INTRODUCTION

The Fast Moving Consumer Goods (FMCG) industry in India is one of the largest

sectors in the country and over the years has been growing at a very steady pace.

The sector consists of consumer non-durable products which broadly consists,

personal care, household care and food & beverages. The Indian FMCG industry is

largely classified as organized and unorganized. This sector is also buoyed by

intense competition. Besides competition, this industry is also marked by a robust

distribution network coupled with increasing influx of MNCs across the entire

value chain. This sector continues to remain highly fragmented.

Industry Classification

The FMCG industry is volume driven and is characterized by low margins. The

products are branded and backed by marketing, heavy advertising, slick packaging

and strong distribution networks. The FMCG segment can be classified under the

premium segment and popular segment. The premium segment caters mostly to the

higher/upper middle class which is not as price sensitive apart from being brand

conscious. The price sensitive popular or mass segment consists of consumers

belonging mainly to the semi-urban or rural areas who are not particularly brand

conscious. Products sold in the popular segment have considerably lower prices

than their premium counterparts.

 

What are Fast Moving Consumer Goods (FMCG)?

Products which have a quick turnover, and relatively low cost are known as Fast

Moving Consumer Goods (FMCG). FMCG products are those that get replaced

within a year. Examples of FMCG generally include a wide range of frequently

purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning

products, shaving products and detergents, as well as other non-durables such as

glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also

include pharmaceuticals, consumer electronics, packaged food products, soft

drinks, tissue paper, and chocolate bars.

A subset of FMCGs is Fast Moving Consumer Electronics which include

innovative electronic products such as mobile phones, MP3 players, digital

cameras, GPS Systems and Laptops. These are replaced more frequently than other

electronic products.

White goods in FMCG refer to household electronic items such as Refrigerators,

T.Vs, Music Systems, etc.

In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing

industries in India. According to one study, the industry grew 5.3% in value

between 2004 and 2005.

The Indian FMCG sector is the fourth largest in the economy and has a market size

of US$13.1 billion. Well-established distribution networks, as well as intense

competition between the organized and unorganized segments are the

characteristics of this sector. FMCG in India has a strong and competitive MNC

presence across the entire value chain.

It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015

from US $ billion 11.6 in 2003. The middle class and the rural segments of the

Indian population are the most promising market for FMCG, and give brand

makers the opportunity to convert them to branded products. Most of the product

categories have potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with

rapid urbanization, increased literacy levels, and rising per capita income.

The big firms are growing bigger and small-time companies are catching up as

well.

List of FMCG Companies in India

ALPHABATES COMPANIES

B Britannia

C Colgate Palmolive(India) ltd.

D Dabur India Limited

E Emami Limited

G GlaxoSmithKline Consumer Healthcare Limited

Godfrey Phillips India Limited

Godrej Consumer Products Limited

H Hindustan Unilever Limited

I ITC Limited

M Marico Limited

N Nestle India Limited

Nirma Limited

P Procter & Gamble Hygiene and Health Care Limited

R Radico Khaitan Limited

T Tata Tea Limited

U United Breweries LimitedUnited Spirits Limited

W Weikfield Products Company India Private Limited

THE TOP 20 COMPANIES IN FMCG SECTOR

S.

NO.

Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco

Company)

3. Nestlé 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

11. Colgate-Palmolive (India)ltd.

12. Gillette India ltd.

13. Godfrey Phillips

14. Henkel spic

15. Johnson & Johnson

16. Modi Revlon

17. Nestle

18. Nirma ltd

19. Amul India

20. Godrej consumer products ltd.

The companies mentioned in Exhibit I, are the leaders in their respective sectors.

The personal care category has the largest number of brands, i.e., 21, inclusive of

Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds.  There are 11 HLL brands in

the 21, aggregating Rs. 3,799 crore or 54% of the personal care category.

Cigarettes account for 17% of the top 100 FMCG sales, and just below the

personal care category. ITC alone accounts for 60% volume market share and 70%

by value of all filter cigarettes in India.

The foods category in FMCG is gaining popularity with a swing of launches by

HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs.

4,637 crore. Nestle and Amul slug it out in the powders segment. The food

category has also seen innovations like softies in ice creams, chapattis by HLL,

ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury. This

category seems to have faster development than the stagnating personal care

category. Amul, India's largest foods company, has a good presence in the food

category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also

ranks in the top 100 FMCG brands, dominates the biscuits category and has

launched a series of products at various prices.

In the household care category (like mosquito repellents), Godrej and Reckitt are

two players. Goodknight from Godrej is worth above Rs 217 crore, followed by

Reckitt's Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and

Sunsilk make it to the top 100, although P&G's Head and Shoulders and Pantene

are also trying hard to be positioned on top. Clinic is nearly double the size of

Sunsilk.

Dabur is among the top five FMCG companies in India and is a herbal specialist.

With a turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur

has brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real.

Asian Paints is enjoying a formidable presence in the Indian sub-continent,

Southeast Asia, Far East, Middle East, South Pacific, Caribbean, Africa and

Europe. Asian Paints is India's largest paint company, with a turnover of Rs.22.6

billion (around USD 513 million). Forbes Global magazine, USA, ranked Asian

Paints among the 200 Best Small Companies in the World

Cadbury India is the market leader in the chocolate confectionery market with a

70% market share and is ranked number two in the total food drinks market. Its

popular brands include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The

Rs.15.6 billion (USD 380 Million) Marico is a leading Indian group in consumer

products and services in the Global Beauty and Wellness space.

Outlook

There is a huge growth potential for all the FMCG companies as the per capita

consumption of almost all products in the country is amongst the lowest in the

world. Again the demand or prospect could be increased further if these companies

can change the consumer's mindset and offer new generation products. Earlier,

Indian consumers were using non-branded apparel, but today, clothes of different

brands are available and the same consumers are willing to pay more for branded

quality clothes. It's the quality, promotion and innovation of products, which can

drive many sectors.

Most of the consumer durable goods will see a reduction in price as the

government of India decided to reduce tax levied on them. 4 percentage point

reduction in the Cenvat to 10 per cent from 14 per cent is the key driver.

SCOPE

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest

sector in the economy. A well-established distribution network, intense

competition between the organized and unorganized segments characterize the

sector. FMCG Sector is expected to grow by over 60% by 2010. That will translate

into an annual growth of 10% over a 5-year period. It has been estimated that

FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores

in 2010. Hair care, household care, male grooming, female hygiene, and the

chocolates and

confectionery categories are estimated to be the fastest growing segments, says an

HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has

been able to make a fine recovery since then.

For example, Hindustan Levers Limited (HLL) has shown a healthy growth in the

last quarter. An estimated double-digit growth over the next few years shows that

the good times are likely to continue.

Growth Prospects

With the presence of 12.2% of the world population in the villages of India, the

Indian rural FMCG market is something no one can overlook. Increased focus on

farm sector will boost rural incomes, hence providing better growth prospects to

the FMCG companies. Better infrastructure facilities will improve their supply

chain. FMCG sector is also likely to benefit from growing demand in the market.

Because of the low per capita consumption for almost all the products in the

country, FMCG companies have immense possibilities for growth. And if the

companies are able to change the mindset of the consumers, i.e. if they are able to

take the consumers to branded products and offer new generation products, they

would be able to generate higher growth in the near future. It is expected that the

rural income will rise in 2007, boosting purchasing power in the countryside.

However, the demand in urban areas would be the key growth driver over the long

term. Also, increase in the urban population, along with increase in income levels

and the availability of new categories, would help the urban areas maintain their

position in terms of consumption. At present, urban India accounts for 66% of total

FMCG consumption, with rural India accounting for the remaining 34%. However,

rural India accounts for more than 40% consumption in major FMCG categories

such as personal care, fabric care, and hot beverages. In urban areas, home and

personal care category, including skin care, household care and feminine hygiene,

will keep growing at relatively attractive rates. Within the foods segment, it is

estimated that processed foods, bakery, and dairy are long-term growth categories

in both rural and urban areas.

Availability of raw materials

Because of the diverse agro-climatic conditions in India, there is a large raw

material base suitable for food processing industries. India is the largest producer

of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest

producer of rice, wheat and fruits &vegetables. India also produces caustic soda

and soda ash, which are required for the production of soaps and detergents. The

availability of these raw materials gives India the location advantage.

FMCG during Recession

At a time when the economy and industry sectors such as automobiles, aviation and

financial services are reeling from the global slowdown, the consumer goods sector in

India has managed to buck the trend with most companies posting double-digit growth in

net profits in the first half of fiscal 2009 backed by healthy sales

According to the recent reports, India's fast moving consumer goods industry has so far

been resilient to the slowdown in the economy and a dip in consumer sentiment. If we go

by the numbers for the past few months, the growth only seems to have got better when

compared to the earlier months.

 As very categorically said by the Amway India Enterprises managing director and chief

executive, Mr. William Pinckney.

" I am not saying that our company (sector) is recession-proof but it is recession-resilient.”

 This statement on the whole stands strong for most the leading players in the FMCG

sector.

ASIAN PAINTS

Asian Paints was formed in 1942 in India. Asian Paints is dealing in marine and

industrial coatings, automobile OEMs and refinishes, wood finishes, finish coats

and an ancillary product in decorative paints. It manufactures and markets paints.

The plants of the Group are located in:

Maharashtra

Gujarat

Andhra Pradesh

Uttar Pradesh

Tamil Nadu

Asian Paints is the largest paint company in India and the third-largest company

in Asia. It has a turnover of US$ 680 million. The company is spread across 21

countries and has 29 paint manufacturing facilities.

Asian Paints serves through its subsidiaries by the name of:

Berger International Limited

Apco Coatings

SCIB Paints

Taubmans

Some Facts about Asian Paints:

- Asian Paints was ranked among 200 Best small companies in the world for 2002

and 2003 and was presented as the 'Best under a Billion Award' by Forbes Global

Magazine;

- In Feb 2001, Asian Paints was also awarded as the Ninth Best Player in India by

the leading magazine called India Today;

- Asian Paints was ranked as the Fourth most admired company across industries

in India in a survey conducted by 'Economic Times' in January 2000;

NESTLE

Nestlé's relationship with India started in 1912. It started its trading with India as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. Nestlé India is amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. Nestlé India is a company that provides Indian Consumers products with global standards and is committed to constant growth and shareholder satisfaction. Nestlé India has also provided opportunities of growth and employment to about 1 million people including farmers, suppliers of packaging materials, services and other goods.

Nestlé made its first investment in Moga in 1961. In 1967 Nestlé established its

next factory at Choladi (Tamil Nadu). At present, it has a number of factories in

different parts of India such as:

1.Punjab

2.Uttaranchal

3.Delhi

4.Gurgaon

5.Kolkata

6.Mumbai

7.Goa

8.Karnataka

9.Chennai

10.TamilNadu

Nestlé's Brands in India

Milk Products & Nutrition

.Nestléeverydaydairywhitener

.Nestléeverydayslim

.NestléeverydaYghee

.Nestlé milkmaid

.Nestléfresh'n'naturaldahi

.Nestléfresh'n'naturaLslimdahi

.NesTlEjeeraraita

.Nestle curds

.Nestle milk

.Nestléslimmilk

.NestlEmilkmaidfruityoghurt

Beverages

.Nescafe classic

.Nescafe sunrise

.Nestlémilo

.Nescafe3in1

.Nescafekoolerz

Prepared Dishes and Cooking aids

.Maggi2-MINUTENoodles

.MaggiVegetableAttaNoodles

.MaggiDalAttaNoodles

.MaggiRiceNoodlesMania

.MaggiSauces

.MaggIPizzAMazza

.MaggiHealthySoups

Chocolates and Confectionary

.NestléKitKat

.NestléKitKatLite

.NestléMilkyBar

.Nestle Munch

.NestléMilkChocolate

.NestlEFunBar

.Polo

.PoloPowermint

.NestléMunchPopChoc

. Nestlé Éclairs

DABUR

Dabur India Ltd. is the fourth largest FMCG Company in India. Dabur deals in

Health care and Personal care products. Today, Dabur has a turnover of

Rs.1899.57 crores. The market penetration of Dabur is of about 1.5 million retail

outlets all over India with 47 C& F agents and more than 5000 distributors. Dabur

India is divided into 2 major strategic business units:

Consumer Care Division

Consumer Health Division

Dabur has 3 subsidiary group companies:

1. Dabur Foods

2. Dabur Nepal

3. Dabur International- Further divided into Asian Consumer Care in Bangladesh,

African Consumer Care in Nigeria and Dabur Egypt.

Dabur's Brands

Vatika

Anmol

Hajmola

Dabur Amla

Dabur Chyawanprash

Dabur Lal Dant Manjan

CADBURY

Cadbury entered India in 1948 by importing chocolates. And now, it has

manufacturing facilities in Mumbai, Pune, Gwalior, Bangalore, and Himachal

Pradesh and 4 sales offices at Mumbai, Kolkata, New Delhi, and Chennai in India.

The corporate office is in Mumbai. Cadbury is into the business of Chocolate

Confectionary, Milk Food Drinks, and Candies.

Some of Cadbury's key brands are:

Chocolates

Cadbury Dairy Milk

5 Star

Perk

Éclairs

Celebrations

Milk food drinks

Bournvita

Candy

Halls.

MARICO

Marico is a leading Indian group operating in

Consumer Products

Aesthetic Services

Global Ayurvedics Business Marico has generated a turnover of Rs. 11.5

billion (US$ 250 Million) during 2005-06. It is a leading Indian group in

Consumer Products and Services. Marico's well-known brands are:

o Parachute

o Saffola

o Sweekar

o Hair & Care

o Nihar

o Shanti

o Mediker

o Revive

o Kaya

o Sundari

o Aromatic Fiancee

o HairCode.

GCMMF(AMUL)

Gujarat Cooperative Milk Marketing FederationGujarat Cooperative Milk Marketing Federation (GCMMF) is the largest food product marketing organization of India. It aims to provide good returns to the farmers and also to fulfill the requirements of consumers by giving them quality products.

Amul was formed in 1946 by an apex co-operative organization, Gujarat Cooperative Milk Marketing Federation. AMUL means "priceless" in Sanskrit. Amul products are used by millions of people. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk, and Amulya has made Amul one of the leading

food brands in India. Amul products are sold at reasonable prices. Amul has a

turnover of Rs. 37.74 billion in 2005-06

Amul's Products

Infant Milk Range

Amul Infant Milk Formula 1

Amul Infant Milk Formula 2

Amulspray Infant Milk Food

Milk Powders

Amulya Dairy Whitener

Sagar Skimmed Milk Powder

Sagar Tea and Coffee Whitener

Amul Full Cream Milk Powder

Bread Spreads

Amul Butter

Amul Lite Low Fat Bread Spread

Amul Cooking Butter

Pure Ghee

Sagar Pure Ghee

Amul Pure Ghee

Amul Cow Ghee

Cheese Range

Amul Emmental Cheese

Amul Gouda Cheese

Amul Malai Paneer (cottage cheese)

Utterly Delicious Pizza

Amul Pasteurized Processed Cheddar Cheese

Amul Pizza (Mozarella) Cheese

Amul Shredded Pizza Cheese

Amul Processed Cheese Spread

Mithaee Range (Ethnic Sweets)

Amul Mithaee Kulfi Mix

Avsar Ladoos

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

Amul Amrakhand

Amul Mithaee Gulabjamuns

UHT Milk Range

Amul Shakti

Amul Taaza

Amul Gold

Amul Lite Slim-n-Trim Milk

Amul Fresh Cream

Amul Snowcap Softy Mix

Fresh Milk

Amul Slim & Trim Double Toned Milk

Amul Saathi Skimmed Milk

Amul Taaza Toned Milk

Amul Gold Full Cream Milk

Amul Cow Milk

Amul Shakti Standardized Milk

Curd Products

Yogi Sweetened Flavored Dahi

Amul Masti Dahi

Amul Masti Spiced Butter Milk

Amul Lassee

Amul Ice creams

Royal Treat Range

Nut-o-Mania Range Nature's Treat

Sundae Range

Assorted Treat

Utterly Delicious

Chocolate & Confectionery

Amul Milk Chocolate

Amul Fruit & Nut Chocolate

Brown Beverage

Nutramul Malted Milk Food

Milk Drink

Amul Kool Flavored Milk

Amul Kool Cafe

Health Beverage

Amul Shakti White Milk Food

HUL

Hindustan Unilever Limited also called Hindustan Lever Limited (HLL) was

established in 1933 as Lever Brothers India Limited. Hindustan Lever

Limited (HLL) is India's largest Fast Moving Consumer Goods Company,

with a customer base of 2 out of every 3 Indian in the category of Home &

Personal Care Products and Foods & Beverages. The company has

combined volumes of about 4 million tonnes and sales of Rs.10, 000 crores.

HLL is also one of the country's largest exporters; the Government of India

has recognized HLL as a Golden Super Star Trading House

Some of HLL brands are:

Kwality Walls Ice Cream

Hamam

Lifebuoy

Rexona

Lux

Liril

Moti Soaps

Breeze

Lipton Tea

Brooke Bond Tea

Bru Coffee

Pepsodent

Close Up

Surf

Rin

Wheel Laundry Detergent

Kissan

Annapurna

Pond's

Vaseline

Fair & Lovely

Lakmé

Clinic Plus

Clinic All Clear

Sunsilk and Lux Shampoos

Vim

Ala Bleach

Domex

Pureit Water Purifier