The small bets trap
Big FMCG systems eat their young. Small bets need parallel enabling structures
No strategy can survive a system that’s Strategy Blind™. Legacy FMCG systems see a market of the past. D2C systems see the cap table. That’s why the industry’s most expensive product is an 80-slide deck that only mimics strategy.
I write for 1,600+ FMCG leaders who know their strategy looks right but feels wrong. Join them here.
Every FMCG leader knows that size matters
Bigger budgets,
Wider distribution,
Lower unit costs.
Size gets personal, too - the larger the business you manage, the bigger your career (and ego).
That’s just how the industry is wired. From production runs to career incentives, everything runs on size.
That’s because the Great Indian FMCG engine buys and sells in bulk which keeps costs down.
Its survival depends on scale.
Produce large quantities: More large-batch production keeps costs low, so prices stay low → low prices mean more people buy → which feeds more large-batch production → which keeps costs low.
Buy lots of media: Buy more media at lower unit prices for more eyeballs → more eyeballs build familiarity → familiarity generates demand → demand generates money to buy more media.
Distribute in lots of shops: Millions of retail shelves stock these products because they sell → they sell because millions of people see them on shelves and buy them.
Replace ‘scale’ with ‘small’ and the system collapses.
To a large FMCG, a small bet looks like a bad bet, because the flywheel is built for scale.
This is how big companies eat their own babies
The comparison trap
A business that might be a good sized D2C business by itself looks smaller and slower next to a high-velocity-high-volume product in a system that’s gotten used to big numbers.
Even if Pepsi’s Tropicana sells 5 units vs. 3 of Dabur’s Real in a shop that sells 50 of Pepsi, the sales team and the retailer deprioritise Tropicana because their frame of reference is Pepsi.
Path of least resistence trap
People take the path of least resistance.
Since it is easier to sell 3 extra cases of Pepsi than Tropicana, the sales officer will meet his targets by just selling Pepsi, he will not put in the effort to sell more Tropicana.
And since the retailer’s investment on Pepsi turns faster than on Tropicana, he will only stock maintenance levels of Tropicana.
The MOQ trap
It is inefficient for large factories to produce small MOQs (minimum order quantity).
Their KPI is ROCE (return on capital expenditure), so higher the MOQ, greater the ROCE.
The career tax trap
The leader who manages a ₹5 crore product inside a ₹10,000 crore company portfolio gets labeled as ‘still proving themselves’.
So the smart move is to never make the small bet at all.
The behemoth started as a small bet
The engine forgets that Amul, Lux, and Maggi didn’t start as billion-dollar behemoths.
They started as small bets that took decades, even centuries, to compound into what they are now.
In 1946, Amul started with just 2 villages and 250 litres of milk a day. Today, they process 35 million litres a day from 22,000 villages.
In 1929, Lux was launched only in Mumbai and Calcutta. Today, it sells from 6.3 million stores.
The instant noodle category was only $27 million in 1985. Today, it is $1.8 billion.
The infrastructure for small bets exists. The incentives to make them don’t.
Contract R&D and manufacturing have made small MOQs of even 10,000 units viable.
D2C brands like Mamaearth have figured this out — launch many and let the power law play out.
Tomorrow’s Amul, Maggi and Lux is today’s small bet.
The strategic response from legacy FMCG should be to digest the complexity of setting up a completely parallel small bets flywheel.
It’s been done before
When HUL bought Lakme from the Tatas, Lakme skincare struggled for the first few years.
A system that sold millions of Fair and Lovely and Ponds into millions of shops could not digest Lakme, which sold in lesser shops, in lower volumes, at a higher value.
The sales team sold in huge volumes of Lakme, the stock aged and impacted the bottomline.
The structure and business model that Lakme needed was very different from what FAL and Pond’s needed.
The good leaders at HUL recognised that this was a structure problem, not a small bet problem, and they launched a completely different go-to-market system - a different sales team, different leadership, and a completely different incentive structure tied only to the small brands. That’s how Lakmé succeeded.
PepsiCo did the same thing. It launched a separate GTM for brands like Tropicana, which did not have the velocity of a Pepsi.
Strategy starts at the top. The question for every FMCG leader isn't whether small bets work. It’s whether your system will let one survive long enough to prove it.
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wonderful Rashi.