fmcg

By:
Thushar Nair
Section:c

FMCG

INTRODUCTION
FMCG stands for fast moving consumer goods
Also called as consumer packaged goods (CPG)
Fast-moving consumer goods(FMCG)
orconsumer packaged goods(CPG) are products
that are sold quickly and at relativelylow cost.
Examples include non-durable goods such assoft
drinks,over the counter drugs,toys,processed
foods.
In contrast, durable goods or major appliances such
as kitchen appliances are generally replaced over a
period of several years.

FMCG have a shortshelf life.

High consumer demand
Product deteriorates rapidly.
Some FMCGssuch as meat, fruits and
vegetables, dairy products, and baked
goodsare highly perishable.
Other goods such as alcohol, prepackaged foods ,soft drinks, and cleaning
products have high turnoverrates

 The profit margin made on FMCG

products is relatively small
They are generally sold in large
quantities.
The cumulative profit on such
products can be substantial.
FMCG is probably the most classic
case of low margin and high volume
business.

CHARACTERISTICS
The following are the main characteristics of
FMCGs:
From the consumers' perspective:
Frequent purchase
Low involvement (little or no effort to choose the item)
Low price

From the marketers' angle:

High volumes
Low contribution margins
Extensivedistribution networks
Highstock turnover

TOP COMPANIES

According to the study conducted by AC Nielsen, 62 of the top 100

brands are owned by MNCs, and the balance by Indian companies.
Fifteen companies own these 62 brands, and 27 of these are owned by
Hindustan UniLever.
The top ten India FMCG brands are:
1.Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestl India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries

Rural set to rise

Rural areas expected to be the major driver for FMCG,
as growth continues to be high in these regions.
Rural areas saw a 16 per cent, as against 12 per cent
rise in urban areas.
Companies are also working towards creating specific
products specially targeted for the rural market.
These measures have helped in reducing poverty
inrural Indiaand given a boost to rural purchasing
power.
Hence rural demand is set to rise with rising incomes
and greater awareness of brands.

Urban trends
With rise in disposable incomes, mid- and highincome consumers in urban areas have shifted
their purchasing trend from essential to
premium products. In response, firms have
started enhancing their premium products
portfolio. Indian and multinational FMCG
players are leveraging India as a strategic
sourcing hub for cost-competitive product
development and manufacturing to cater to
international markets.

Indian scenario
The overall fast moving consumer goods (FMCG) market is
expected to increase at a compound annual growth rate (CAGR)
of 14.7 per cent to touch US$ 110.4 billion in the period 20122020, with the rural FMCG market anticipated to increase at a
CAGR of 17.7 per cent to US$ 100 billion during 2012-2025.
The market size of the Indian FMCG sector is expected to reach
US$ 135 billion by 2020 from US$ 44.9 billion in 2013. It is also
the fourth largest sector in the Indian economy and has grown
at an annual average of about 11 per cent over the last decade.
Food products, the leading market segment with 43 per cent of
the overall market revenue together with personal care at 22
per cent make up two-thirds of the sector's revenue.

 The Government of India's policies and regulatory frameworks

such as relaxation of license rules and approval of 51 per cent
foreign direct investment (FDI) in multi-brand and 100 per
cent in single-brand retail are some of the major growth
drivers in this sector. The government has also 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).
There is a lot of scope for growth in the FMCG sector from
rural markets with consumption expected to grow in these
areas as penetration of brands increases. Also, with rising per
capita income, which is projected to expand at a CAGR of 7.4
per cent over the period 2013-19, the FMCG sector is
anticipated to witness some major growth.

Trends in fmcg in india since

years

Road ahead

FMCG brands would need to focus on R&D and innovation as a means

of growth. Companies that continue to do well would be the ones that
have a culture that promotes using customer insights to create either
the next generation of products or in some cases, new product
categories.
One area that we see global and local FMCG brands investing more in
is health and wellness.
Leading global and Indian food and beverage brands have embraced
this trend and are focused on creating new emerging brands in health
and wellness.
According to the PwC-FICCI report Winds of change, 2013: the wellness
consumer, nutrition foods, beverages and supplements comprise a INR
145 billion to 150 billion market in India, is growing at a CAGR of 10 to
12%.