A STUDY ON FAST MOVING CONSUMER GOODS

INDUSTRY PRESENTED BY,

SREERAJSTREAM-S3,MBA

1

OVER THE YEARS…

• One of the fastest growing sector in early 1980’s till 1990’s.

• The dream of every creative man, any investor, advertising agency,

or B-school graduate to work in or for FMCG company.

• After 1990’s,

FMCG started losing their sheen due to introduction of other

product types

Total lack of imagination on the part of FMCG companies.

• During 2010, Consumers willingness to upgrade to better, value

added products helped FMCG.

2GEETHU

INTRODUCTION

• Fast-moving consumer goods (FMCG) also known as consumer

packaged products are products that are sold quickly and at

relatively low cost.

• FMCG products have a quick turnover and relatively low cost .

• India’s FMCG sector is 4th largest Sector in the economy and

contribute to around 3mn employment opportunities.

• 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 are generally sold in large quantities, and so the

cumulative profit on such products can be substantial.3

GEETHU

SCOPE

India is an important market for FMCG players

The Indian FMCG sector is the 4th largest in the economy with total

market size of around US$ 13.1 billion.

Due to increasing competition among companies, FMCG has

started penetrating rural and semi urban areas.

This has increased employment opportunity in wide range.4

GEETHU

SIGNIFICANCE OF FMCG SECTOR

• Strong MNC presence.

• Intense competition between organized and

unorganized players.

• Easy availability of important raw

materials.

• Cheaper labour cost.

• Large market 5GEETHU

MARKET SCENARIO

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Evaluation of fMCG sECtor

• The fast moving consumer goods (FMCG) segment is the fourth largest

sector in the Indian economy.

• The market size of FMCG in India is expected to grow from US$ 30

billion in 2011 to US$ 74 billion in 2018.

• FMCG’s GDP contribution rises by 24%, FMCG sector’s contribution to

the country’s GDP now stands at 24.3 per cent.

• Food products is the leading segment, accounting for 43% of overall

market.

• Personal care (22%) & Fabric care (12%) come next in terms of market

share7

SREERAJ

MarKEt sEGMEnt

8SREERAJ

The FMCG sector in India generated revenues worth US$ 34.8

billion in 2011, a growth of 15.2 per cent as compared to the

previous year. Over 2006-11, the sector's revenues posted a

compound annual growth rate (CAGR) of 17.3 per cent. Food

products are the leading segment, accounting for 43 per cent of the

overall market. Personal care (22 per cent) and fabric care (12 per

cent) are the other leading segments.

A report by the Financial Derivatives Company, FDC, says, “The

FMCG sector remains one of the fastest growing sectors of the

economy and we believe opportunities still exists in this sector. The

size of the market is heavily influenced by the country’s

demographic dynamics and the profound influence that western

culture is having on consumer tastes.”9SREERAJ

GroWtH ProsPECts

Large Market• India has a population of more than 1.150 billion, which is just

behind China.

• According to the estimates, by 2030, Indian population will be

around 1.450 billion and will surpass China to become the world’s

largest in terms of population.

• FMCG Industry which is directly related to the population is

expected to maintain a robust growth rate.

10SREERAJ

11SREERAJ

Study conducted by UN Population Division, Medium Variant

MarKEt sEGMEntation

12ARUN

ECONOMIC CONTRIBUTION

Employment

• Direct employment is estimated at approximately 6% of turnover,

i.e. US$ 1.5 billion (Rs. 7,000 crores)

• Approximately 12-13 million retail stores in India, out of which 9

million are FMCG kirana stores. Thus the sector is responsible for

the livelihood of almost 13 million people

Fiscal contribution

• Cascading Multiple Taxes by the FMCG sector(Import duty,

service tax, CST, income tax). 30% revenue of the sector goes into

both direct and indirect taxes. estimated size of $25 billion (Rs.

120,000 crores), that would constitute a contribution to the

exchequer of approximately US$ 6.5 billion (Rs. 31,000 crores).13

ARUN

Social contribution

• Create employment for people with lower educational qualifications.

FMCG firms have also undertaken some specific projects to integrate

with upcountry and rural areas for both inputs and for distribution as

well as to fulfil CSR.

Some examples:

• ITC echoupal and Choupal Sagar:- sells both agricultural inputs and

daily needs products. . ITC’s rural e-network enables farmer

connectivity and provides an easy way for farmers to get better

profitability and control through access to timely information.

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Contribution to Other Sectors

1.Agriculture - Its intake of agricultural output as raw material

is estimated to constitute roughly 9% of total turnover for the

sector. That would put its total value to agriculture at US$ 2.2

billion (Rs. 10,500crores).

2. Third Party Logistics - The third-party logistics market for the

FMCG sector in India has been growing at a CAGR of 12%

since 2002, and is estimated to be worth US$ 63 million (Rs. 300

crores). It is anticipated to double by 2011, and be worth over US$

146 million (Rs. 700 crores) by 2012, a growth of 211% from 2002.

15ARUN

3. Ancillary Industries:-

a. Manufacturing – Almost 9-10% of total sector’s production is

outsourced to contract manufacturing units taking the total size

to $ 1.7 – 2 billion (Rs. 8,000 – Rs. 9,500 crores), approximately.

b. Distribution –

i. ITC services 1.1 million outlets at an average frequency of three

days, including those in villages with population of 2,000, and

has 1,000 wholesale dealers.

ii. Marico reaches 1.6 million outlets, through almost 900 direct

distributors, 100+ super distributors, catering to almost 2,500

small stockists and 4,600 van markets. 16

4. Packaging Industry - The packaging industry for the FMCG

sector alone is worth US$ 2.9 billion (Rs. 14,000 crores), and

is expected to grow faster due to the growth of private label FMCG

products.

5. Media Industry - The media industry has a lot to gain from

the FMCG sector. Around 40% of media industry earnings

from advertising (US$ 5 billion) are estimated to come from the

FMCG sector, a contribution of US$ 2 billion (Rs. 9,500 crores).

6. Tourism Industry - Penetration of familiar brands across the

length and breadth of the country provides comfort and

reassurance of quality to both domestic and international tourists.17

NEEMA

FACTORS INFLUENCING GROWTH OF FMCG SECTOR IN INDIA

LARGE AND GROWING YOUTH POPULATION

INFLUENCING FACTORS

INFRASTRUCTURE DEVELOPMENT

SIGNIFICANT INCREASE IN CONSUMPTION LEVELS

GROWING URBANISATIO

N

EMERGENCE OF ORGANISEDRETAIL BUSINESS

18NEEMA

Low operational cost

Well established distribution

network

Strong brand &large market

High advertisement cost Low export level Lower scope of investing in

technology

Large domestic market Rising income level Online social network

Tax and regulatory structure Rural demand is cyclical in

nature Different Monsoon

STRENGTHS WEAKNESS

OPPORTUNITIES THREATS

SWOT ANALYSIS

19NEEMA

TOP TEN FMCG COMPANIES

1.Hindustan Unilever Ltd.

2.ITC (Indian Tobacco Company)

3.Nestle India

4. Amul

5.Dabur India

6.Asian Paints (India)

7.Cadbury India

8.Britannia Industries

9.Procter & Gamble Hygiene and Health Care

10.Marico Industries 20

NEEMA

cONcLUSION

• More and more people these days have started involving

themselves in this field as it creates tremendous job

opportunities for them. It is a steady, diverse and a highly

profitable industry where a person can do a lot of work.

• The jobs in this field range from sales and supply chain,

investment, promotion, HR development, and general

management. It also allows you to trade directly with the

various traders online.

21NEEMA

THANK YOU