99594811 analysis-and-assessment-of-fmcg-market-of-india

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99594811 analysis-and-assessment-of-fmcg-market-of-india

  1. 1. www.studygalaxy.com A RESEARCH REPORT ONANALYSIS & ASSESSMENT OF FMCG MARKET OF INDIA
  2. 2. ACKNOWLEDGEMENTWe would like to express our sincere gratitude to _______________, forhis inspiration and guidance towards penetration of this report. We arehighly indebted to all those who provided us the stimulus of writing thisproject report on Analysis and Assessment of FMCG Market of India.We are grateful to ____________________________for their valuableadvice, continuous support and guidance through various useful discussionsat different stages of this work.A humble thanks are also due to ___________________for their usefulsuggestions and constant help in preparation of this report.We also acknowledge the whole staff at _________________office to rendertheir whole hearted co-operation at times.Our sincere THANKS are due to all of them. They all have been a constantsource of inspiration to us throughout our summer training program.Last but not the least, a word of thanks to our entire faculty and staffmembers at our Institutes for their encouragement at any times.
  3. 3. Table of Contents INTRODUCTION OF REPORT……………………………………….. RESEARCH PROCESS IN FLOW CHART…………………………… • DEFINE RESEARCH PROBLEM…………………………………. • FORMULATE HYPOTHESIS………………………………………. • DESIGN RESEARCH……………………………………………….. • COLLECTION OF DATA…………………………………………… • ANALYSE DATA…………………………………………………… • INTERPRET AND REPORT ……………………………………….. INTRODUCTION OF FMCG MARKET………………………………. • " WHAT IS FMCG? "……………………………………………….. • SCOPE OF THE FMCG SECTOR………………………………… • BUDGET 2007-2008 FOR FMCG SECTOR ………………………. WHY INDIAN MARKET………………………………………………. CONSUMPTION PIE CHART ………………………………………… INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD…………………………………………………………………. TOP TEN PLAYERS IN FMCG SECTOR…………………………….. MARKET OPPORTUNITIES FOR INVESTMENT…………………… ANALYSIS OF FMCG MARKET………………………………………. SEGMENT WISE ANALYSIS………………………………………….. RECOMMENDATIONS FOR FMG MARKET…………………………
  4. 4. RESEARCH PROCESS IN FLOW CHART REVIEW CONCEPTS & THEORIES FORMULATE DESIGN COLLECT ANALYSE INTERPRETDEFINE HYPOTHESIS RESEARCH DATA DATA AND REPORTRESEARCH REVIEWPROBLEM PREVIOUS RESEARCH FINDINGS
  5. 5. DEFINE RESEARCH PROBLEMResearch encompasses activities that increase the sum of human knowledge.Research and Experimental Development comprises: • Creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of humanity, culture and society, and the use of this stock of knowledge to devise new applications. • Any activity classified as research and experimental development is characterized by originality; it should have investigation as a primary objective and should have the potential to produce results that are sufficiently general for humanitys stock of knowledge (theoretical and/or practical) to be recognizably increased. Most higher education research work would qualify as research and experimental development.Research carries with it a professional and ethical responsibility to disseminate and applythe results of research activity and to conduct research in a manner consistent with theStatement and Guidelines on Research Practice . An essential characteristic is that it leads topublicly verifiable outcomes which are open to peer appraisal.The complementary activity of scholarship refers to possession of an extensive andprofound knowledge of an academic discipline and the analysis and interpretation ofexisting knowledge aimed at improving, through teaching or by other means ofcommunication, the depth of human understanding.Types of Research ActivityResearch includes pure basic research, strategic basic research, applied research andexperimental development .Pure basic research is experimental and theoretical work undertaken to acquire newknowledge without looking for long-term benefits other than the advancement ofknowledge.Strategic basic research is experimental and theoretical work undertaken to acquire newknowledge directed into specified broad areas in the expectation of useful discoveries. Itprovides the broad base of knowledge necessary for the solution of recognised practicalproblems.
  6. 6. Applied research is original work undertaken primarily to acquire new knowledge with aspecific application in view. It is undertaken either to determine possible uses for thefindings of basic research or to determine new ways of achieving some specific andpredetermined objectives.Experimental development is systematic work, using existing knowledge gained fromresearch or practical experience, that is directed to producing new materials, products ordevices, to installing new processes, systems and services, or to improving substantiallythose already produced or installed.The purpose of the research is to discover answers to questions through the application ofscientific procedures. The main aim of research is to find out the truth which is hiddenand which has not been discovered as yet.Aim: Analysis and Assessment of Fast Moving Consumer Goods,which refer to things that we buy from local supermarkets on dailybasis, the things that have high turnover and are relativelycheaper.
  7. 7. FORMULATE HYPOTHESISA hypothesis is a specific statement of prediction. It is simple; hypothesis is a suggestedsolution or explanation to a problem or a phenomenon. So you will just write what youthink is the solution to that problem. It describes in concrete (rather than theoretical)terms what you expect will happen in your study. Not all studies have hypotheses.Sometimes a study is designed to be exploratory. There is no formal hypothesis, andperhaps the purpose of the study is to explore some area more thoroughly in order todevelop some specific hypothesis or prediction that can be tested in future research. Asingle study may have one or many hypotheses.If your prediction specifies a direction, and the null therefore is the no differenceprediction and the prediction of the opposite direction, we call this a one-tailedhypothesis. When your prediction does not specify a direction, we say you have a two-tailed hypothesisThe logic of hypothesis testing is based on these two basic principles: • The formulation of two mutually exclusive hypothesis statements that, together, exhaust all possible outcomes • The testing of these so that one is necessarily accepted and the other rejected
  8. 8. DESIGN RESEARCHResearch design is the controlling plan for a marketing research study in which themethods and procedures for collecting and analysing the information to be collected isspecified. Research design can be thought of as the structure of research -- it is the "glue"that holds all of the elements in a research project together.Types of Research Designs • Randomized experiment • Non-experimental design • Quasi-experimental designWe can classify designs into a simple threefold classification by asking some keyquestions. First, does the design use random assignment to groups? [Dont forget thatrandom assignment is not the same thing as random selection of a sample from apopulation!] If random assignment is used, we call the design a randomized experimentor true experiment. If random assignment is not used, then we have to ask a secondquestion: Does the design use either multiple groups or multiple waves of measurement?If the answer is yes, we would label it a quasi-experimental design. If no, we would callit a non-experimental design. A randomized experiment generally is the strongest of thethree designs when your interest is in establishing a cause-effect relationship. A non-experiment is generally the weakest in this respect.
  9. 9. COLLECTION OF DATAMethods of primary data collection  Semi-structured interview / unstructured interview  Focus groups  Diaries / written accounts  Participant observation / non-participant observation  Media sources  Through schedule  Warranty cards  Distributors or Store audits  Pantry audits  Consumers panels  Use of mechanical device  Projective techniqueMethods of secondary data collection  Various publications of the central, state local governments  Various publication of foreign governments or international bodies and their subsidiary organisations  Reports and publication of various associations  Reports prepared by research scholars  Public records and statistics, historical documents  Technical and trade journals  Newspapers  Magazines  Books
  10. 10. ANALYSE DATAThis will be much more substantial, and much more discursive, than the results section ofa typical experimental report. Your purpose here is twofold - you need to give an accountof your data (to communicate a sense of ‘what it is like’) and to offer an interpretation of(to make a case for ‘what it means’). This should be based upon your codes and/orthemes, but there is plenty of scope for you to be imaginative in both the way that youchoose to structure your analysis section, and in the way that you choose to lay out yourevidence. Many of your decisions will depend on your chosen approach.By the time you get to the analysis of your data, most of the really difficult work has beendone. Its much more difficult to: define the research problem; develop and implement asampling plan; conceptualize, operationalize and test your measures; and develop adesign structure. If you have done this work well, the analysis of the data is usually afairly straightforward affair.In most social research the data analysis involves three major steps, done in roughly thisorder: • Cleaning and organizing the data for analysis (Data Preparation) • Describing the data (Descriptive Statistics) • Testing Hypotheses and Models (Inferential Statistics) involves checking or logging the data in; checking the data for accuracy;Data Preparationentering the data into the computer; transforming the data; and developing anddocumenting a database structure that integrates the various measures. are used to describe the basic features of the data in a study. TheyDescriptive Statisticsprovide simple summaries about the sample and the measures. Together with simplegraphics analysis, they form the basis of virtually every quantitative analysis of data.With descriptive statistics you are simply describing what is, what the data shows. investigate questions, models and hypotheses. In many cases, theInferential Statisticsconclusions from inferential statistics extend beyond the immediate data alone. Forinstance, we use inferential statistics to try to infer from the sample data what thepopulation thinks. Or, we use inferential statistics to make judgments of the probability
  11. 11. that an observed difference between groups is a dependable one or one that might havehappened by chance in this study. Thus, we use inferential statistics to make inferencesfrom our data to more general conditions; we use descriptive statistics simply to describewhats going on in our data.INTERPRET AND REPORTThe best advice is to consider your particular writing context carefully and to let it guideyour writing. If you’re writing in a workplace context, find out if your organization hasdocument or style guidelines and look at previous reports put out by the organization.Whenever you write, you should keep your purpose and audience clearly in focus. Beginby considering • what you want to accomplish with your report: what are your primary and secondary objectives? • who will be reading your report and for what purposes: What is their background? What questions might they have? What might they expect in terms of content and format?
  12. 12. INTRODUCTION OF FMCG MARKET
  13. 13. INTRODUCTIONThe Indian FMCG sector is the fourth largestsector in the economy with a total market size inexcess of US$ 13.1 billion.It has a strong MNCpresence and is characterised by awellestablished distribution network, intensecompetition between the organised andunorganised segments and low operational cost.Availability of key raw materials, cheaperlabour costs and presence across the entire valuechain gives India a competitive advantage.The FMCG market is set to treble from US$11.6 billion in 2003 to US$ 33.4 billion in 2015.Penetration level as well as per capitaconsumption in most product categories likejams, toothpaste, skin care, hair wash etc inIndia is low indicating the untapped marketpotential. Burgeoning Indian population,particularly the middle class and the ruralsegments, presents an opportunity to makers ofbranded products to convert consumers tobranded products.Growth is also likely to come from consumerupgrading in the matured product categories.With 200 million people expected to shift toprocessed and packaged food by 2010, Indianeeds around US$ 28 billion of investment inthe food-processing industry.Automatic investment approval (includingforeign technology agreements within specifiednorms), up to 100 per cent foreign equity or 100per cent for NRI and Overseas Corporate Bodies(OCBs) investment, is allowed for most of thefood processing sector.
  14. 14. " WHAT IS FMCG? "FMCG’s or fast moving consumer goods are the products which are frequently purchasedby consumers including toiletries, soaps, cosmetics, teeth cleaning products, shavingproducts, detergents, other non-durables such as glassware, bulbs, batteries, paperproducts ,plastic goods etc. It used to be called the grocery industry, now it’s just calledFMCG. FMCG is an ugly acronym for Fast Moving Consumer Goods , which translated intoEnglish means things you buy on a regular basis at places like your local supermarket.Scope of the FMCG SectorThe Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sectorin the economy. A well-established distribution network, intense competition between theorganized and unorganized segments characterize the sector. FMCG Sector is expected togrow 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 56,500crores 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 thefastest growing segments, says an HSBC report. Though the sector witnessed a slowergrowth 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 lastquarter. An estimated double-digit growth over the next few years shows that the goodtimes are likely to continue.Recent Developments in Fast Moving Consumer Goods (FMCG) Sector FMCG sector is no doubt registering an up trend in growth. According to CNBC, FMCGsector growth story will continue because of the positive budget. Nevertheless, there aresome barriers to the growth of the sector. Indirect taxes constitute no less than 35% of thetotal cost of consumer products - the highest in Asia. Last year, Finance Ministerproposed to introduce an integrated Goods and Service Tax by April 2010.This is anexceptionally good move because the growth of consumption, production, andemployment is directly proportionate to reduction in indirect taxes.
  15. 15. Budget 2007-2008 for FMCG Sector  Reduction of duty on edible oil will have a positive impact on Marico.  Full exemption of excise duty on biscuits priced at 50 rupees or less per kg is positive for ITC, Britannia, and Parle.  Reduction of custom duty on food processing machinery and their parts from 7.5% to 5%.  Reduction of excise duty on food mixes from 16% or 8% to nil is positive for ITC.  Development of rural infrastructure is in focus, which is beneficial for FMCG companies because it is a big market for FMCGs. Better infrastructure will improve the supply chain.  Exemption of free samples and displays from the purview of FBT will be beneficial for FMCG companies because they spend huge amount of money on advertising and brand building. HLL, Dabur, ITC, and Marico will be amongst the most benefited companies.
  16. 16. The Indian FMCG sector is the fourthlargest sector in the economy with a totalmarket size in excess of US$ 13.1 billion. Ithas a strong MNC presence and ischaracterized by a well establisheddistribution network, intense competitionbetween the organized and unorganizedsegments and low operational cost.Availability of key raw materials, cheaperlabour costs and presence across the entirevalue chain gives India a competitiveadvantage. The FMCG market is set totreble from US$ 11.6 billion in 2003 to US$33.4 billion in 2015. Penetration level aswell as per capita consumption in mostproduct categories like jams, toothpaste,skin care, hair wash etc in India is lowindicating the untapped market potential.Burgeoning Indian population, particularlythe middle class and the rural segments,presents an opportunity to makers ofbranded products to convert consumers tobranded products. Growth is also likely tocome from consumer upgrading in thematured product categories. With 200million people expected to shift to processedand packaged food by 2010, India needsaround US$ 28 billion of investment in the food-processing industry.
  17. 17. WHY INDIAN MARKETLarge Domestic MarketIndia is one of the largest emerging markets, with a population of over one billion. Indiais one of the largest economies in the world in terms of purchasing power and has astrong middle class base of 300 million.Around 70 per cent of the total households in India (188 million) resides in the ruralareas. The total numbers of rural households are expected to rise from 135 million in2001-02 to 153 million in 2009-10. This presents the largest potential market in theworld. The annual size of the rural FMCG market was estimated at around US$ 10.5billion in 2001-02. With growing incomes at both the rural and the urban level, themarket potential is expected to expand further.India - A Large Consumer Goods SpenderAn average Indian spends around 40 per cent of his income on grocery and 8 per cent onpersonal care products. The large share of fast moving consumer goods (FMCG) in totalindividual spending along with the large population base is another factor that makesIndia one of the largest FMCG markets.
  18. 18. CONSUMPTION PIE CHART :-
  19. 19. Even on an international scale, total consumer expenditure on food in India at US$ 120billion is amongst the largest in the emerging markets, next only to China.
  20. 20. Change in the Indian consumer profileRapid urbanisation, increased literacy and rising per capita income, have all caused rapidgrowth and change in demand patterns, leading to an explosion of new opportunities.Around 45 per cent of the population in India is below 20 years of age and the youngpopulation is set to rise further. Aspiration levels in this age group have been fuelled bygreater media exposure, unleashing a latent demand with more money and a new mindset.Demand-supply gapCurrently, only a small percentage of the raw materials in India are processed into valueadded products even as the demand for processed and convenience food is on the rise.This demand supply gap indicates an untapped opportunity in areas such as packagedform, convenience food and drinks, milk products etc. In the personal care segment, thelow penetration rate in both the rural and urban areas indicates a market potential.
  21. 21. INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLDMARKETSMaterials AvailabilityIndia has a diverse agro-climatic condition due to which there exists a wide-ranging andlarge raw material base suitable for food processing industries. India is the largestproducer of livestock, milk, sugarcane, coconut, spices and cashew and is the secondlargest producer of rice, wheat and fruits & vegetables. India also has an ample supply ofcaustic soda and soda ash, the raw materials in the production of soaps and detergents –India produced 1.6 million tonnes of caustic soda in 2003-04. Tata Chemicals, one of thelargest producers of synthetic soda ash in the world is located in India. The availability ofthese raw materials gives India the locational advantage.Apart from the advantage in termsof ample raw material availability,existence of low-cost labour forcealso works in favour of India.Labour cost in India is amongst thelowest in Asian countries. Easyraw material availability and lowlabour costs have resulted in alower cost of production. Manymulti-nationals have set up largelow cost production bases in Indiato outsource for domestic as wellas export markets.Leveraging the cost advantageGlobal major, Unilever, sources a major portion of its product requirements from itsIndian subsidiary, HLL. In 2003-04, Unilever outsourced around US$ 218 million ofhome and personal care along with food products to leverage on the cost arbitrageopportunities with the West. To take another case, Procter & Gamble (P&G) outsourcedthe manufacture of Vicks Vaporub to contract manufacturers in Hyderabad, India. Thisenables P&G to continue exporting Vicks Vaporub to Australia, Japan and other Asiancountries, but at more competitive rates, whilst maintaining its high quality and costefficiency.
  22. 22. Presence across value chainIndian firms also have a presence across the entire value chain of the FMCG industryfrom supply of raw material to final processed and packaged goods, both in the personalcare products and in the food processing sector. For instance, Indian firm Amuls productportfolio includes supply of milk as well as the supply of processed dairy products likecheese and butter. This makes the firms located in India more cost competitive.Trends and PlayersThe Indian FMCG sector is the fourth largest sector in the economy and createsemployment for three million people in downstream activities. Within the FMCG sector,the Indian food processing industry represented 6.3 per cent of GDP and accounted for 13percent of the countrys exports in 2003-04. A distinct feature of the FMCG industry isthe presence of most global players through their subsidiaries (HLL, P&G, Nestle), whichensures new product launches in the Indian market from the parents portfolio.
  23. 23. Top Ten Players in FMCG Sector:-Companies1. Hindustan Unilever Ltd.2. ITC (Indian Tobacco Company)3. Nestlé India4. GCMMF (AMUL)5. Dabur India6. Asian Paints (India)7. Cadbury India8. Britannia Industries9. Marico Industries10.Procter & Gamble Hygiene and Health CareCritical Operating Rules In Indian FMCG Sector:-
  24. 24.  Heavy launch costs on new products on launch advertisements, free samples and product promotions.  Majority of the product classes require very low investment in fixed assets  Existence of contract manufacturing  Marketing assumes a significant place in the brand building process  Extensive distribution networks and logistics are key to achieving a high level of penetration in both the urban and rural markets  Factors like low entry barriers in terms of low capital investment, fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganised sector  Providing good price points is the key to successPenetration And Per Capita Consumption:-
  25. 25. Penetration level in most productcategories like jams, toothpaste,skin care, hair wash etc in India islow. The contrast is particularlystriking between the rural andurban segments - the averageconsumption by rural households ismuch lower than their urbancounterparts. Low penetrationindicates the existence ofunsaturated markets, which arelikely to expand as the incomelevels rise. This provides anexcellent opportunity for theindustry players in the form of avastly untapped market. Moreover,per capita consumption in most ofthe FMCG categories (includingthe high penetration categories) inIndia is low as compared to boththe developed markets and otheremerging economies. A rise in percapita consumption, withimprovement in incomes andaffordability and change in tastesand preferences, is further expectedto boost FMCG demand. Growth isalso likely to come from consumer"upgrading", especially in thematured product categories. Detergent per capita Consumption (in Kg) Tea per capita Consumption (in Kg)
  26. 26. Tooth paste per capita Consumption (in Kg) Personal wash per capita Consumption (in Kg) Tea per capita Consumption (in Kg) Skin care products per capita Consumption (in Rs)Ice Cream per capita Consumption (in Lit.) Shampoo per capita Consumption (in Kg)
  27. 27. MARKET OPPORTUNITIES FOR INVESTMENT:-According to estimates based onChinas current per capitaconsumption, the Indian FMCGmarket is set to treble from US$11.6 billion in 2003 to US$ 33.4billion in 2015. The dominanceof Indian markets by unbrandedproducts, change in eating habitsand the increased affordability ofthe growing Indian populationpresents an opportunity tomakers of branded products, whocan convert consumers tobranded products.A recent survey of industries in the Fast Moving Consumer Goods (FMCG) sectorconducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) hasshown positive growth trends and signs of recovery in various segments .The surveynotes, some sectors showing negative growth in terms of value have recorded positivegrowth in volumes.The survey attributes the reflected buoyancy to the following factors:1) Several cost saving measures2) Various tax benefits3) Rising demand4) Growing GDP5) Good monsoon6) Strong economic fundamentals7) The expected policy packages to be announced by the new government for farmers forraising rural income is bound to stimulate growth further
  28. 28. GROWTH PROSPECTSWith the presence of 12.2% of the world population in the villages of India, the Indianrural FMCG market is something no one can overlook. Increased focus on farm sectorwill boost rural incomes, hence providing better growth prospects to the FMCGcompanies. Better infrastructure facilities will improve their supply chain.FMCG sector is also likely to benefit from growing demand in the market. Because of thelow per capita consumption for almost all the products in the country, FMCG companieshave immense possibilities for growth. And if the companies are able to change themindset of the consumers, i.e. if they are able to take the consumers to branded productsand offer new generation products, they would be able to generate higher growth in thenear future.It is expected that the rural income will rise in 2007, boosting purchasing power in thecountryside. However, the demand in urban areas would be the key growth driver overthe long term. Also, increase in the urban population, along with increase in incomelevels and the availability of new categories, would help the urban areas maintain theirposition in terms of consumption. At present, urban India accounts for 66% of totalFMCG consumption, with rural India accounting for the remaining 34%.However, rural India accounts for more than 40% consumption in major FMCGcategories such as personal care, fabric care, and hot beverages. In urban areas, home andpersonal care category, including skin care, household care and feminine hygiene, willkeep growing at relatively attractive rates. Within the foods segment, it is estimated thatprocessed foods, bakery, and dairy are long-term growth categories in both rural andurban areas.The survey confirms higher growth rates for some FMCGs belonging to personal careproducts, fabric & personal wash products, oral care products and Hair care products. Thesectors which have recorded double digit growth in terms of value are shaving cream (20per cent), deodorant (40 per cent), branded coconut oil (10 per cent),anti dandruffshampoos (15 %), hair dyes (25 per cent), cleaners & repellents (20 per cent). Somesectors which have recorded negative growth are personal health care (-3 %) Laundrysoaps (-5 percent), dish wash (-3 %), toilet soap (-4.5%) Tooth paste (-5percent),toothpowder(-8percent).
  29. 29. ANALYSIS OF FMCG MARKET
  30. 30. The research report offers insights into the dynamics of growth in a competitivemarket environment. The salient features of development the survey has identifiedinclude: • The improvement has been much more pronounced in volume terms than in value terms for most of the products. • Post liberalization period provided the consumers the opportunity to make choices amongst the products of domestic companies and imported products. • One of the greatest achievements made by the FMCG industry has been the ‘sachet’ bugs which have helped the companies to introduce products in smaller package sizes, at lower price points and reach new users and to expand market share for value added products in urban India. • Several cost saving measures, various tax benefits, rising demand, good monsoon have helped the industry to achieve positive growth. • Most of the multinational companies have started sourcing their products from India. HLL has become the production center in respect of personal consumer products like oral care, skin care products, soap, detergents globally for Unilever. • There has been a trend from shift to own manufacturing from third party manufacturing or procuring goods from third party small-scale manufacturers. • Though the companies are going global, they are focusing on the overseas markets like Bangladesh, Pakistan, Nepal, Middle East and CiS countries because of the lifestyles, consumption habits similar to India. Godrej Consumer, Marico, Dabur, Vicco laboratories are among the companies. • The offshoots and mushrooming of regional companies which are posing a threat to bigger FMCG companies like HLL. The rise of Jyothi Laboratories, throwing challenge to Reckitt Benckiser is a case in point. • FMCG market remains highly fragmented with almost half of the market representing unbranded, unpackaged home made products. This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products. • There is competition between the organized and the unorganized sectors in the FMCG sector. • Marketing and distribution are very important in FMCG companies. New products require a large investment in product development, market research, and awareness campaign, developing franchise for a new brand advertisements, free samples and product promotions. • All these developments have made the consumers strong, who are in a position now to choose a variety of products, from a number of companies, at different price points. Bargaining power of customers is high. • Key factors to success are distribution (in rural markets) and advertising (in urban markets). Critical factors for success are the ability to build, develop and maintain a robust distribution network. • The fact that a lot of women have started looking for specialized products has driven growth.
  31. 31. SEGMENT WWISE ANALYSISFabric wash market:The demand for detergents has been growing atan annual growth rate of 10-11 per cent duringthe past five years, while the laundry bar markethas witnessed a negative growth. This yeargrowth rate is low at 2 per cent for detergentcakes and 2.5 per cent for washing powder. Inthe urban markets, people prefer to use washingpowder and detergents, instead of bars, onaccount of convenience of usage, increasedpurchasing power, aggressive advertising andincreased penetration of washing machines.Personal wash market:While the growth rate for the overall personalwash market is only 1 per cent compared toaverage growth rate of 5 per cent, premium andmiddle-end soaps are growing at a rate of 10 percent. The leading players in this market are HLL(Lux, Lifebuoy, Breeze, Rexona), Nirma(Nima), Godrej Soaps (Cinthol, FairGlow,Shikakai, Nikhar), and Reckitt & Colman(Dettol).Oral care market:The oral care market valued at Rs. 26 bn hassuffered a negative growth of 5 per cent in 2003-04. Toothpaste and toothpowder have sufferednegative growth of 5 % and 8 % respectively.The market for tooth brushes valued at Rs 4 bnhas grown at 5 per cent.
  32. 32. Skin care and cosmetics market:Skin care and cosmetics valued at Rs 12 bn andincludes cold creams, lotions, moisturizers,cleansers, talcum powders, deodorants, lipsticks,nail enamels, etc. The shaving cream market valuedat Rs 1.1 bn, has grown by 20%. The market isdominated by C-P, Gillette India and Godrej Soaps.The skin care market has seen the entry of anumber of international brands, like Oriflame,Avon and Aviance. The herbal-based products arealso quite popular inthis market.Hair care market:Hair care includes a variety of branded andunbranded products like hair oils, shampoos,creams, conditioners hair dyes, etc. The CoconutOil Market account for 72 per cent of the hair oilmarket. In the branded coconut hair oil market,Marico (with Parachute) and Dabur are the leadingplayers. HLL is also extending its Sunsilk brand tohair oils. The market for branded coconut oil valuedat approximately Rs. 8 bn has grown by 10 %. Themarket has been witnessing a shift in usage patternsin both urban and rural markets.Feminine hygiene market:The feminine hygiene market is estimated to beworth Rs. 2 bn market. The market has reversedfrom a negative growth in previous years and flatgrowth in the last year has recorded a growth of 2per cent. This hasgot a boost from the withdrawal of excise duties.Deodorants market:
  33. 33. The deodorant market is estimated to be worth Rs 0.8 bn and has been growing at 40 percent annually. The organized segment is dominated by HLL with its Rexona, Axe, Denimand Impulse brands in different categories targeting different segments of the market.Dish wash market:The total size of the dish wash market, estimatedat Rs 4.4 bn has recorded a negative growth of 3per cent . Over 60 per cent of the market isdominated by bars, while dish wash powdersaccounts for 32 per cent. Thepenetration levels are, however, still very low.Cleaners / Repellents Market:The cleaner market covering products like floorcleaners, air, phenyl and toilet cleaners, and isestimated to be growing at 20 per cent per annum.The key players are HLL, Reckitt & Colman India(RCI), Henkel Spic, Bayer India and BalsaraHygiene. The market for insecticides andrepellents is estimated to be around Rs 8 bn hasgrown by 20 per cent. Godrej Sara Lee is theworlds largest manufacturer of mosquito mats,with an all-India market share of about 66 percent. The organized sector is trying to increasepenetration levels by higher brand visibility.
  34. 34. RECOMMENDATIONS FOR FMCG MARKET
  35. 35. This research report outlines some measures for raising productivity, efficiency andmaking FMCG competitive as follows: - • Level of abatement for soaps and detergents should be revised to 45 per cent in consideration of hike in the prices of various inputs. • Excise duty of about 50 per cent without CEN VAT credit facilities on alcohol based toiletries is very high and should be on par with non- alcoholic toiletries. • Higher and different sales tax rates in different states. • VAT applicable for these products should fall in the proposed 4 per cent slab. • Companies need to have a distribution system of its own or rely on other companies and for product awareness and demand creation try new products with already established popular product lines. • The companies should introducing product variants that account for distinctive regional tastes as well as a wide range of package sizes and prices to suit to purchasing preferences of India’s varied consumer segments.The survey confirms that the FMCG sector is poised for further growth because of theemerging opportunities and strong fundamentals developing in the economy. This reporthighlights the need for pro-active government action forhelping the industry to achieve lower cost, improved quality and better performance in thecompetitive environment.The survey foresees that future growth will come from newer segments such as the youthand through increased rural and small town penetration. The Internet and e-commercewill change the dynamics of this industry helping companies improve their procurement,distribution and selling efficiencies. This will, in turn, help them reduce prices and stillremain profitable.A package of fiscal incentives provided by various State governments like HimachalPradesh, Uttranchal, have encouraged companies to set up manufacturing facilities in
  36. 36. these regions. Some companies setting up units in backward areas are:• Britannia Industries• Colgate Industries• Dabur Industries• Godrej Consumer Products• Hindustan Lever• Marico IndustriesFMCG market remains highly fragmented with almost half of the market representingunbranded, unpackaged home made products. This presents a tremendous opportunity formakers of branded products who can convert consumers to branded products.In the past decade, the personal care industry has witnessed a consumer boom. This hasbeen possible due to liberalization, growing urbanization and an increase in thedisposable incomes due to rise in Gross Domestic Product. The changing lifestyles,higher level of awareness among the rural community as a result of the onslaught ofsatellite television has fuelled demand.The boom has also been fuelled by the reduction of excise duties, de reservation from thesmall-scale sector and the concerted efforts of personal care companies to tap thepotentials of the segment of the middle class through product and packaging innovations.
  37. 37. these regions. Some companies setting up units in backward areas are:• Britannia Industries• Colgate Industries• Dabur Industries• Godrej Consumer Products• Hindustan Lever• Marico IndustriesFMCG market remains highly fragmented with almost half of the market representingunbranded, unpackaged home made products. This presents a tremendous opportunity formakers of branded products who can convert consumers to branded products.In the past decade, the personal care industry has witnessed a consumer boom. This hasbeen possible due to liberalization, growing urbanization and an increase in thedisposable incomes due to rise in Gross Domestic Product. The changing lifestyles,higher level of awareness among the rural community as a result of the onslaught ofsatellite television has fuelled demand.The boom has also been fuelled by the reduction of excise duties, de reservation from thesmall-scale sector and the concerted efforts of personal care companies to tap thepotentials of the segment of the middle class through product and packaging innovations.

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