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    Fast Moving Consumer Goods (FMCG) : Industry Analysis

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    Priya Aggarwal
    The document provides an overview of the fast moving consumer goods (FMCG) sector in India. Some key points: 1) The FMCG sector is the 4th largest sector in India and contributes significantly to GDP and employment. 2) The sector is composed primarily of household products, health care, and food and beverages. Urban and rural markets each account for around half of sales. 3) Revenues have grown steadily each year, reaching $103.7 billion in 2020. Major players include HUL, Nestle, ITC and others. 4) Growth drivers include rising incomes, low product penetration in rural areas, and increased online access. The sector faces challenges from the pandemic

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    Fast Moving Consumer Goods (FMCG) : Industry Analysis

    Uploaded by

    Priya Aggarwal
    85 views17 pages
    The document provides an overview of the fast moving consumer goods (FMCG) sector in India. Some key points: 1) The FMCG sector is the 4th largest sector in India and contributes significantly to GDP and employment. 2) The sector is composed primarily of household products, health care, and food and beverages. Urban and rural markets each account for around half of sales. 3) Revenues have grown steadily each year, reaching $103.7 billion in 2020. Major players include HUL, Nestle, ITC and others. 4) Growth drivers include rising incomes, low product penetration in rural areas, and increased online access. The sector faces challenges from the pandemic

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    The document provides an overview of the fast moving consumer goods (FMCG) sector in India. Some key points: 1) The FMCG sector is the 4th largest sector in India and contributes significantly to GDP and employment. 2) The sector is composed primarily of household products, health care, and food and beverages. Urban and rural markets each account for around half of sales. 3) Revenues have grown steadily each year, reaching $103.7 billion in 2020. Major players include HUL, Nestle, ITC and others. 4) Growth drivers include rising incomes, low product penetration in rural areas, and increased online access. The sector faces challenges from the pandemic

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    85 views17 pages

    Fast Moving Consumer Goods (FMCG) : Industry Analysis

    Uploaded by

    Priya Aggarwal
    The document provides an overview of the fast moving consumer goods (FMCG) sector in India. Some key points: 1) The FMCG sector is the 4th largest sector in India and contributes significantly to GDP and employment. 2) The sector is composed primarily of household products, health care, and food and beverages. Urban and rural markets each account for around half of sales. 3) Revenues have grown steadily each year, reaching $103.7 billion in 2020. Major players include HUL, Nestle, ITC and others. 4) Growth drivers include rising incomes, low product penetration in rural areas, and increased online access. The sector faces challenges from the pandemic

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    You are on page 1of 17

    FAST MOVING CONSUMER GOODS (FMCG)

    Industry Analysis
    By: Swati Sachdeva (2K19/DMBA/101)
    Introduction

    • The fourth largest sector in the Indian


    economy
    • The FMCG sector is a vital
    The FMCG contributor to India’s GDP
    • Creates employment for more than 3
    Sector Million people
    • High Volume Sales at low prices
    • Exceptionally competitive market

    2
    Sector Composition

    SEGMENTS
    By Product OF FMCG By Region

    9%,

    18%,
    Household Urban
    Health Care Rural
    Food and Beverages Semi Urban
    50%,
    36%, 55%,

    32%,

    3
    OVERVIEW OF REVENUES

    FMCG Year wise Revenues (US$ billion)

    2020 103.7

    2019 83.3

    2018 68.4

    2017 52.8

    2016 49

    2015 43.1

    2014 38.8

    2013 35.7

    2012 33.3

    2011 31.6

    0 20 40 60 80 100 120

    4
    Key Players Operating in the Indian FMCG Market

    • Hindustan Unilever Ltd.


    • Nestlé India
    • Cadbury India
    • ITC Ltd. (Indian Tobacco Company)
    • Asian Paints (India)
    • Procter & Gamble Hygiene and Health Care
    • AMUL
    • Dabur India
    • Britannia Industries
    • Marico Industries
    • Colgate Palmolive

    5
    6 6 FMCG
    GROWTH DRIVERS FOR INDIA’S FMCG SECTOR
     Organised sector is expected to grow as  Low penetration levels of branded products
    the share of unorganised FMCG market in categories like instant foods indicating a
    has seen a fall with increased level of scope for volume growth.
    brand consciousness.  Investment in this sector attracts investors
     Growth in modern retail will augment the as FMCG products have demand throughout
    growth of organised FMCG sector. the year.

     Post GST and demonetisation, modern  Increase in food parks to 17, food
    trade share grew to 10 per cent of the processing capacity to 1.41 million and food
    overall FMCG revenue as of August 2018. labs to 42.
     ITC to invest Rs 700 crore (US$ 100 million)
    in food parks in Madhya Pradesh.

    GROWTH DRIVERS

     Availability of products has become way  Rural consumption has increased,


    easier as internet and different channels of led by a combination of increase in
    sales has made the accessibility of desired income and higher aspiration levels.
    product to customers more convenient at There is an increased demand for
    required time and place. branded products in rural India.
     Online grocery stores and online retail
     Huge untapped rural market.
    stores like Grofers, Flipkart, and Amazon
    are making FMCG products more readily
    available.

    7
    IMPACT OF COVID-19 ON FMCG SECTOR
     Retailing: consumers developed online grocery shopping habit.
     Packaged and fresh food: Stockouts and price volatility made staples a
    luxury.
     Home care: home hygiene points to a more permanent shift in consumer
    behaviour.
     Consumer health: preventative healthcare remedies will gain in the long
    term.
     Alcoholic drinks and tobacco: interruption of sales.
     Consumer food service: consumers move back into kitchens.

    8
    Challenges due to Lockdown

    Hurdles in booking and fulfilling orders.

    No Visibility of Ground Situations.

    Zero Engagement with Outlets.

    9
    Challenges Post Lockdown

    Ensuring product availability across targeted markets

    Improper beat optimization for new normal

    10
    STRATEGIES

    Promotion
    and offers  Firms like ITC offers combo deals to the consumers.
     Amazon India is planning to invest significantly over the coming months for expanding its
    grocery and food business, launching more products and categories and forming new
    partnerships with huge grocery and supermarket chains.

     In May 2020, Tata Consumer Products Limited (TCPL) acquired PepsiCo’s stake in
    NourishCo Beverages Limited.
     In March 2020, Hindustan Unilever Limited (HUL) signed an agreement with Glenmark
    Pharmaceuticals Ltd to acquire its intimate hygiene brand VWash.
    Expansion  In July 2020, ITC Ltd completed the acquisition of spice-manufacturer Sunrise Foods
    Private Ltd at an upfront cash deal price of Rs 2,150 crore (US$ 305.01 million).

    11
    Future Plans

    Product Portfolio development considering current


    Pandemic

    FMCG companies taking direct route to customer homes

    Rising contribution of E-commerce

    1
    Product Portfolio development

     In July 2020, Mother Dairy forayed into bread


    segment as part of its strategy to diversify
    business and announced its target to more
    than double its revenue to Rs 25,000 crore
    (US$ 3.55 million) in the next five years.
     In June 2020, ITC launched Salvon Germ
    Protection wipes.
     In June 2020, Emami launched organic aloe
    vera gel under BoroPlus brand.
     In June 2020, Amul launched ginger and tulsi
    milk variants to boost immunity.

    13
    ADVANTAGES FROM INDIAN PERSPECTIVE

     Rising income and growing youth  Low penetration levels in rural market offers room
    population have been key growth for growth.
    drivers of the sector  Dabur stepping-up product launches to
     India’s contribution to global sell only on E-commerce platforms.
    consumption is expected to more  E-commerce segment is forecast to
    than double to 5.8 per cent by contribute 11 per cent to the overall
    2020. FMCG sales by 2030.
    ADVANTAGES
     RP-Sanjiv Goenka Group to invest capital
    fund of US$ 14.74 million in FMCG
     Investment approval of up to
    startups. 100 per cent foreign equity in
     Supa Star Foods Pvt Ltd, a packaged food single brand retail and 51 per
    and beverage maker, has received its cent in multi-brand retail.
    second investment from Roots Ventures,
     The minimum capitalization for foreign
    which will help the company grow its
    distribution network and add more FMCG companies to invest in India is
    products. US$ 100 million.
    14
    GOVT INITIATIVES TO PROMOTE FMCG SECTOR

    Some of the major initiatives taken by the Government to promote the FMCG sector in India are
    as follows:

     The Government of India has approved 100 per cent FDI in the cash and carry segment and
    in single-brand retail along with 51 per cent FDI in multi-brand retail.

     The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the
    FMCG products such as soap, toothpaste and hair oil now come under the 18 per cent tax
    bracket against the previous rate of 23-24 per cent. Also, GST on food products and hygiene
    products have been reduced to 0-5 per cent and 12-18 per cent respectively.

     GST is expected to transform logistics in the FMCG sector into a modern and efficient model
    as all major corporations are remodeling their operations into larger logistics and
    warehousing.

    15
    Road Ahead
     Rural consumption has increased, led by a combination of increasing income and higher aspiration
    levels. The rural FMCG market in India is expected to grow to US$ 220 billion by 2025 from US$ 23.6
    billion in FY18.

     Another major factor propelling the demand for food services in India is the growing youth population,
    primarily in urban regions.

     The initiatives for the growth of sector are expected to increase the disposable income in the hands of
    the common people, especially in the rural area, which will be beneficial for the sector.

    Trends that are likely to play out for the FMCG sector due to Covid 19:

    • Rural consumption-driven growth.


    • E-commerce demand is here to stay.
    • Renewed focus on cost control.
    • The Q1 FY21 show is likely to be an aberration—positive or negative.

    16
    17

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