Contents1 About The Company2 India FMCG Market3 Our Strategy4 Financial Information, Share5 Corporate Governance
Indian FMCG sector• 4th Largest sector in the economy with an estimated size of Rs.1,300 billion.• The sector has shown an average annual growth of about 11% per annum over the last decade.• Characteristics: Strong MNC Pressure, Well established distribution network, intense competition between the organized and unorganized players, Easy availability of raw material, cheaper labor cost
THE TOP 10 COMPANIES IN FMCG SECTOR 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
FMCG Market Opportunity 137 62 87 58 28FY 10 E FY15P FY20P Base case High case
Key growth drivers to the Industry are as follows:• Robust growth in India’s GDP• Growing urbanization• Evolving consumer life style• Increased income in rural areas• Spending Pattern• Changing Profile and Mind Set of Consumer• Growth of modern retail
Presented by: Sourabh, Laltendu & ShwetaDate: 11th Aug 2012MPE Batch IV
Mission And Vision We work to create a better future everyday.We help people feel good, look good and get more out of life withbrands and services that are good for them and good for others.We will inspire people to take small everyday actions that can addup to a big difference for the world.We will develop new ways of doing business that will allow us todouble the size of our company while reducing our environmentalimpact.
India’s Largest FMCG Company More than 75 years of experience in India Products touch the lives of 2 out of 3 Indians everyday Direct distribution reach of > 2 Mn stores7 brands > Rs. 1000 crs; 13 brands > Rs. 500 crs No.1 and strong17 out of top 100 most trusted brands in India^ No.2 in more than 95% of the business
Portfolio straddling the pyramidFabric Cleaning Skin Cleansing Hair Skincare Tooth Paste Soaps & Detergents: 48% Personal Products: 31%
How Will We Win30 million people reached with Lifebuoy soap handwashingprogrammes in 2010-1130 million people have gained access to safe drinking water byusing Pureit in-home water purifier, since 2005Around 60%of our major food and beverage brands – Brooke Bond,Bru, Knorr, Kissan and Kwality Wall’s – comply with the ‘HealthyChoice’ guidelines’Reduced CO2 emissions by 14.7%, water use by 21.5% and wasteby 52.8% in our factories, over 2008 baselineImproved CO2 efficiency in transportation by 17.8%60% of tomatoes in Kissan Ketchup are sourced sustainably
Unilever Sustainable Living Plan - Three big goals
StrengthHLL enjoys a formidable distribution network covering over 3400 distributors and 16million outlets. This helps them maintain heavy volumes, and hence, filth shelves of mostoutlets.The new sales organization named One HLL brings "Household and Personal Care" andfoods distribution networks together, thereby aligning all the units towards the commongoal of achieving success.HLL has been continuously able to grow at a rate more than growth rate for FMCG Sector,thereby reaffirming its future stronghold in Indian market.Project Shakti - Rural India is spread across 627,000 villages and possesses a seriousdistribution challenge for FMCG Cos.HLL has come up with a unique and successful initiative wherein the women from therural sector market HLL products, and hence, are able to reach the same wavelength as ofthe common man in village.Apart from product reach, the initiative also creates brand awareness amongst the lowerstrata of society. This has brought about phenomenal results.
WeaknessHLLs market dominance, originating from its extensive reach and strong brand presence,allowed it to raise the prices even as raw materials were getting cheaper.Hence, though the volumes decreased, the margins grew, and company was able to earnmore profits. But higher margins attracted competition in areas of operations.HLLs strategy remained focused on creating power brands and earning higher margins. Itwas not left with any other option but to try cutting down the costs in order to protectvolumes, if not increase it.The key differentiators for an FMCG player are ability to call shots and pricing power, andHLL has shown weakness over both these factors.HLLs weakness was its inability to transform its strategies at the right time. Theycontinued with the same old strategy which helped them gain profits but was not genuinein this changed environment.HLLs risk aversion and market myopia led to stagnation of business, andferocity ofcompetition forced it into a defensive mode.
OpportunityIndia is one of the worlds largest producer of FMCG goods but its exports areminiscule ascompared to production.Though Indian Cos. have been going global, their focus is more towards Asian countriesbecause of the similar preferences.HLL is one of the top companies exporting FMCG goods from India. An expansion ofhorizons towards more and more countries would help HLL grow its consumer base andhenceforth the revenues.Opportunity in Food Sector - The advent of modern trade has opened up greateropportunities for HLL to diversify its brand and strength its food division. It could look atintroducing products from its parents stable like margarines and could also look atexpanding its Knorr range of products.Well-placed to take advantage of future FMCG Growth - HLL reach out 80% of 207 millionhouseholds in the country through various brands. It has a very well-defined productportfolio spread across many product categories.Penetration levels for some major categories like skin-cream (22%), shampoo(38%),toothpaste (48%) and processed foods, continue to remain low offerings but greatgrowthopportunities products
ThreatsITC has reduced its dependence on the cigarettes business - Contributionof the core business in revenues has come down from 87% in FY 99 to 70%in FY 05.Over a period of five years, ITC has extended its presence into areas likefoods, retailing, hotels, greetings, agro, paper, etc. These are businessesthat can give it growth impetus in the long run.With ITC gaining momentum in each of these businesses, it is turning intoa consumer monolith, and hence, the greatest threat to HLLs Business.SSKI India has gone on to say, "We maintain Out performer on ITC with aprice target of Rs.2200, while our Under performer call on HLL remainsunaltered (price target of Rs. 160)."
Two billion times a day, P&G brands touch thelives of peoplearound the world. P&G people work to makesure those brands liveup to their promise to make everyday life just alittle bit better.At P&G, we see big potential in the little moments of life.Touching lives, improving life.
Some Key Facts• Founded in 1837 by William Proctor & James Gamble.• Headquartered in Cincinnati, Ohio, USA• Operations in 80 countries.• Brand available in more than 180 countries worldwide.• Established in India in 1964.• P&G operates under three entities in India - two listed entities “Procter & Gamble Hygiene and Health Care Limited” and ‘Gillette India Limited’, as well as one 100% subsidiary of the parent company in the U.S. called ‘Procter & Gamble Home Products’.
• Vision:Be, and be recognized as, the best consumer productsand services company in the world.• Mission:We will provide branded products and services ofsuperior quality and value that improve the lives of theworlds consumers. As a result, consumers will reward uswith leadership sales, profit, and value creation, allowingour people, our shareholders, and the communities inwhich we live and work to prosper."
Our Principles• We Show Respect for All Individuals• The Interests of The Company and The Individual Are Inseparable• We Are Strategically Focused in Our Work• Innovation Is The Cornerstone of Our Success• We Are Externally Focused• We Value Personal Mastery• We Seek to Be The Best• Mutual Interdependency Is a Way of Life
P&G SWOT AnalysisStrengths Weakness• Product innovation • Views Product performance only• Offers multiple Products • Increased promotional spending to• Strong Brand Image keep health sales• Strong Customer Loyalty • Customer concentration• Diversified Business StructureOpportunities Threats• Going Green Eco Friendly High levels of competition• Emerging Markets • Raw material and energy price• Selling directly to consumers increases• Better Product Experience • Potential Gillette integration Vicks banned in US market Slow down in consumer spending Substitute products have cheaper price
Porters 5 forces model Threat of Competition Threat of New Entrants Threat of Substitutes Power of Suppliers Power of Buyers
Threat of Competition: HIGH P&G’s market environment is highly competitive, with global, regional, and local competitors. In many of the markets and industry segments in which P&G sells its products, P&G competes against other branded products as well as retailers’ private-label brands. There are many different options for consumer products. Consumers can choose not solely based on price but also brand strength and now there is even a push for environmentally friendly products. Although the options are abundant, the threat is still more moderate because of the brand equity in most products. Advertising and marketing are a large part of swaying consumers to purchase one product over another and the economies of scale that are presented with large companies (P&G) favor them in the advertising. Advertising also helps establish the brand loyalty. Although the consumer has many options to choose from it all comes down to the value and quality of the product. Product quality and performance are important and P&G focuses on providing a quality offering to the consumer. Competition is even present with the non-branded products and with consumer spending and disposable income low, competition is increasing.
Threat of New Entrants: LOW-MODERATE The threat of new entrants seems to be low overall but it depends on which business segment of Procter & Gamble the threat is coming from. It is a low probability for a new entrant to become as big and as well capitalized as P&G. The biggest barriers to entry are derived from research and development. Since competition is somewhat intense, a new entrant must enter the market with a product that is differentiated. Again, reputable companies with successful brand names have established relationships with retailers and have advantages when competing for shelf space. Nearly all the markets that P&G participates in are mature markets making it less attractive for new entrants.
Threat of Substitutes: LOW-MODERATE The threat of substitutes is moderate and not high because most of the products that P&G sells are necessities. There is no substitute for laundry detergent besides different types of laundry detergent. The only true substitute is to not wash your clothes or wash them without laundry detergent. It is similar for shaving and using diapers. However, some of the business segments i.e. snacks and beauty do have substitute products. That is why the threat of substitutes is low to moderate.
Power of Suppliers: LOW Procter & Gamble does not seem to have any reliance on specific suppliers and P&G forms joint ventures and partnerships for new products. The sheer size of P&G also helps it deal with suppliers in delivering the product because companies want to work with P&G.
Power of Buyers: MODERATE The power of buyers is moderate because as mentioned, 15% of P&G’s sales are to Wal-Mart who is a very demanding buyer. There are two tiers of buyers, the retailers and the end consumer. The retailers have more power in dealing with P&G because they have large contracts for many stores (Wal-Mart stores, Albertsons). Yet, many of these retailers enjoy having P&G products because of the profit potential they bring. The end consumer has moderate to high power. Although they have the decision on choosing substitutes or the competition, the success of P&G’s brands and the brand loyalty they have created thus far have shown that the consumers enjoy its products.
Product Categories of P&GSegment CategoriesBeauty Antiperspirant and Deodorant, Cosmetics, Hair Care, Hair Color, Hair Styling, Personal Cleansing, Prestige Products, Salon Professional, Skin CareGrooming Blades and Razors, Electronic Hair Removal Devices, Shave Products, Home Small AppliancesHealth Care Feminine Care, Gastrointestinal, Incontinence, Rapid Diagnostics, Respiratory, Toothbrush, Toothpaste, Water Filtration, Other Oral Care
Product Categories of P&G Cont.Segment CategoriesFabric Care & Home Care Laundry Additives, Air Care, Batteries, Dish Care, Fabric Enhancers, Laundry Detergents, Surface CareBaby Care and Family Care Baby Wipes, Diapers, Paper Towels, Tissues, Toilet Paper
P&G Global Brands- More than 300 brands23 brands with annual sales of a billion dollars or more. Actonel- A prescription medication to treat and prevent postmenopausal osteoporosis. Always/Whisper- Women around the world count on Always and Whisper feminine protection. Ariel- Fabric cleaning and care at its best. Bounty- Spills happen. With the Quilted Quicker Picker-Upper paper towel, cleanup is easy. Braun Electric Razor- Keeping millions of men well-shaved and well-groomed. Charmin- America’s favorite bathroom tissue. Crest- Oral care products creating beautiful, healthy smiles every day. Dawn- No matter what your dishwashing need, Dawn has a product that’s right for you. Downy/Lenor- Laundry feels soft and smells fresh because of Downy and Lenor. Duracell- You can depend on powerful, long-lasting Duracell batteries.
P&G Global Brands- More than 300 brands23 brands with annual sales of a billion dollars or more. Folgers-Millions of Americans wake up with Folgers coffee every day. Gain- Laundry detergent that delights scent-seekers. Gillette Gel- Get a close shave, with comfort. Gillette MACH3 Razor- Battery-powered shaving. Push the button, feel the power. Head & Shoulders- Smooth, beautiful, flake-free hair. It’s not what you’d expect in a dandruff shampoo. Head & Shoulders has 12 customized formulas – one just for you. Iams - Nutrition for every life stage and lifestyle of your pet. Olay- Designed for women of all ages to “love the skin they’re in.” Oral-B- Dental hygiene products used by dentists themselves. Pampers- Millions of babies experience the comfort and dryness of Pampers diapers. Pantene- Hair around the world shines because of Pantene hair care products. Pringles- Potato chips: Once you “pop,” the fun doesn’t stop! Tide- Tough cleaning power that gets out laundry stains. Wella- Hair care products used in salons and at home.
P&G India BrandsThough we strive hard to keep our homes and our cars cleanand tidy, the results are rarely satisfactory. Odours that lingerin our homes just before guests arrive, or a persistent stenchthat never leaves the car, not only adversely affect our mood,but also that of our guests. With this in mind, P&G expertshave bottled the fragrance of freshness with the new AmbiPur range for both homes and cars.Introduced in 1991, Ariel was the first to bring the compactdetergent technology, the enzyme technology for safe andsuperior stain-removing power and the smart eyestechnology into India, with an aim of becoming Indias beststain removal detergent. Ariel contains safe ingredients for allfabrics under recommended usage conditions for laundry. TheAriel product range in India includes different variants to meetyour specific needs like Ariel OxyBlu, Ariel Oxyblu Ultramatic,Ariel Front O Mat, Ariel 2in1.Duracell batteries have a history of providing dependablepower when and where you need it the most. Our range ofBatteries gives you the right power for all your device needs,providing up to 10x performance. The product range in Indiaincludes Duracell and Duracell Ultra. Duracell is available insizes AAA, AA, C, D, and 9-volt while Duracell Ultra is availablein sizes AA and AAA sizes.
P&G India Brands Cond…Oral-B continuously strives to work closely with the dentalprofessionals and deliver high quality products, which makeus leaders* in the $ 4.5 billion toothbrush category.In India,Oral-B has an innovative range of toothbrushes includingCross Action Pro-health 7 Benefits, CrossAction Pro-healthSuperior Clean and Advantage Sensitive toothbrush. Oral-B’Sfloss range includes Ultra Floss & Essential Floss.As a result of constant research and innovation inunderstanding the needs of babies at various stages ofdevelopment, Pampers Active Baby has been voted as thebest diaper by Indian moms with the guarantee of superiordryness for an uninterrupted sleep of 12 hours. Pampers hasan answer for all your needs with its innovative product rangethat includes Pampers, Pampers Active Baby, Pampers ActiveBaby Pants, all designed especially for providing a night ofGolden Sleep for the baby.The New Pantene Amino Pro-V Complex range of shampoo &conditioner comes in three variants suited for individual needs- Pantene Nourished Shine, Pantene Hair Fall Control &Pantene Smooth & Silky. Enriched with the goodness of pro-vitamins and three essential aminos, Pantene restores yourhair with its lost beauty while making your hair ten timesstronge.
P&G India Brands Cond…Gillette’s innovative razors and shaving products designed forthe unique needs of men – helping them to look, feel and betheir best every day. The razor range in India includes GilletteVector, Gillette Mach3, Gillette Mach3 Turbo, Gillette Guardand Gillette Mach3 Turbo Sensitive and Gillette Fusion. TheShave Care range includes Gillette Fusion HydraGel, GilletteSeries Sensitive Skin Foam, Gillette Series After Shave &Gillette Classic Shave Foam Sensitive Skin. Gillette SkincareFoaming Wash, Gillette Skincare Scrub, Gillette Skincare FacialMoisturizer with Aloe Vera, Gillette Skincare FacialMoisturizer with SPF and Gillette Skincare Lotion 100ml.Since 1950, Head & Shoulders has been at the forefront ofscalp and hair science, significantly advancing the treatmentof dandruff and scalp problems. Along with professionaladvice and expert insight we have a wide range of products tocare for your scalp and nurture your hair. Head & Shoulders isavailable in 8 variants in India including Men Hair Retain,Complete Care for Dry Scalp, Anti Hair fall, Smooth & Silky,Cool Menthol, Clean & Balanced, Thick & Long & Silky Black.Help women look and feel beautiful and Challenge what’spossible with their skin. The Olay portfolio in India covers BaseMoisturizer, Anti Ageing and Olay Whitening. The Anti Agingrange includes Olay Regenerist, Olay Total Effects, and Olay AgeProtect. The Olay Whitening range includes Olay WhiteRadiance and Olay Natural White. The Base Moisturizerincludes Olay Moisturizing Lotions and Creams.
P&G India Brands Cond…Tide is the World’s Oldest & Most Trusted Detergent brandand is the Market Leader in 23 Countries around the world.Launched in India in mid-2000, Tide provides ‘OutstandingWhiteness’ on white clothes & excellent cleaning on colouredclothes as well. Tide’s Fabric Whitening Agents clean clotheswithout bleaching or removing colour from a garment. TheTide range in India includes Tide (Detergent) and Tide (Barwith Whiteons). Tide Naturals was launched in India inDecember 2009. Packed with the benefits of lemon andchandan, it provides great cleaning while keeping the handssoft.Vicks has long been invested in the science and research ofrespiratory health and through that dedication has developeda wide range of therapeutic products that offer effective relieffor all the major signs and symptoms of the common cold, fluand sinus pain and pressure. The Vicks product range in Indiaincludes Vicks Cough drops, Vicks Vaporub, Vicks Inhaler, VicksVapocool, and Vicks Action 500 Extra.Whisper understands that were each very different, andoffers a wide range of sanitary napkins to suit every girl orwomans needs. With the right menstrual pad, you could takethe first step to having a Happy Period. Whisper has a widerange of products in India which includes Whisper UltraRegular Wings,Whisper Ultra XL Wings, Whisper Ultra HeavyFlow Overnights Wings, Whisper Maxi Regular, Whisper MaxiXL Wings, Whisper Choice Regular, Whisper Choice Wings andWhisper Choice Ultra Wings.
P&G India Brands Cond… Wella Kolestint with it deep, long lasting colour has mesmerized Indian women. No doubt, 96% Indian women say that it is the best hair colour they have ever used. Wella Kolestint packs are available in 12 vibrant shades in beauty stores across India. Each pack comes with a complete hair colour kit to give deep, long lasting colour.
Structure• Organizational structure composed of three Global Business Units (GBUs) and a Global Operations group. The Global Operations group consists of the Market Development Organizations (MDOs) and Global Business Services (GBS).• GBU’s are: Beauty, Health and Well-Being, Household Care.
Structure• Global OperationsThe MDOs develop go-to-market plans at the local level,leveraging their understanding of the local consumerand customer. MDOs are organized along sevengeographic regions. (See next page for map.)• Global Business ServicesGBS operates as the “back office” for the GBU and MDOorganizations, providing world-class technology,processes and standard data tools to better understandthe business and better serve consumers andcustomers. GBS personnel, or highly efficient andeffective third-party partners, provide these services.