Bussines Economics

7/29/2019 Bussines Economics

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FMCG are populary named as consumer packed goods.

The items are meant for daily of frequent consumoption & have a high return.

Many major players are included in this sector.

A large number of opportunities is available in the FMCG sector.

The finance ministor has proposed to introduce an integrated goods and service tax by april 2010.


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In India, the FMCG industry is the fourth largest sector and are classified as premium and popular segments. The market growth over the past 5 years has been phenomenal, primarily due to consumers growing

disposal income.

The large population in the rural and semi urban regions is driving demand growth, with continuousrise in disposable income etc.

The consumer goods sector in India has managed to defy the trend.

Indias FMCG industry has so far been resilient to the slowdown in the economy and a dip in consumersentiment.

As said by Mr. William pinckey I am not saying that our company is recession proof but it is recessionresilient.

Price hike and cost cutting were the first lines of defense in a bid to protect margins.


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HOUSEHOLD CARE1) Personal wash

2) Detergents

Personal care1) Skin care2) Hair care

3) Oral care

Food and beverages1. Food segment

2.

Tea and coffee


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LARGE MARKET. SPENDING PATTERN.


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What came in?Continued spending on rural

and social development

Positive for all FMCG

companies

Roll-back in excise duty

reduction from 8% to 10%

Negative for FMCG

companies especially HUL as

higher sales from non-excise

free units. Neutral for Dabur

New excise slab of Rs669/100

sticks introduced in filter

cigarettes under 60mm.

Excise on other filter

cigarettes raised by 9-18%,

excise on non-filter cigarettes

(>60mm but


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Highly unorganised.

Inadequate distribution network.

High competition between large and small players.

KEY GROWTH DRIVERS Availability of raw materials.

Vast agriculture output.

Low labour cost.

Large domestic market.

Presence across value chain. Growing share of organised retail.


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Focus on health.

Impact of inflation.

Micro segmentation.

Low value SKUS.

Jet age consumer products.

Mainstream penetrated growth categories.

Under penetrated growth categories.

Low per capita consumption.

Innovative product forms.


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Strengths:1. Low operational costs2. Presence of established distribution networks in both urban and rural areas3. Presence of well-known brands in FMCG sector

Weaknesses:

1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors2. Low exports levels

3. "Me-too" products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCGproducts in rural and semi-urban market.

Opportunities:

1. Untapped rural market2. Rising income levels, i.e. increase in purchasing power of consumers3. Large domestic market- a population of over one billion.4. Export potential5. High consumer goods spending

Threats:

1. Removal of import restrictions resulting in replacing of domestic brands2. Slowdown in rural demandTax and regulatory structure


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COMPANY SALES(RS.MILLION) Marketcap(RS.MILLION)HIND.UNIL 175238.00 586171.10

DABUR INDIA 28568.70 179377.27

GODREJ CONSUMER 12678.81 125002.87COLGATE PALMOLIV 19624.59 112656.45

MARICO 20242.90 78625.05

P&G HYGIENE 7742.06 73273.62

EMAMI 9905.77 70004.38

GODREJ INDUSTRIES 8163.68 66240.67

GILLETE INDIA 6615.13 61936.35

NIRMA 31179.50 31963.73


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There is a huge market potential for all the FMCG companies as the per capita consumption of almost all products in thecountry is amongst the lowest in the world.earlier indian consumers were using non branded appreal,but today, clothes of

different brands are available and the same consumers are willing to pay more for branded quality clothes. Its the quality,

promotion and innovation of products, which can drive many sectors.


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Bussines Economics

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