Hindustan Unilever (HUL) is the largest FMCG company in India, followed by Nestle India, ITC, and Dabur. Over the past 3-5 years, HUL has grown through expanding its large distribution network. Nestle India's growth slowed to 8% annually while ITC and Dabur grew around 25-30% through expanding into international markets and new product segments. The top FMCG companies have a presence across multiple segments like food, beverages, personal care, home care, and healthcare. HUL maintains a leading market share across segments while shares of Nestle, ITC and Dabur have been increasing in recent years through innovations and acquisitions.

1. By Rahil Ahamed

3. • FMCG stands for Fast-moving consumer goods. It is also known as
consumer packaged goods(CPG).
• These are products that are sold quickly and at a relatively low cost.
• Though the profit margin made on FMCG products is relatively small(more
so for retailers than the producers/suppliers), they are generally sold in
large quantities; thus, the cumulative profit on such products can be
substantial.
• FMCG is probably the most classic case of low margin and high volume
business.
• Examples include non-durable goods such as soft drinks, toiletries, over the
counter drugs, toys, processed foods and many other consumables.
• The FMCG industry is poised to grow 10 to 12 percent annually.
• The organised retail has created new channels for FMCG players through
diverse retail such as departmental stores , hypermarkets etc.

6. • Rivalry among players is very high in the FMCG industry.
• Competition is cut throat(this results in brand wars)
• Price competition
• Advertisement and promotional stuff – Price wars (eg: coke vs pepsi)
• Distribution
• New product
• Storage
• Exit barriers are low
• Warranty and guarantee

7. • No barriers to entry.
• Low resistance and high complexity leads to easy to enter.
• New entrants offer tough competition due to cost effectiveness.
• Not a capital intensive sector, therefore, even small players can enter.
• Potential entry is highly viable.

8. • Consumer needs are complex and never ending.
• Lack of one company to satisfy all needs gives sufficient room for new product
development.
• There are plenty of substitutes available and a wide range of choices in this industry.
Eg(HUL,ITC).
• Range of choices leads to higher consumer expectation and gives rise to substitutes.

9. • The bargaining power of suppliers of raw materials and intermediate goods is
not very high.
• There is ample number of substitute suppliers available and the raw materials
are also readily available and most of the raw materials are homogeneous.
• There is no monopoly situation in the supplier side because the suppliers are
also competing among themselves.

10. • Bargaining power of consumers is also very high.
• The switching costs of most of the goods is very low in the FMCG industry.
• There is no threat of buying one product over the other.
• Customers are never reluctant to buy or try new things off the shelf.

11. Growth rate over the
past 3-5 years
• The FMCG industry is currently growing at double
digit growth rate and is expected to maintain a high
growth rate.
• It has grown at an annual average of 11 % over the last
decade.
• The past 3 to 5 years has seen fluctuations in the
growth rate of FMCG industry due to inflation.
• The urban FMCG industry has been growing at a fairly
steady and healthy rate over the last 3 years.
• The latest growth figure (September 2013) was 4.7 %
in the urban market and 6.7% in the rural market.

12. Expected growth rate in the
future
• The Indian FMCG sector is the fourth largest sector in the economy
with a total market size of US$18 billion as of 2007.
• FMCG industry is expected to maintain a robust growth rate as the
population is increasing.
• The organised sector is account to 14-18 % of the share.
• The FMCG industry was a laggard in 2000-2005. However , it
witnessed phenomenal growth rate in the next half of the decade.
• The FMCG industry is expected to witness further accelerated
growth rate in the coming decade aided by urbanisation , changing
demographics and increase in private final consumption .
• Overall, the FMCG industry is expected to increase at a compound
annual growth rate at 14.7 percent , with a rural FMCG market
expected to increase at 17.7 %.

13. 33%
Share of Rural FMCG Market in 2013
$44.9 billion
India’s FMCG Market Size in 2013 (2006-13 growth rate of
16.2%)
2.4%
FMCG Sector’s Contribution to India’s GDP (2013)
10–12%
Estimated Share of Modern Trade in FMCG Sales by 2016
69%
Share of Food Products and Personal Care in FMCG
Revenues in 2013
$135 billion
Estimated FMCG Market Size in 2020 under Optimistic
Scenario (2013–20 growth rate of 17%)
India‟s FMCG sector at a glance

14. FMCG
Household care
Fabric wash, Household
cleaners
Personal care
Oral care, hair care, skin
care, cosmetics/deodorants,
perfumes, feminine hygiene
and paper products
Food & Beverages
Health beverages,
staples/cereals, bakery
products, snacks,
chocolates, ice cream,
tea/coffee/soft drinks,
processed fruits and
vegetables, dairy products,
and branded flour
Source: HUL
Notes: OTC is over the counter products; ethicals are a range of pharma products
Health care
OTC products and ethicals

15. Source: Booz & Company, Dabur, AC Nielsen, Aranca Research
Trends in FMCG revenues over the years
(USD billion)
The FMCG sector in India generated revenues worth
USD36.8 billion in 2012, a 5.7 per cent rise compared to the
previous year
The strong growth in 2012 should come as no surprise
given the impressive performance of the sector over the
years
Over 2006-12, the sector’s revenues posted a CAGR of
15.2 per cent 15.7
17.8 21.3
24.2
30.2
34.8
36.8
2006 2007 2008 2009 2010 2011 2012
CAGR: 15.2%

16. Market break-up by revenue (2009)‘Food products’ is the leading segment, accounting for 43.0
per cent of the overall market
Personal care (22.0 per cent) and fabric care (12.0 per cent)
are the other leading segments
43%
22%
8%
12%
4%
4%
2%
5% Food products
Personal care
Fabric care
Hair care
Households
OTC products
Baby care
Others
Source: Dabur, Aranca Research

17. 8



Food products is the largest FMCG segment, constituting ~43% of the total market, followed by personal care products (22%).
Salty snacks was the fastest growing FMCG category in 2013 with a growth rate of 25%. Other categories such as packaged atta, chocolates, and
non-refined oil grew over 20% in 2013, as companies aggressively focused on increasing their penetration.
Sales in biscuits, refined oil, soap, and washing powder (among the top five FMCG product categories) grew 4–10% in 2013, down from 15–23% in
2012. Their value growth was affected due to consumers opting for cheaper options due to economic slowdown and inflation, forcing companies to
offer discounts to push volume sales.
FMCG REVENUES – BY SEGMENT (2013) REVENUES / GROWTH BY PRODUCT CATEGORIES
Source: AC Nielsen report, The Economic Times, Industry estimates, Aranca analysis
10%
4%
25%
10%
15%
23%
29%
22%
21%
19%
22%
18%
20%
20%
Biscuits
ToiletSoap
Refined Oil
Salty Snacks
Packaged Atta
Chocolate
Non Refined Oil
Washing Powder
0%
7%
10%
20%
20% 30% 40%
2012 2013
0.7
1.4
2.2
2.5
2.6
2.7
2.9
4.4
(Growth:%)(% share) (2013 Sales: USD billion)
Food products & personal care are the largest segments accounting for ~69% of the
FMCG market; biscuits and refined oil are the largest product categories
5%
10%
16%
22%
47%
USD44.9
billion
Personal
Care
Household
Care
Food Products
Others
Tobacco

18. KEY GROWTH ENGINES
 Rising per capita disposableincome
• Per capita disposable income determines an individual's ability to purchase
goods or services. As per BRIC‟s report, India is likely to witness a rise in
disposable income to USD1,150 per annum by 2015 from USD556 in 2010, on
account of growth in the industrial and services sector.
• As a result, spending would increase, consequently boosting the FMCG sector‟s
growth.
 Increasing discretionary expenditure
• Another encouraging factor for the FMCG sector is the falling spend on basic
food items including consumer staples, soaps, etc. allowing consumers to spend
on other categories of FMCG products such as packaged foods &
beverages, creams, cosmetics, etc. This trend is noticeable among urban and
rural consumers.
 Growingrural market
• Rural India spends ~USD12 bn on FMCG products annually.
• Rural India accounts for 700 million consumers, or 70% of the country‟s
population,contributingto one-third sales of the FMCG market.
• As per Nielsen estimates, the Indian rural market is expected to grow more than
10-fold to USD100 bn by 2025, presenting a huge opportunity for leading FMCG
firms.
 Growingpopularity of modern trade
• Modern trade not only facilitates comfortable and modern store experience but
also makes available a variety of brands under a single roof, and value-for-
money deals which attract consumers to organized retail in a big way.
• The growing popularity of modern retail is expected to bolster the growth of the
FMCG sector by aiding distributionchannels.
KEY GROWTH INHIBITORS
 Complex tax structure
• India‟s complex tax structure aggravates problems. VAT is levied at state
level, there are other state taxes such as octroi and entry as well as central
excise duties and service tax. As a result, product prices are not the same
across states.
 Counterfeits and pass-offs
• Taking advantage of lack of literacy and consumer knowledge, several small
manufacturers churn out spurious products, which they label akin to the big
brands. Examples include Lifeboy, Lax soap, Fivestare chocolate bars, Vicky
balm,etc.
• These spurious pass-off products affect large, high quality brands which have
actually invested money in research and development to create their products
and build brand equity.
• These spurious products account for ~10–15% of the total sector revenue and
pose serious challenge to its growth. They also impact government‟s tax
revenue significantly.
 Infrastructure bottlenecks
• India‟s agriculture infrastructure is weak. Irrigation and modern farming
methods are not widespread; thus, agriculture is highly dependent on naturally
available amenities. Thus, the amount of harvest of critical inputs to
manufactureFMCG products varies every season.
• High power costs in India also contributesubstantiallyto cost of goods sold.
• Another challenge is that of poor transportation infrastructure as many villages
are poorly connected by either road, rail, or sea. So, the time taken to
transport the harvest to FMCG manufacturers is unpredictable, resulting in
substantialspoilage of goods.
12
Rising per capita disposable income, and growing rural market and modern trade could
drive growth; complex tax structure, counterfeits, and infrastructure bottlenecks are key
challenges

19. Rural market
Innovative products
Premium products
Sourcing base
Penetration
•
•
•
•
•
•
•
•
Leading players of consumer products have a strong distribution network in rural India;
they also stand to gain from the contribution of technological advances such as internet
and e-commerce to better logistics
Rural FMCG market size is expected to touch USD100 billion by 2025
Indian consumers are highly adaptable to new and innovative products. For instance there
has been an easy acceptance of men’s fairness creams, flavoured yoghurt, and cuppa
mania noodles
With rise disposable incomes mid- and high-income consumers in urban areas have
shifted their purchase trend from essential to premium products
In response, firms have started enhancing their premium products portfolio
Indian and multinational FMCG players can leverage India as a strategic sourcing hub for
cost-competitive product development and manufacturing to cater to international markets
Low penetration levels offer room for growth across consumption categories
Majors players are focusing on rural markets to increase their penetration in those areas
Source: Assorted articles and reports; AC Nielsen, Aranca Research

20. CRITICAL SUCCESS FACTORS

21. 2
c
Innovation track record
To maintain customer interest and to stay ahead of the competition, companies need to
constantly
introduce new and better products.
A company's product innovation capabilities and track record in creating successful brands.
One good indicator of innovation is the contribution to revenues, of brands that have been
introduced in the last three to five years.
Differentiation
The first and foremost factor is a product's perceived benefit and differentiation vis-
a-vis others in the market.
A product can command a premium only if the consumers are convinced of its superiority.
Market share
• The market share trends of a company's products.
• A consistently high market share has several advantages. It ensures a stable relationship with and
better control over the distribution channel.
• Also, the company does not need to offer very high margins to the trade since this is compensated
by
• higher volumes.
• Established products with high market share also entail lower marketing and advertising
• expenses since it is cheaper to maintain an established brand than to create a new one.

22. 3
Pricing Power
A high market shares do not necessarily translate into price protection.
Companies with small market shares can still pose strong price competition to the market leaders.
Brand equity
Brand equity is the degree of consumer loyalty that a company's products maintain.
This is an important factor since established brands act as high entry barriers.
If brand loyalty is strong, consumers tend to be willing to pay a high price for the product, and are
reluctant to switch to competitive products.
During periods of slow growth and economic recession, the companies are often tempted to show
higher
short-term profits by reducing their advertising expenditure.
The companies with successful brands have an edge over their competitors, supported by greater
association with customers and lower advertising
expenses.
Operating efficiency
Wide and extensive distribution reach, continuous cost-cutting efforts, optimal manufacturing
facilities
and efficient raw material sourcing are critical elements that determine an FMCG company's
operating
efficiency.

23. SIZE OF THE TOP 5 PLAYERS FOR THE FMCG INDUSTRY
Market Capitalization – 256,769 crores
Market Capitalization – 127,144 crores
Market Capitalization – 49,768 crores
Market Capitalization – 28,107 crores
Market Capitalization – 27,261 crores

24. GROWTH OVER THE LAST 3-5 YEARS
•Hindustan Unilever's distribution covers over 2 million retail outlets across India
directly and its products are available in over 6.4 million outlets in the country.
As per Nielsen market research data, two out of three Indians use HUL products.
•Nestlé’s sales in India had been growing at about 20 per cent a year in the three years to
2012, but this growth decelerated sharply – to 8 per cent – in the third quarter of last
year.
Sales in India account for only 1.5 per cent of Nestlé’s global sales, but the group has
invested Rs35bn ($569m) in the past four years to increase its manufacturing capacity
there, expanding seven existing plants and setting up one new facility.
•In the last three years, GCPL has been growing about 28 to 29 per cent annually.
From 15 per cent in 2009-10, almost 50 per cent of flagship company Godrej Consumer
Products' revenues now come from international markets.
At the group level, it has a stated 10x10 strategy, to grow ten times in ten years both
organically and inorganically, and international business is an important focus area.
•With FMCG revenues of Rs 7,000 crore in 2012-13, it has already nosed ahead of
Nestle.
ITC’s non-cigarette FMCG business grew 26.4% during last fiscal, while net overall
revenue reported a growth of 19.4% at Rs 29,605.58 crore.
•Dabur has been one of the few companies in the Fast Moving Consumer Goods industry
who have managed a double-digit growth this year.
Dabur has been able to manage a healthy growth of 11.9%over last year.
The industry focused on reaping the benefits of internal economies that resulted in

25. SEGMENTAL PRESENCE OF THE TOP PLAYERS
FMCG- Cigarettes & Cigars- Foods- Lifestyle Retailing- PersonalCare-
Education and Stationery- Safety Matches- Agarbattis
Food and drink-Home care-Personal care-Water purifier
Hair Care-Home Care-Personal Care
Milk Products and Nutrition-Beverages-Prepared Dishes and Cooking Aids-
Chocolates and Confectionery
Health Care-Personal Care-Foods-Home Care-Consumer Health –
Ethical-Professional Range-Guar Gum

26. MARKET SHARE IN EACH SEGMENT (TREND OVER THE LAST 5 YEARS)
ITC NESTLE INDIA

27. HUL DABUR INDIA LTD

28. FINANCIALS – REVENUE, PROFIT, MARKET CAPITALIZATION,
P/E RATIOS.
PROFIT EARNING
RATIO OF ITC.
FINANCIAL REVENUE
AND PROFIT
CONTRIBUTRION OF ITC.

29. PROFIT EARNING RATIO OF HUL
FINANCIAL REVENUE OF HUL.

30. FINANCIAL REVENUE OF NESTLE INDIA
AND EARNING PER RATIO.

31. FINANCIAL REVENUE AND EARNING PROFIT SHARE OF
GODREJ CONSUMER PRODUCTS LTD

32. FINANCIAL REVENUE AND EPS OF DABUR LTD.

33. RATIO ANALYSIS (BOTH OPERATIONAL AND FINANCIAL
RATIOS) AND THE STRATEGIES BEHIND THEM
ITC

34. HUL

35. NESTLE INDIA

36. t
Particulars FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
ROCE 4.57 3.91 13.29 10.96 7.86
ROE /
RONW
7.92 11.51 15.20 12.32 12.60
GODREJ

37. DABUR INDIA LTD.

38. SWOT ANALYSIS

39. ITC

40. STRENGHT
•strong and experienced management
Strong brand presence, excellent
products advertising
•Excellent research and development
facilities
•Cigarette market is 22,000 cr and ITC has
lion’s share in it
•A lasting impression by catchy ads
•Diversified product and services
portfolio which includes FMCG, Hotel
chains, paper & packaging and agri-
business
•Agro-export segment showing excellent
growth of 28 % & earning Rs. 4 billion
foreign exchange
WEAKNESS
•Hotel industry has not been able to
create a huge market share
•ITC is still dependant on its tobacco
revenues and people have cheaper
substitutes and other brands
•High competition from established
brands which has resulted in reduction in
profit margins
•Diversification into various lines in
which it does not have much knowledge
would be very risky proposition
•Negative Connection of Tobacco

41. OPPORTUNITY
•Tap rural markets and increase
penetration in urban areas
•Mergers and acquisitions to strengthen
the brand
•More publicity of hotel chains to
increase market share
•Good source of revenue & foreign
exchange available by way of exports of
agricultural products, hotels & cigarettes
•Its competitors don’t have the financial
banking like it so it can take advantage of
this
THREATS
•Ban on smoking
•Increasing Tax on cigarettes
•Poor monsoon leads to poor agricultural
growth which would affect the agro-
exports
•Competition from unbranded products
•High competition from established
brands

42. HUL

43. STRENGHT
•HUL is a part of the Unilever group,
hence strong brand equity
•It has over 15000 employees
•Reach 6.4 million retail outlets which
includes direct reach to over 1.5 million
retail outlets
•Products with presence in over 20
consumer categories with over 700
million Indian consumers using its
products
•As a part of CSR, HUL has initiatives like
project Shakti, plastic recycling, women
empowerment etc.
WEAKNESS
•Market share is limited due to presence
of other strong FMCG brands
•HUL products has stiff competition from
big domestic players and international
brands
•Inability to transform its strategies at
right time
•Lacked the ability to call shots and
power pricing

44. OPPORTUNITY
•Tap rural markets and increase
penetration in urban areas
•Mergers and acquisitions to strengthen
the brand
•Increasing purchasing power of people
thereby increasing demand
•New brand segments: medicines etc.
•Diversification
THREATS
•Intense and increasing competition
amongst other FMCG companies
•FDI in retail thereby allowing
international brands
•Competition from unbranded and local
products

45. NESTLE

46. STRENGHT
•More than 140 years in the industry
•World biggest brand, top brand in
Fortune 500 list
•Global reach with presence in over 86
countries
•An employee strength of around
328,000 people worldwide
•Wide product range including baby food,
pet food, dairy products, confectioneries,
pharmaceuticals, beverages, etc.
•Popular brands owned like Maggi,
Haagen-Dazs, Boost, Kit Kat, Nescafe, etc.
•Largest R&D network facilitating
continuous innovation
•Strong supply chain network
•Mergers and acquisitions and joint
ventures to increase market share
•Strong marketing and advertising power
•Strong brand loyalty and brand recall
WEAKNESS
•Inability to provide consistent quality in
food products
•Weak implementation of CSR
•Being a big global brand, Numerous
controversies in different countries of
operation can cause issues
•Strong competition by other brands

47. OPPORTUNITY
•Extend Vatika brand to new categories
like Skin Care and body wash segments
• Increasing income level of the middle
class
•Dabur is the world’s largest ayurvedic
medicine and its export quantities are
constantly in demand in foreign market
•The affinity towards yoga and Hinduism
is proving more advantageous towards
the reach of ayurvedic medicines globally
•People have started realizing that
ayurvedic medicines like Dabur,
Himalayas etc doesn’t have much of side
effects
•Ayurveda as a field is receiving much
more attention across the world in the
last 2–3 years. Thus huge opportunity for
Dabur to capitalize on the market
sentiments
THREATS
•The allopathy players are of major
threat as they invest heavily on
advertising and distribution of their
products through medical
representatives etc.
•Some ayurvedic doctors give their own
medicines or give a mixture of Ayurvedic
Company’s product without packaging
(loose medicines). This reduces the sales
in the market and dilutes the brand
image
•Kerala is an ayurvedic hub, for most of
the treatments. Hence people visit
directly and attend health camps to get
cured
•Competition from unbranded and local
products

48. THANK YOU