FMCG Sector

ADITI MASHRUASHISH K NAINANNILESH THAKAREONKAR KHAMKARSHREYA KULKARNI

Introduction to FMCG

Porter’s 5 force model & BCG Matrix - Procter and Gamble

4P’s –ITC Limited.

SWOT,Brand laddering,STPD,Brand etc.

Dabur- Journey from herbal ayurvedic to a global FMCG giant.

FMCG – THE BIG STORYFast Moving consumer goods – How fast are they moving in India.

• INDUSTRY AND SECTOR AT A GLANCE. FMCG Stands for fast moving consumer goods. The fast-moving consumer goods (FMCG) sector is an important contributor to

India’s GDP and it is the fourth largest sector of the Indian economy.

It broadly constitutes 4 product categories:

Home care products

Personal care products

Food and beverages.

Spirits and tobacco

In India, the fmcg sector is roughly worth $35billion and grows at an industry staggering rate of 17% y-o-y.

Rise in rural income has given a boost to the FMCG industry in particular.

PRODUCT CHARACTERISTICS

Products belonging to the FMCG segment generally have the following characteristics:

They are used at least once a month

They are used directly by the end-consumer

They are non-durable

They are sold in packaged form

They are branded

MORE DATA AND STATISTICS

Major FMCG companies in India:

Unilever India, Procter and Gamble India,Himalaya,Nirma,Colgate-Palmolive,Dabur,Marico,Lakme,Cadbury,Coca Cola,Pepsico,Reckitt Benckiser,etc to name few.

Common FMCG products include food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. and some other examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes,watches, soaps etc

Some of the merits of FMCG industry are low operational cost, strong distribution networks.

Population growth is another factor which is responsible behind the success of this industry.

The Indian FMCG sector is highly fragmented, volume driven and characterized by low margins.

The sector has a strong MNC presence, well established distribution network and high competition between organized and unorganized players.

FMCG products are branded while players incur heavy advertising, marketing, packaging and distribution costs.

The pricing of the final product also depends on the costs of raw material used.

The growth of the sector has been driven by both the rural and urban segments.

India is becoming one of the most attractive markets for foreign FMCG players due to easy availability of imported raw materials and cheaper labour costs.

URBAN VS RURAL

The urban segment is the biggest contributor to the sector, accounting for two-thirds of total FMCG sector revenue. The semi-urban and rural segments which are growing at a brisk pace, currently account for 33.5% of revenues of the FMCG sector. FMCG products account for 53% of total rural spending. During FY 11, over 80% of FMCG products grew at a faster pace in rural markets as compared to urban ones with premium skin care brands growing twice as fast in rural areas than urban brands. Lower priced packs have increased the penetration of the FMCG sector in rural India. The sectors that are witnessing high growth include salty snacks, refined edible oil, healthcare products, iodised salt, etc. Hair oils, toothpastes and shampoos have quite high penetration in both urban and rural markets while the sales of instant noodles, floor cleaners and hair dyes is increasing in rural markets due to higher awareness. There are a total of 12-13 million retail outlets in India, with kirana stores being the majority of them. Some of the major FMCG players in India include ITC, HUL, Nestle, Dabur, Godrej Consumer, etc.

FMCG SNEEK-PEAK

SCOPE IN INDIA- AT A GLANCE

Huge growth potential as the per capita consumption of almost all products in the country is amongst the lowest in the world.

Prospect could be increased further if these companies can change the consumer's mindset and offer new generation products.

Due to agro-economic diversity, availability of raw materials gives India the locational advantage.

Low cost labour gives India a competitive advantage.

Indian companies have their presence across the value chain of FMCG sector, right from the supply of raw materials to packaged goods in the food-processing sector.

 Largely dependent on rural demand to garner volumes in 2013 when sales of discretionary items were affected in a slowing market.

India’s FMCG market is mature, competitive, and crowded with local and global brands. In this market, innovation is critical for:

Market

• Remaining competitive

• Generating new avenues for sales and profits

• Driving growth by entering new categories through relevant innovation

• Increasing market share and moving towards market dominance positions in:

- Brand share

- Overall FMCG market share

- Category share

• Growing product and category penetration

Consumer • Creating products that match consumers’ evolving tastes, preferences and needs

• Reaching new customers

• Growing the share of wallet from current customers