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Jan, 28 2009
Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. Indiaʹs FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. Its principal constituents are Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments. The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the third quarter of 2008-09 despite the economic downturn. The industry is expected to register a 15% growth in Q3 2008-09 as compared to the corresponding period last year. Unlike other sectors, the FMCG industry did not slow down since Q2 2008. the industry is doing pretty well, bucking the trend. As it is meeting the every-day demands of consumers, it will continue to grow. In the last two months, input costs have come down and this will reflect in Q3 and Q4 results.
85,000 Crores Indian FMCG market is one of the important sector and has registered a robust growth rate.
Ag-gregate sale FMCG industry is expected to increase by 19.2 per cent during the December 2008 quarter.
Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has been also aided by the lack of competition in the respective categories. Singleproduct leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and Dabur in toothpastes have also posted market share improvement, with revived growth in semi-urban and rural markets.
because increase in prices has led some consumers to look for cheaper substitutes.FMCG SECTOR Swot Analysis Jan. 75 per cent are in the rural areas.a population of over one billion. i. growth in rural demand is expected to increase because consumers are moving up towards premium products. • Export potential • High consumer goods spending Threats: • Removal of import restrictions resulting in replacing of domestic brands • Slowdown in rural demand • Tax and regulatory structure • Industry Category and Products Household Care Personal Wash:The market size of personal wash is estimated to be around Rs. in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps. Economy and Popular. With increase in disposable incomes. These products narrow the scope of FMCG products in rural and semi-urban market. 8. The seg-ment is expected to grow by double digit. However. out of which. HUL is the leader with market share of ~53 per cent. www. Godrej occupies second position with market share of ~10 per cent. It is available in 5 million retail stores.300 Cr. The penetration level of soaps is ~92 per cent. increase in purchasing power of consumers • Large domestic market.com . especially in small sectors • Low exports levels • "Me-tooʺ products.ghallabhansali.e. Page 2 Hindustan Unilever Lim-ited is the biggest pro-ducer of Personal wash and detergents. which illegally mimic the labels of the established brands. Opportunities: • Untapped rural market • Rising income levels. The personal wash can be segregated into three segments: Premium. 28 2009 Strengths: • Low operational costs • Presence of established distribution networks in both urban and rural areas • Presence of well-known brands in FMCG sector Weaknesses: Lower scope of investing in technology and achieving economies of scale.
increase in disposable incomes. P&G occupies second position with market share of around ~23 per cent. Dabur occu-pies second position at ~17 per cent.000 Cr. Shampoos:The Indian shampoo market is estimated to be around Rs. In washing powder HUL is the leader with ~38 per cent of mar-ket share. greater product choice and availability. Sachet makes up to 40 per cent of the total shampoo sale. Hair Care:The hair care market in India is estimated at around Rs. Personal Care Skin Care:The total skin care market is estimated to be around Rs. the demand for the household care products is flourishing. It has low penetration level even in metros. Marico is the leader in Hair Oil segment with market share of ~ 33 per cent. Antidandruff segment constitutes around 15 per cent of the total shampoo market. and hair gels. Again the market is dominated by HUL with around ~47 per cent market share. Henkel and Proctor & Gamble. The demand for detergents has been growing but the regional and small unorganized players account for a major share of the total volume of the detergent market. The market is further expected to increase due to increased marketing by players and availability of shampoos in affordable sachets.400 Cr. The hair care market can be segmented into hair oils.com Page 3 . The Skin Care segment is expected to register a growth rate of mare that 16 percent. hair colorants & conditioners. The penetration level of this segment in India is around 20 per cent. 12. The skin care market is at a primary stage in India. 28 2009 Detergents:The size of the detergent market is estimated to be Rs. fol-lowed by CavinKare with a market share of ~12 per cent and Godrej with a market share of ~3 per cent. Household care segment is characterized by high degree of competition and high level of penetration. emergence of small pack size and sachets. people are becoming aware about personal grooming.700 Cr. The major players in this segment are Hindustan Unilever with a market share of ~54 per cent.800 Cr. www. shampoos. It has the penetration level of only 13 per cent in India. With rapid urbanization. 3.ghallabhansali. 3.FMCG SECTOR Jan. Other major players are Nirma. With changing life styles. 2.
by 2030 India population will be around 1. 28 2009 Oral Care:The oral care market can be segmented into toothpaste . Tea :The major share of tea market is dominated by unorganized players.ghallabhansali. Growth Prospect Large Market India has a population of more than 1.17 per cent.500 Cr. The oral care market. Colgate and Dabur are the major players.60 per cent. remains under penetrated in India with penetration level ~50 per cent. es-pecially toothpastes. More than 50 per cent of the market share is capture by unorganized players. ready to eat rice by HUL and pizzas by both GCMMF and Godrej Pillsbury. 4. However. the export of tea is expected to be more that 210 million kg for the year 2008 against about 179 million kg last year. ITC. The total toothpaste market is estimated to be around Rs. Nestle and Amul slug it out in the powders segment.com Page 4 . more than 50 per cent of the market share is in unpacked or loose form. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate. The food category has also seen innovations like softies in ice creams. According to the estimates. HUL and Tata Tea. while HUL occupies second position with market share of ~30 per cent.450 Billion and will surpass China to become the World largest in terms of population. and others. 3.23 per cent. Godrej. The major players in this segment are Nestlé.FMCG SECTOR Jan. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent. www. This category has 18 major brands aggregating Rs. Leading branded tea players are HUL and Tata Tea. According to Tea Board of India. Coffee :The Indian beverage industry faces over supply in segments like coffee and tea. Food & Beverages Food Segment :The foods category in FMCG is gaining popularity with a swing of launches by HUL. In toothpowders market. toothbrushes . toothpowder .600 Cr. The penetration level of toothpowder/toothpaste in urban areas is three times that of rural areas.150 Billions which is just behind China.
ghallabhansali. automatic foreign in-vestment and food laws resulting in an environment that fosters growth. Consumers are switching from economy to premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. C. C. We have seen willingness in consumers to move to evolved products/ brands. Nielsen shows about 71 per cent of Indian take notice of packaged goods' labels contain-ing nutritional information compared to two years ago which was only 59 per cent. Survey by A. of household mainly because of in-crease in nuclear family where both the husband and wife are earning.com Page 5 . Changing Profile and Mind Set of Consumer People are becoming conscious about health and hygienic.FMCG SECTOR India is second largest Country in terms of Popula-tion growth and increase in population has a direct rela-tion to FMCG Products. There is a change in the mind set of the Consumer and now looking at “Money for Value” rather than “Value for Money”. rising disposable income etc. Jan. Nielsen shows about 71 per cent of Indian take notice of packaged goodsʹ labels containing nutritional information compared to two years ago which was only 59 per cent. An increase in disposable income. There is an upward trend in urban as well as rural market and also an increase in spending in organ-ized retail sector. reducing excise duties. www. Findings according to a recent survey by A. Advantages To The Sector Governmental Policy Indian Government has enacted policies aimed at attaining international competitiveness through lifting of the quantitative restrictions. 28 2009 Source: UN Population Division: Medium variant Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. has leads to growth rate in FMCG goods. because of changing lifestyles. 100 per cent ex-port oriented units can be set up by government approval and use of foreign brand names is now freely permitted.
is allowed for most of the food processing sector except malted food. as these prod-ucts are either subject to specific duty or are exempt from excise. This announcement has a positive impact on the industry. up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment. Godfrey Phillips). ITC) or ready-to-eat foods. 28 2009 Central & State Initiatives Recently Government has announced a cut of 4 per cent in excise duty to fight with the slowdown of the Economy. There is a continuous growth in net FDI Inflow.FMCG SECTOR Jan.com Page 6 . Foreign Direct Investment (FDI) Automatic investment approval (including foreign technology agreements within specified norms). The changes in excise duty do not impact cigarettes (ITC. Even players with manu-facturing facilities located mainly in tax-free zones will also not see material excise duty savings.ghallabhansali. biscuits (Britannia Industries. Only large FMCG-makers may be the key ones to bet and gain on excise cut. There is an increase of about 150 per cent in Net Inflow for Vegetable Oils & Vanaspati for the year 2008. alcoholic beverages and those reserved for small scale industries (SSI). But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. www.
yet only around 15 per cent of the milk is processed. wheat. Even investment opportunities exist in value-added products like desserts. or ~70 per cent of the Indian population and accounts for ~50 per cent of the total FMCG market. Beverages Indian tea market is dominated by unorganized players. More than 50% of the market share is capture by unorganized players highlighting high potential for organized players. The market for FMCG products in rural India is esti-mated ~ 52 per cent and is projected to touch ~ 60 per cent within a year. And an average citizen in rural India has less then half of the purchasing power as compare to his urban counterpart. Still there is an untapped market and most of the FMCG Companies are taking different steps to capture rural market share. Multi National Companies out-source its product requirements from its Indian company to have a cost advantage. The organized liquid milk business is in its infancy and also has large long-term growth potential. Hindustan Unilever Ltd is the largest player in the industry and has the widest market coverage. Sectoral Opportunities Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below: Dairy Based Products India is the largest milk producer in the world. especially toothpastes.com Page 7 .FMCG SECTOR Market Opportunities Jan. Lower price and smaller packs are also likely to drive potential up trading. fruits & vegetables. Export . the growth potential is huge. www. sugarcane.“Leveraging the Cost Advantage” Cheap labor and quality product & services have helped India to represent as a cost ad-vantage over other Countries. India is the largest producer of livestock. puddings etc. remains under penetrated in India with penetration rates around 50 per cent. thus highlighting the huge potential for expansion of this industry. Even the Government has offered zero import duty on capital goods and raw material for 100% export oriented units. With rise in per capita incomes and awareness of oral hygiene. It adds a cost advantage as well as easily available raw materials. Packaged Food Only about 10-12 per cent of output is processed and consumed in packaged form. spices and cashew apart from being the second largest producer of rice. milk.ghallabhansali. The working rural population is approximately 400 Millions. 28 2009 Vast Rural Market Rural India accounts for more than 700 Million consumers. coconut. Oral Care The oral care industry.
South Africa.ghallabhansali. Godrej Consumer Products Limited (Godrej) • The Board of Directors of Godrej Consumer Products Limited (GCPL) has approved the acquisition of 50 per cent stake of its joint venture partner SCA Hygiene Products’ stake in Godrej SCA Hygiene Limited. Kinky is among one of the largest brand into hair segment with product portfolio. India. scien-tific & public health institutions and meets the germ-kill criteria of the Environmental Pro-tection Agency. After the transaction. • Godrej Consumer Products Limited has acquired 100 per cent stake in the Kinky Group Limited. It is also eco-friendly because it reduces waste in the printing process. The company is planning to launch the rest 13 product in India. • Hindustan Unilever’s product .FMCG SECTOR Company Prospects Jan. Pureit received the award for outstanding contribution in the field of water in India. the Joint Venture which owns the ‘Snuggy’ brand of baby diapers will become a 100 per cent subsidiary of GCPL. Pureit’s performance has been tested by leading international & national medical. the drinking water regulatory agency in the USA. • The company has an aggressive plan to set up 20 new factories across the World out of which 19 is expected to come in emerging markets and most of them would be seen in Brazil. The company expects to see a growth in other categories. Procter & Gamble Hygiene & Health Care Limited (P&G) • The Company has 21 product categories out of which only 8 product have presence in India.Pureit (a water purifier) has received the UNESCO Water Digest Water Award 2008-2009 in the category of best domestic non-electric water puri-fier. HUL has pared down the colour palette used for print-ing across many products. www. and China (BRIC) nations.com Page 8 . The product is available across 21 Indian states and has reached more than 1 million homes in India giving them access to microbiologically safe drinking water. HUL is taking different steps to reduce the cost and increase the margin. 28 2009 Hindustan Unilever Limited • Unilever is lowering its expenditure on packaging across its portfolio of food brands as part of a wider cost-cutting drive. Russia. • Whisper which is one of the company’s power brands has recorded 50 per cent market share in urban India. The system has been used to reduce printed packaging costs for Unileverʹs products.
30 million. Dabur got approval from Government of Himachal Pradesh to set up another medicine manufacturing unit. Nestle International is reinvesting and expanding in India and Nestle India will have all the financial resources to expand and grow from the parent company.45% to Rs 10. would be doubling the investment in 2009 as part of its business strategy.356. when compared with the prior year period. The project has an expected investment of Rs. the profit of the company rose 26. while total income for the quarter rose 23. they expect to capture a market share of 10 per cent of the Rs.ghallabhansali.210.54% to Rs 1. Consequently. According to the company. a leading player in the women’s skin care products market.56 a share during the quarter.7 Crores in an all-cash deal.70 lakh.FMCG SECTOR Dabur India Limited (Dabur) • Jan. • www. SS Oral Hygiene Products has become a wholly owned subsidiary of the company.900 Crores malted food drink market over the next two years. 130 Crores. The Company is expected to create synergy by this deal. Net sales for the quarter rose 23. for Rs 203. Hyderabad.40 million. 1.78% to Rs 10. registering 26. last year. Nestle India reported a good increase in its standalone net profit for the second quarter.During the quarter.61% growth over prior year period.90 million from Rs 956.com Page 9 . The company posted earnings of Rs 12. Nestle India Limited • Nestle is planning to invest Rs 6 billion in India in 2009 for expansion of its business in the country.423.90 million in the same quarter. Dabur has acquired 72. • • Colgate-Palmolive (India) Limited • Colgate Palmolive (India) Ltd. which is currently holding 75 per cent of the share capital of SS Oral Hygiene Products Private Ltd.15 per cent of Fem Care Pharma Ltd (FCPL). has acquired the remaining 25 per cent share capital from the local shareholders at an aggregate price of Rs 77.The company which has allotted an investment of Rs 3 billion in the Indian market in 2008. 28 2009 Dabur has entered into the malted food drink market with the launch of a new health drink “Dabur Chyawan Junior”.
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