a new course amid unprecedented global upheaval
This was always going to be a consequential year for India. There was hope that the decisive 2019 reelection of the Bharatiya Janata Party would clear the way for further reforms and economic growth. Even after years of debates over tax codes and macroeconomic indicators, India had been growing at a steady clip, much faster than other world powers. India’s economy was diversifying, and consumer spending remained strong. At the same time, however, there was a sense that 2020 would be a year when India would either consolidate its gains, or risk a future slowdown. The hope and expectation was for the former outcome.
Then India entered lockdown.
Significant challenges ahead
This moment is more than a readjustment. COVID-19 is an unprecedented global crisis, for which there is no established rulebook. In late March 2020, when the country had several thousand confirmed cases, Prime Minister Modi ordered a swift lockdown of Indian society: a drastic and difficult step, but one that Indians met with a level of compliance that put some Western societies to shame. There was a universal outpouring of support for the country’s first responders and essential workers.
By May, the financial costs of shutting down the Indian economy had begun to mount, and the government eased some restrictions on business and movement. That same month, the government announced a Rs 20-lakh-crore ($265 billion) economic package (equal to some 10 percent of India’s GDP).
By August, India had reported over 2 million confirmed cases of the coronavirus (though the data also seemed to suggest a lower death rate than in other countries). Economists have forecasted that India’s national GDP could fall by 4 - 4.5 percent in calendar year 2020, down from 5 percent in 2019. For fiscal year 2021, which began in April, GDP could fall by nearly 10 percent. Unemployment remains a pressing concern.
Urban India has been hardest hit by coronavirus in terms of total infections. But rural India has undergone significant upheaval as well: both from lockdown itself, and also from absorbing the waves of migrant workers who made the arduous trek home after work in the cities dried up. For a brief time, before the agricultural season picked up, rural unemployment soared from single digits to nearly 25 percent, eclipsing urban joblessness.
By August, rural workers had once ahead begun to move back into cities in search of economic opportunity. The hope is that in the interim, India has learned just how crucial this workforce is to the country’s economic health – and that issues with informal contracts, unstable living conditions, and the lack of a social safety net will be ameliorated. (To that end, major industry leaders across India have already promised to improve their migrant employment programs in the months and years to come.)
Not surprisingly, ones of the most pressing challenges India has faced during this pandemic year is the question of health care provision. Despite recent increases, India’s public health expenditure is only 1.29 percent of GDP, and the country’s hospital system has been stretched to the breaking point. Many middle class and poor Indians have struggled to access adequate healthcare during the pandemic.
The interplay between nationalism and geopolitics has added another layer of complexity to today’s business climate – in India, and in the world. In today’s environment, for instance, a military clash on the India-China border can have knock-on effects on the mobile handset industry, TikTok’s global user base, and domestic Indian support for locally-made brands.
India’s information ecosystem has grown similarly complex. Countries around the world are struggling with how to enjoy the positive benefits of social media while minimizing the risks of “fake news.” Information technology has provided a gateway to the world for even the smallest Indian businesses and the remotest of its towns. At the same time, however, false rumors that start in a village can inflame social tensions in a metro, and vice-versa. The internet, it seems, has a unique ability to exacerbate the kinds of tensions around identity and belonging that continue to vex modern societies. Meanwhile, businesses that choose to take a stance on a hot-button issue can face unpredictable online backlash - but can catch equal fury for not speaking up at all.
This, then, has been a year of facing great challenges and hard truths.
Repurposing Brands for the Future
But there is hope, too, that Indian society can emerge from this crisis more resilient than ever before: that it will emerge better-equipped to recognize and surmount the multifaceted challenges of the 21st century. India has always been an optimistic country, which goes a long way. Just as importantly, it is right to be optimistic.
Whatever its challenges, India has surely entered the 2020s as a more diversified economy than it was ten years prior - thanks to factors like the rise of India’s digital unicorns; renewed interest in local and ayurvedic FMCG brands; and a connectivity boom that most recently saw mobile internet usage rise by 45 percent from 2019 to 2020. Whatever its impact on GDP, the coronavirus crisis cannot erase these gains.
Indeed, diversity is one of India’s greatest sources of resilience. In the months since India entered lockdown, a wide array of brands and businesses have found smart, surprising ways to work together and create new pathways to growth. From PepsiCo’s tie-up with Dunzo; to ITC’s partnership with Amway; to Reliance’s work on e-commerce with kirana stores (which, incidentally, have surely been the great retail heroes of is pandemic period): cooperation is the new competition.
One of India’s biggest IT breakthroughs of the past decade, the implementation of a United Payments Interface (UPI), is another testament to cooperation: a diverse array of finance, government, and retail stakeholders came together in a private-public partnership to vault the country’s digital payments system into the future. The lockdown has only accelerated UPI’s usefulness in an age where some merchants have begun to move away from cash and Cash On Delivery payments.
Cooperation has been the watchword of the day at the local level, too, with urban resident associations and community groups creating new protocols to take care of their most vulnerable residents. These local associations have also partnered with brands to bring van-powered, mobile markets and bank services to apartment-dwellers’ doorsteps. This is Jugaad in practice on the most intimate neighborhood scale.
Brands with strong Indian roots are having an especially important moment. Economists have long argued about whether India’s inwardly-focused economy is a blessing or a detriment. Those debates are far from over - but it’s true that in this period of global trade disruption, Indian companies with robust domestic supply chains have been able to restart business in a way that more internationally exposed companies have not.
Going forward, businesses and brands will have a crucial role to play in building a stronger India. The health sector is a prime example of this. Two years ago, the government introduced the Ayushman Bharat scheme, which has since provided health care to some 10 million beneficiaries, but it’s clear that improving health care in India will continue to be a massive, country-wide undertaking. The growth of telemedicine and prescription delivery services is one positive example of the role that private enterprise can play; on the demand side, consumers - for their part - are buying all the supplements, sanitizers, and medicines they can afford. As Indian brands aim to “repurpose for the future,” providing healthy living solutions for eager customers is one way that businesses can do good while doing well.
Constrained household income will nevertheless be an immoveable reality in the years to come. But while Indian consumers are suffering - the poorest among them most of all - they remain a massive economic force. Prior to the pandemic, the Kantar Brand Footprint report on FMCG categories shows that India is responsible for one-fifth of global “consumer reach point” volume - defined as the frequency with which global and local brands are chosen by consumers over the course of a year.
As detailed in this report’s special section on Recovery & Growth, Indian consumers have continued to purchase everyday goods at a surprisingly strong clip during the pandemic. And although they may “trade down” in product ranges or reduce purchase volume, consumers haven’t lost their preferences for their favorite brands and products – especially those that serve as proof of their hard-won economic progress.
This is the kind of behavior that isn’t necessarily captured by headline growth rates. India’s short-term balance sheet may show retrenchment. But the pandemic cannot erase the more wide-ranging effects of India’s recent economic miracle. India’s economy has diversified and matured in positive, irrevocable ways. The country’s human capital has increased apace, and just as irrevocably. Which is to say that the optimistic, entrepreneurial spirit of the Indian people will survive this fraught moment – and prove an undeniable boon to the country’s long-term promise.
BrandZ™ Selection Criteria
India’s Premier Brands
Brands ranked in the 2020 Brand™ Top 75 Most Valuable Indian Brands must meet one or more of these eligibility criteria:
• The corporate parent is listed on a stock exchange in India.
• The brand originated in India and its corporate parent is listed on a recognized stock exchange.
• The brand is privately owned, but its complete financial statements are publicly available.
• Indian unicorns have their most recent valuation publicly available.
As always, brand value is calculated by combining proprietary BrandZ™ measures of a brand’s financial value and its brand contribution. Brand contribution scores draw on how brands rate on being Meaningful, Different, and Salient. These brand contribution attributes allow brands to both capture market share (Brand Power) and command a price premium (Brand Premium).
Meaningful brands are brands that consumers feel meet people’s needs and connect with them emotionally.
Different brands feel different from the rest of their category and set trends in the marketplace.
Salient brands come to mind quickly and readily when activated by ideas relating to category purchase.