The year 2022. An eerie silence engulfs the empty space all around me. I make my way through the aisles in trepidation. There. Found it. As I reach out with my right hand to grab something a few feet higher, my fingers meet with cobwebs. I finally manage to get hold of my favourite can of juice from the top shelf. The label reads 2018. They never manufactured it after. I decided to risk it and make my way towards the lonely man sitting across the counter. I am the first person he\u2019s come in contact in days. I wave my phone at him, finish my payment and hurriedly make my way out of the last BigBazaar left in the city.\r\n\r\nOnly joking, of course. BigBazaar\u2019s going nowhere. But the urban Indian consumer is. In almost every consumer products category, large legacy brands we\u2019ve grown up with and got used to seeing on shelves and owned by FMCG giants will slowly surrender their urban market share to a new wave of usurpers. They include no-nonsense private labels from the likes of Amazon, a new wave of Direct to Consumer (DTC) brands and disruptors like Patanjali that focus on a niche. I\u2019m particularly fascinated by DTC micro-brands. So much so that my first ever angel cheques and baby steps into investing have been to a couple of DTC upstarts.\r\n\r\nAcross the globe, the FMCG playground is evolving from the likes of like Unilever, P&G, Gillette, Pepsi and the ilk. Consumers demand products that meet unique needs. Data now determines brands. And, direct distribution is now an accessible reality for nearly any independent brand that\u2019s starting out. Trends in the consumer goods space shift at speed and traditional FMCG has often found it difficult to keep up.\r\n\r\nToday there are leaner, nimbler companies, which are able to innovate at pace. These companies are able to\u00a0get their products in front of a new audience in a matter of months and even iterate those products on time than a larger company takes to name its new variant of fruit juice. The first ever FMCG brand I worked with\u00a0at the beginning of my career in advertising still hadn\u2019t launched even by the time I quit that job two years later.\r\n\r\nIn the past, big-FMCG might have been able to rely on this group of generic urban households who would repeatedly purchase the same brand of orange juice, which their factory-lines can mass produce and that their regular neighbourhood store will stock. Not anymore. This same juice will soon have to be organically sourced: made only with half-ripe oranges for some, and zero sugar for the rest.\r\n\r\nKeeping these expensive mass-production factory lines running when the consumer demands fragmented product lines that need to evolve each year will obviously start getting tougher. To make it worse, FMCG\u2019s stone-age data practices have no clue who their end consumers are, or about their preferences. The model is inherently anti-innovation.\r\n\r\nBig-FMCG in the West is now steadily losing market share and can't figure out how to innovate. While Gillette was figuring out how to add a 6th blade on their razor, Harry\u2019s & Dollar Shave Club figured how to poach their customers through unique business models. What these micro-brands lack in manufacturing prowess they make up for in data and marketing. Selling direct to consumers means that these smaller upstarts boast a treasure trove of consumer data. Availability of this data translates to better product-consumer fit, quicker product updates and even better marketing \u2014 which for D2C companies, can be argued to look a lot more like sales.\r\n\r\nIn the West, FMCG giants are beginning to \u2018buy innovation\u2019 of younger, agile upstarts because they aren\u2019t nimble enough to do it themselves. In India, DTC brands are still very much upper urban phenomena \u2014 for the 1% to 2% of even India One, as Haresh Chawla\u2019s piece on Founding Fuel defines. But early signs are here that this is a great time to be disruptors in the consumer goods space.\r\n\r\nOn the supply side, it has never been easier to manufacture and distribute a new product. The complexity of managing a global\/pan-India supply chain, building a store and managing distribution was the main moat surrounding the retail incumbents during the twentieth century.\r\n\r\nThese traditional moats have sunk. Product sourcing from Alibaba or Indiamart (you don\u2019t have to order in tonnes). Storefront creation on Shopify (under Rs. 2000\/- a month). Marketing through Instagram (distilled targeting). Distribution through disruptors like Delhivery (or even Shopify plugins that can do everything a larger supply chain can). With an evolving urban consumer playing along, this is already the immediate reality of ecommerce. The future of FMCG, even.\r\n\r\nIt\u2019s not going to be a straight road for DTC either. Most direct-to-consumer brands in the West that have tried to avoid middlemen have ultimately gathered that the niche is too small to scale. The problem is no longer initial distribution, but cheap, scalable customer acquisition.\r\n\r\nDTC micro-brands that want to avoid paying retailers for distribution are ironically paying significant sums to digital advertising platforms like Facebook & Google for finding customers. Most DTC brands in the west now suffer from diminishing marginal unit economics. As spend scales, it always gets more expensive and harder to convert consumers online - never less. People start seeing the ads too often, the purchase triggers become less effective, the \u2018disruptor brand\u2019 messaging becomes stale, and novelty effects become real.\r\n\r\nFor now, these niche opportunities in the Indian landscape are not interesting enough for companies like P&G & Unilever. Creating a product for niche audiences of a few million people is not part of the FMCG DNA today. I love L\u2019Or\u00e9al\u2019s efforts with their incubator. But for most, FMCG continues to be a product cycle business \u2013 add a few new flavours or a few extra blades and re-launch more of the same. Their market advantage remains the same as 100 years ago - delivering mass products at low costs & access to wide distribution networks. But there are no longer as many barriers to innovation that these monoliths can hide behind (preventing other upstarts) like they did the whole of the 20th century.\r\nNew emerging brands are exploiting this scenario and modern industry dynamics are in their favour.\r\nI believe that we will see impressive growth in the long-tail of FMCG in India. More investments, mergers & acquisitions, emerging DTC brands eating into big-FMCG, DTC going offline and capturing Big Bazaar shelf space, etc. To win, big-FMCG will start acquiring these micro-brands or even start some of their own. The correct route will be to take lessons from these upstarts and re-imagine FMCG portfolios to include smaller, more ephemeral brands those are nimble enough to keep up with trends and diversity.\r\n\r\nTo re-imagine KRA\u2019s of C-level executives to not just show single-digit growth in the short-term through minor product updates. Could Marico-backed Beardo become the new Gillette? Could DSG-backed Arata, take on Dove & Sunsilk?\r\n\r\nNotice how I got away without mentioning the word \u2018Amazon\u2019 even once in a piece on retail? It\u2019s a great time to be in the consumer products business.