Presented by: A1Group

IntroductionFast-moving consumer goods (FMCG)

or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost.

Examples include non-durable goods such as soft drinks, toiletries, and grocery items.

Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be substantial.

BackgroundIn India, companies like ITC, HLL, Colgate,

Cadbury and Nestle have been a dominant force in the FMCG sector well supported by relatively less competition and high entry barriers (import duty was high).

These companies were, therefore, able to charge a premium for their products.

The margins were also on the higher side. With the gradual opening up of the economy over the last decade, FMCG companies have been forced to fight for a market share.

Major Players Hindustan Unilever Ltd.ITC (Indian Tobacco

Company)Nestlé IndiaGCMMF (AMUL)Dabur India LtdAsian Paints (India)Cadbury IndiaBritannia Industries Ltd.Procter & Gamble

Hygiene and Health Care

Marico Industries Ltd.

Colgate-Palmolive (India) Ltd.

Gillette India Ltd.Godfrey PhillipsHenkel SpicJohnson & JohnsonModi RevlonWiproNirma LtdAmul India

MARKET STRUCTURE

Regulatory FrameworkInvestment Approval: Automatic investment approval up to 100 per cent foreign equity for NRI and overseas corporate bodies. These investments are allowed in food processing segments such as coffee and tea

FDI in organized retail: India currently allows 100 per cent FDI in Cash & Carry segment and 51% in single-brand retail, which is expected to be further increased to 100%. India is also expected to allow 51% FDI in multi-brand retail, which will boost the nascent organized retail market in the country

Priority Sector: The Government of India recognizes food processing and agro industries as priority sectors

Relaxation of license rules: Industrial licenses are not required for almost all food and agro-processing industries, barring certain items such as beer, potable alcohol and wines, cane sugar, and hydrogenated animal fats and oils as well as items reserved for exclusive manufacturing in the small-scale sectorStatutory Minimum Price: In October 2009, the government amended the Sugarcane Control Order, 1966, and replaced the Statutory Minimum Price (SMP) of sugarcane with Fair and Remunerative Price (FRP) and the State- Advised Price (SAP)

Top 10 food and beverage makers score poorly in social tests.

Unilever looks to remain the leading player in deodorants.

UB plans new product rollouts regularly to strengthen presence in market.

From Unilever to Himalaya it's no more testing cosmetics on animals.

Eurostar expands FMCG footprint with exclusive rights for top consumer brands.

Croda's profit from customers like P&O rises on strong consumer care sales.

TN coconut oil under lens in Kerala over adulteration charges

As per the Consumer Survey by KSATechnopak, of the total consumption expenditure, almost 40% and 8% was accounted by groceries and personal care products respectively.

India offers a large and growing market of 1 billion people of which 300 million are middle class consumers.

India offers a vibrant market of youth and vigor with 54% of population below the age of 25 years.

Domestic demand is expected to double over the ten-year period from 1998 to 2007.

Current scenario

The number of households with "high income" is expected to increase by 60% in the next four years to 44 million households.

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion.

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. 

India is one of the world’s largest producers for a number of FMCG products but its FMCG exports are languishing at around Rs 1,000 crore only.

 

Personal Wash:- The market size of personal wash is estimated to be around Rs. 8,300 Cr.

Detergents:- The size of the detergent market is estimated to be Rs. 12,000 Cr.

Personal Care• Skin Care:-

The total skin care market is estimated to be around Rs. 3,400 Cr.

• Hair Care:- The hair care market in India is estimated at around Rs. 3,800 Cr.

• Shampoos:- The Indian shampoo market is estimated to be around Rs. 2,700 Cr.

• Oral Care:- The total toothpaste market is estimated to

be around Rs. 3,500 Cr.

Food & Beverages• Food Segment :- This category has 18 major brands

aggregating Rs. 4,600 Cr.

Strengths:• Low operational costs• Presence of established distribution networks in both urban and rural areas• Presence of well-known brands in FMCG sector

Weaknesses:• Lower scope of investing in technology and achieving economies of scale, especially in small sectors• Low exports levels• "Me-too” products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:• Untapped rural market• Rising income levels, i.e. increase in purchasing power of consumers• Large domestic market- a population of over one billion.• Export potential• High consumer goods spending

Threats:• Removal of import restrictions resulting in replacing of domestic brands• Slowdown in rural demand• Tax and regulatory structure

CONTRIBUTION IN INDIAN ECONOMY

Fourth largest sector contributed in indian economy.

Contributed to 2.5% of GDP(gross domestic product)

FMCG predicted to touch a networth of us$ 47 billion in 2013 & 95$ billion by 2018

Urban market growth rate is 25% & Rural is 40%