1. ANALYSIS OF FMCG SECTOR:
A GLOBAL ECONOMIC
PERSPECTIVE
Vinod 036
Divya Verma 041
Shobhit Bhatnagar 042
Vaibhav Hitkari 043
GLOBAL BUSINESS ENVIRONMENT

2. INDUSTRY PROFILE
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3. 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.
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4. 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

5. 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.
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Personal care

6. 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.
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Food & Beverage

7. POLICIES & RULES
• Foreign direct investment (FDI)
• Removal of Quantitative Restrictions & Reservations
Policy
• Central & state initiatives
• Food laws
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Policies

8. 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
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Rules

9. 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.
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10. LEADING PLAYERS
• Currently the largest Indian FMCG company.
• Has a portfolio of over 50 brands.
• Enjoys a formidable distribution network.
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Hindustan Unilever Ltd. (HUL)

11. 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
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Godrej Consumer Products Ltd. (GCPL)

12. LEADING PLAYERS (contd.)
• Largest Indian FMCG & ayurvedic products company.
• Product portfolio of the company includes health
care, food products, pharma etc.
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Dabur India Ltd.

13. 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.
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Colgate-Palmolive India Ltd.

14. 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.
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Goods & Services Tax (GST)

15. 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
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16. ANALYSIS OF THE SECTOR
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17. 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
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18. 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
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19. INDUSTRY ANALYSIS
• Price of inputs
• Emergence of private labels
• Counterfeit and pass offs
• Infrastructural bottleneck
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Key Challenges
ANALYSIS OF THE SECTOR

20. INDUSTRY ANALYSIS (contd.)
• Consolidation
• Product innovation
• Lifestyle products
• Backward integration
• Third party manufacturing
• Increased hiring from Tier 1 & 2 cities
• Reducing carbon footprint
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Trends in the Industry
ANALYSIS OF THE SECTOR

21. 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
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Opportunities in the Industry
ANALYSIS OF THE SECTOR

22. 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
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Government Policies
ANALYSIS OF THE SECTOR

23. 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
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Political
ANALYSIS OF THE SECTOR

24. 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
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Economical
ANALYSIS OF THE SECTOR

25. 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
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Social
ANALYSIS OF THE SECTOR

26. 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
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Technological
ANALYSIS OF THE SECTOR

27. 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
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Strengths
ANALYSIS OF THE SECTOR

28. SWOT ANALYSIS (contd.)
• Lower scope of investing in technology & achieving
economies of scale, especially in small sectors
• Low exports levels
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Weaknesses
ANALYSIS OF THE SECTOR

29. SWOT ANALYSIS (contd.)
• Largely untapped rural market which can be
capitalized due to population’s changing life style
• Rising income levels
• Large domestic market
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Opportunities
ANALYSIS OF THE SECTOR

30. 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
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Threats
ANALYSIS OF THE SECTOR

31. ECONOMIC IMPLICATIONS
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32. 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
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33. 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.)
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34. Foreign Institutional Investor
INVESTMENT
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35. • Accounts for around 3 % of the total inflow an
7.3 of total sectorl investment
Foreign institutional investment
INVESTMENT (contd.)
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36. • 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
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37. TO CONCLUDE
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38. 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
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39. 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
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40. THANK YOU