Fast Moving Consumer Goods (FMCG) goods are all consumable items (other thangroceries/pulses) that one needs to buy at regular intervals. These are items which are useddaily, and so have a quick rate of consumption, and a high return. FMCG can broadly becategorized into three segments which are: 1. Household items as soaps, detergents, household accessories, etc, 2. Personal care items as shampoos, toothpaste, shaving products, etc and finally 3. Food and Beverages as snacks, processed foods, tea, coffee, edible oils, soft drinks etc.Global leaders in the FMCG segment are Nestlé, ITC, Hindustan Unilever Limited, ReckittBenckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills,Pepsi, Gillette etc.OverviewThe burgeoning middle class Indian population, as well as the rural sector, present a hugepotential for this sector. The FMCG sector in India is at present, the fourth largest sector witha total market size in excess of USD 13 billion as of 2012. This sector is expected to grow toa USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025.This sector is characterized by strong MNC presence and a well established distributionnetwork. In India the easy availability of raw materials as well as cheap labour makes it anideal destination for this sector. There is also intense competition between the organised andunorganised segments and the fight to keep operational costs low.A look at some factors that will drive growth in this sector: Increasing rate of urbanization, expected to see major growth in coming years. Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration. Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment. Increase in rural non-agricultural income and benefits from government welfare programmes. Investment in stock markets of FMCG companies, which are expected to grow constantly.Some of the challenges this sector is likely to face are: Increasing rate of inflation, which is likely to lead to higher cost of raw materials. The standardization of packaging norms that is likely to be implemented by the Government by Jan 2013 is expected to increase cost of beverages, cereals, edible oil, detergent, flour, salt, aerated drinks and mineral water. Steadily rising fuel costs, leading to increased distribution costs. The present slow-down in the economy may lower demand of FMCG products, particularly in the premium sector, leading to reduced volumes. The declining value of rupee against other currencies may reduce margins of many companies, as Marico, Godrej Consumer Products, Colgate, Dabur, etc who import raw materials.
In conclusion:This sector will continue to see growth as it depends on an ever-increasing internal market forconsumption, and demand for these goods remains more or less constant, irrespective ofrecession or inflation. Hence this sector will grow, though it may not be a smooth growthpath, due to the present world-wide economic slowdown, rising inflation and fall of therupee. This sector will see good growth in the long run and hiring will continue to remainrobust.Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packagedgoods. Items in this category include all consumables (other than groceries/pulses) peoplebuy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos,toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories andextends to certain electronic goods. These items are meant for daily of frequent consumptionand have a high return. The Indian FMCG sector is the fourth largest sector in the economywith a total market size in excess of US$ 13.1 billion.It has a strong MNC presence and ischaracterised by a wellestablished distribution network, intense competition between theorganised and unorganised segments and low operational cost. Availability of key rawmaterials, cheaper labour costs and presence across the entire value chain gives India acompetitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 toUS$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most productcategories like jams, toothpaste, skin care, hair wash etc in India is low indicating theuntapped market potential. Burgeoning Indian population, particularly the middle class andthe rural segments, presents an opportunity to makers of branded products to convertconsumers to branded products. Growth is also likely to come from consumer upgrading inthe matured product categories. With 200 million people expected to shift to processed andpackaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.Anywhere, any time, every day. We make the products that make people smile. We have: People with a single focus: create joy Several billion dollar-plus brands Operations in more than 80 countries 100,000 employees worldwide Estimated 2011 revenues of approximately $35 billion Traded on NASDAQ Our teamChairmanC Y PalChairman - Non ExecutiveManaging Director
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