Ppt analysis of fmcg sector 28 4 13
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Ppt analysis of fmcg sector 28 4 13 Ppt analysis of fmcg sector 28 4 13 Presentation Transcript

  • INDUSTRY PROFILE 8/9/2013 2
  • SECTOR OVERVIEW INDUSTRY PROFILE • At present, FMCG sector is the fourth largest sector in India with a market size of USD 13 Billion as of 2012. • It is projected to grow to a USD 33 Billion industry by 2015 & USD 100 Billion industry by the year 2025. 8/9/2013 3
  • MAJOR SEGMENTS • It includes products such as Laundry soaps/bars, Washing powder etc. & is dominated by brands such as Ariel, Surf Excel, Vim, Tide etc. • Increase in awareness about easy to use home cleaning products & steady economic growth have acted as major stimulants for market growth in this segment. • The segment is characterized by the presence of both domestic & foreign players. INDUSTRY PROFILE8/9/2013 4 Household care
  • MAJOR SEGMENTS (contd.) • It comprises of products such as Soap, Personal wash market, Oral care, Skin care etc. • A highly positive trend can be seen in the growth of this segment on account of the changes in the buying behavior. INDUSTRY PROFILE8/9/2013 5 Personal care
  • MAJOR SEGMENTS (contd.) • Comprises of bakery products, tea, coffee, mineral water, soft drink etc. • Indian hot beverage market is tea dominated. Coffee is consumed largely in the southern states. • The major share of tea market is dominated by non unorganized players. INDUSTRY PROFILE8/9/2013 6 Food & Beverage
  • POLICIES & RULES • Foreign direct investment (FDI) • Removal of Quantitative Restrictions & Reservations Policy • Central & state initiatives • Food laws INDUSTRY PROFILE8/9/2013 7 Policies
  • POLICIES & RULES (contd.) • Heavy launch costs on new products • Existence of contract manufacturing • Marketing assumes a significant place in the brand building process • Providing good price points is the key to success INDUSTRY PROFILE8/9/2013 8 Rules
  • COMPETITIVE LANDSCAPE INDUSTRY PROFILE • 3 well identified set of players operate in the Indian FMCG market. – foreign players who are present through their subsidiaries. – strong Indian players with established national presence. – regional or small domestic players. 8/9/2013 9
  • LEADING PLAYERS • Currently the largest Indian FMCG company. • Has a portfolio of over 50 brands. • Enjoys a formidable distribution network. INDUSTRY PROFILE8/9/2013 10 Hindustan Unilever Ltd. (HUL)
  • LEADING PLAYERS (contd.) • Second largest player in soaps & largest in hair color market. • Includes Good Knight, Cinthol, Expert, Hit, Jet etc. • The company employs 950 people & has state of the art manufacturing facilities in Assam, Madhya Pradesh & Himachal Pradesh INDUSTRY PROFILE8/9/2013 11 Godrej Consumer Products Ltd. (GCPL)
  • LEADING PLAYERS (contd.) • Largest Indian FMCG & ayurvedic products company. • Product portfolio of the company includes health care, food products, pharma etc. INDUSTRY PROFILE8/9/2013 12 Dabur India Ltd.
  • LEADING PLAYERS (contd.) • Largest oral care company in India. • Has a 51 % market share in toothpaste segment, 48 % in toothpowder & 30 % share in the toothbrush segment. • The company’s strategy is to focus on growing volumes by improving penetration through aggressive campaigning & consumer promotions. INDUSTRY PROFILE8/9/2013 13 Colgate-Palmolive India Ltd.
  • RECENT DEVELOPMENTS • GST is a comprehensive tax levy on manufacture, sale & consumption of goods & services at a national level. • It is an indirect tax that will lead to the abolishment of taxes such as central sales tax, excise duty, service tax & VAT. • The main purpose of GST is to simplify India’s tax structure. INDUSTRY PROFILE8/9/2013 14 Goods & Services Tax (GST)
  • SCOPE OF THE SECTOR • Continues growth in sales and profit lead to right future • Growth will be positive because of recent development and good recent future • GST motivates FMCG sector and export as well INDUSTRY PROFILE8/9/2013 15
  • ANALYSIS OF THE SECTOR 8/9/2013 16
  • PORTER’S 5 FORCE MODEL ANALYSIS OF THE SECTOR • Threat Of New Entrants: MODERATE – presence of low regulatory barriers – high competitive industries require large investments, so small players create less impact • Threat Of Substitutes: HIGH – multiple brands with low product differentiation – new companies compete at prices which increase product substitution 8/9/2013 17
  • PORTER’S 5 FORCE MODEL (contd.) ANALYSIS OF THE SECTOR • Bargaining Power Of Suppliers: MODERATE – due to long term relations with suppliers • Rivalry Among Competitors: HIGH – as more MNC’s are entering the country • Bargaining Power Of Customers: LOW – due to high brand loyalty & low switching costs 8/9/2013 18
  • INDUSTRY ANALYSIS • Price of inputs • Emergence of private labels • Counterfeit and pass offs • Infrastructural bottleneck 8/9/2013 19 Key Challenges ANALYSIS OF THE SECTOR
  • INDUSTRY ANALYSIS (contd.) • Consolidation • Product innovation • Lifestyle products • Backward integration • Third party manufacturing • Increased hiring from Tier 1 & 2 cities • Reducing carbon footprint 8/9/2013 20 Trends in the Industry ANALYSIS OF THE SECTOR
  • INDUSTRY ANALYSIS (contd.) • Untapped rural market, it accounts for two thirds of the Indian population • Food processing industry, around 200 million people are expected to shift to packaged & processed food • Lack of infrastructure & storing facilities, huge investment in rural infrastructure & efficient utilization of resources for the overall growth of FMCG sector in India 8/9/2013 21 Opportunities in the Industry ANALYSIS OF THE SECTOR
  • INDUSTRY ANALYSIS (contd.) • Investment approval, investment of up to 100 % foreign equity for NRI & overseas corporate bodies has been approved by the government. • FDI in organized retail, India has allowed 51 % FDI in multi brand retail • Relaxation of license rules • Priority sector 8/9/2013 22 Government Policies ANALYSIS OF THE SECTOR
  • PEST ANALYSIS • Tax exclusion in sales & excise duty for small scale industries • Transportation & infrastructure development in rural areas helps in distribution network • Restrictions in import policies • Help for agricultural sector 8/9/2013 23 Political ANALYSIS OF THE SECTOR
  • PEST ANALYSIS (contd.) • The GDP rate of Indian economy is increasing every year & is expected to get better in comparison to other countries • New policies are being adopted by the government & RBI to control inflation rate • There is an increase in disposable income due to increased GDP rate which has resulted in an increase in per capita income allowing consumers to spend more 8/9/2013 24 Economical ANALYSIS OF THE SECTOR
  • PEST ANALYSIS (contd.) • Distribution of income • Changes in lifestyle • Consumerism • Education levels • Law affect social behavior • In 2003 46 million household achiever, whereas 124 million household are in position to spent on FMCG in 2013 8/9/2013 25 Social ANALYSIS OF THE SECTOR
  • PEST ANALYSIS (contd.) • Technology has been made available in India & is also imported from foreign countries • With research & development facilities available developments have been possible in technology field with the help of some foreign players 8/9/2013 26 Technological ANALYSIS OF THE SECTOR
  • SWOT ANALYSIS • Operational costs for the FMCG sector in India are relatively low • Presence of established distribution networks in both urban & rural areas • Favorable governmental policies • Low labor costs as compared to other countries 8/9/2013 27 Strengths ANALYSIS OF THE SECTOR
  • SWOT ANALYSIS (contd.) • Lower scope of investing in technology & achieving economies of scale, especially in small sectors • Low exports levels 8/9/2013 28 Weaknesses ANALYSIS OF THE SECTOR
  • SWOT ANALYSIS (contd.) • Largely untapped rural market which can be capitalized due to population’s changing life style • Rising income levels • Large domestic market 8/9/2013 29 Opportunities ANALYSIS OF THE SECTOR
  • SWOT ANALYSIS (contd.) • Removal of import restrictions resulting in replacing of domestic brands • Tax & regulatory structure • Rural demand is cyclical in nature & also depends upon monsoon 8/9/2013 30 Threats ANALYSIS OF THE SECTOR
  • ECONOMIC IMPLICATIONS Disposable Income • Per capita disposal income is USD556 per annum • Raise up to USD 1150 by 2015 • Food processing industry represented 6.3% of GDP and accounted for 13% of country export • Demand will be boom by 100% by 2015 and share of middle class will about to be 88% CONSUMPTION 8/9/2013 32
  • Rate of Inflation • No significant effect of inflation • Gross margin contribution is around 40-45% • Need to increase by up to 2-4% • Growth rate of industry is lower than that of previous decade is about 9% CONSUMPTION (contd.) ECONOMIC IMPLICATIONS8/9/2013 33
  • Foreign Institutional Investor INVESTMENT ECONOMIC IMPLICATIONS8/9/2013 34
  • • Accounts for around 3 % of the total inflow an 7.3 of total sectorl investment Foreign institutional investment INVESTMENT (contd.) ECONOMIC IMPLICATIONS8/9/2013 35
  • • Rigorous import duties to discourage import • 100 % import duties levied on tea & coffee • Purpose of export duties is to increase the price up to international level as they manufactured at very low cost TARIFFS ECONOMIC IMPLICATIONS8/9/2013 36
  • TO CONCLUDE 8/9/2013 37
  • CONCLUSION • Future projection is highly optimistic($100 bn by 2025) • Players showing positive results indicator of healthy economy • Key growth drivers are low labor cost, more and better choices, changing preferences • Abundant area of future growth • Opportunity in Indian rural market include of 60% population 8/9/2013 38
  • Conclusion • Highly positive outlook as per economic perspective as the FMCG sector accounts a total investment of Rs. 40,000 cr. • Favourable tariff is positive indicator • Approval of FDI is good indicator 8/9/2013 39