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FMCG Report 1

Executive Summary The report observes the changing dynamics in the FMCG sector through the late 20th century, which forced the FMCG majors to revamp their product, marketing, distribution formats to meet the changing customer requirements or preferences. In the light of this, the report discusses some innovative customer-centric initiatives taken by companies such as HLL, CavinKare and TVS. It finally explores future threats and opportunities for the retailing and FMCG industry in India. What are Fast Moving Consumer Goods (FMCG)? 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. A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc. In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing industries in India. According to the AC Nielsen India study, the industry grew 5.3% in value between 2004 and 2005.

Introduction FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management. 8 FMCG is the acronym of Fast Moving Consumer Goods which is also known as Consumer Packaged Goods (CPG). Fast moving consumer goods are products that have a quick turnover, and relatively low cost. FMCG generally include a wide range of often purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, condoms,

batteries, paper products and plastic goods. The purchasers usually put less thought into the purchase of FMCG than they do for other durable products such as electronic items. In comparison with other industries such as automobiles, computers, and airlines, FMCG business has a steady rate of growth, for it does not suffer from huge recession and layoffs every time the economy starts to dip. In FMCG business absolute profit made on the products is relatively small. Since they generally sell in large numbers, the overall profit on such products can be huge.
Indian FMCG Journey So Far !! FMCG sector in India has seen some ups and downs in the last half decade. The journey of FMCG industry after independence can be split into five stages: A) LACKLUSTER STAGE 1950s to 1970s Post independence (During 1950's to 1970's), there was not much happening in the FMCG sector in India. The business was limited to the upper segment of the society, as the purchasing power was low. Companies like HLL were purely focused on the urban areas and never bothered to enter the rural hinterland of India. The investment in the sector was low, with few FMCG companies selling their products. Also, the governments emphasis was more on the small-scale sector. There was never a doubt in the potential of the sector, with such a big base of consumers residing in India. B) RURAL SENSITIZATION STAGE 1970s to 1990s Two examples, which changed the scenario, and brought focus to the rural markets. NIRMA In the early 1970s, when Nirma washing powder was introduced in the low-income market, Hindustan Lever Limited reacted in a way typical of many multinational companies. Senior executives were dismissive of the new product and never considered the potential and opportunity. But very soon, Nirmas success in the detergents market convinced HLL that it really needed to take a closer look at the low-income market. At the time, the focus of the organised players like HLL was largely urbane. There too, the consumers had limited choices. However, Nirmas entry changed the whole Indian FMCG scene. The company focused on the value for money plank and made FMCG products like detergents very affordable even to the lower strata of the society. Nirma became a great success story and laid the roadmap for others to follow. MNCs like HLL, which were sitting pretty till then, woke up to new market realities and noticed the latent rural potential of India. CAVINKARE 1983, C K Ranganathan started selling shampoos in a sachet with an investment of Rs 15,000 and dared to take on the multinationals, Lever and P&G, the unquestioned leaders in that segment. Ranganathan took the then shampoo market by storm, selling his Chik brand of shampoo at a much lower price than other shampoo sachets which were selling at Rs 2. He targeted rural and smalltown consumers who used soaps to wash their hair. He introduced the sachet at 90 paise and then reduced it to 50-paise. And thats when the multinationals sat up and noticed him. But what really worked was the bring empty sachets and take shampoo sachets in return offer.

Sales zoomed from 35,000 sachets to 12 lakhs. Initally they took any sachet, but after three months they restricted to Chik sachets. C) LIBERLIZATION BOOM and STABLIZATION STAGE - Post Liberalisation (1991 - 2000) Post liberalisation not only saw higher number of domestic choices, but also imported products. The lowering of the trade barriers encouraged MNCs to come and invest in India to cater to 1bn Indians needs. Rising standards of living urban areas coupled with the purchasing power of rural India saw companies introduce products targeting both rural and urban markets with value for money and value added offers. Companies started investing in increasing the distribution depth, upgrade existing consumers to value added premium products and increase usage of existing product ranges. As an outcome of increased choices to the consumers and positive euphoria post liberalization, many of the affluent consumers who always had the money but limited choices, started splurging. So you could see all companies be it HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate, trying to outdo each other in getting to the rural consumer first. Each of them has seen a significant expansion in the retail reach in mid-sized towns and villages. Some who could not do it on their own, have piggy backed on other FMCG majors distribution network (P&G-Marico). The Sales boom was observed for first 4 to 5 years and then it stabilized. D) DROP STAGE (2000 2005) 2000 was a rather uneventful year for manufacturers and marketers of fast moving consumer goods (FMCGs). The growth rate of FMCG categories was torpid to say the least and the marketing environment was such that, even veterans like Hindustan Lever Ltd (HLL) and Procter & Gamble (P&G) found it difficult to hold on to their market share. The market grew more crowded, what with the entry of new brands entering categories which were virtually the bastions of HLL, Colgate or P&G. Even in 2001 prominent, high penetration categories such as toilet soaps and detergent bars were very badly affected, actually shrinking in real value terms. Categories with a comparatively lower reach in terms of market penetration, such as shampoos and skin creams too slowed although to a lesser extent. The explanation for this could be that categories with high penetration levels, such as detergents and soaps also depend to a great extent on rural demand. The probable cause is a combination of both industrial slowdown as well as the almost-crisis in the agricultural sector which forced consumers to cut back on spending. Buyers moved from higher-end products to low-end products in an effort to reduce monthly grocery expenditure. Mid-priced and low-priced segments in soaps and detergents registered robust growth rates, while the premium segment faltered. Impulse products suffered while essentials managed higher rates of growth. Despite the slowdown, staple foods such as atta and salt managed to recorded superior growth rates, higher than those of supposed luxury products such as chocolates and ice creams. Low unit packs saw robust volume growth. Most FMCG marketers offered smaller versions of their products at affordable price points and these drew in new consumers. The crisis of declining FMCG markets was also driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves. Indian population was all set to experience the new basket of products, but with cut-

down on FMCG. E) BOOM REVISTED STAGE: 2005 onwards Everything turned positive thereafter. 2006 was a different story altogether though. The FMCGs seem to have gotten a new lease of life 2005 onwards. Be it hair care products to sunscreen, they were flying off the shop-shelves. In fact sale of white goods dipped while toiletries registered an increase. Such a sharp rebound was, however, unexpected. AC Nielsen's retail sales audit numbers for August 2006, show that sales growth was sound, recording a 24%. Not so long ago, in July 2005 most firms were unable to pass on even basic cost increases and growth had plunged to under 3 per cent. The key reasons look like the following (please refer my previous post Indian FMCG Growth Drivers and Category Trends): a) Increased disposable income b) Organized Retail Boom c) Increased Rural Penetration Also the new basket of products mentioned above (like mobile phones etc) were now affordable (because of cheaper products and EMI culture) to the Indian consumers and therefore revisited and upgraded to FMCG products.

Indian FMCG Sector: The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. Well-established distribution networks, as well as intense competition between the organised and unorganised segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid urbanization, increased literacy levels, and rising per capita income. The big firms are growing bigger and small-time companies are catching up as well. According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft drink and cigarette companies have always shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they account for 35 of the top 100 brands. Exhibit I THE TOP 10 COMPANIES IN FMCG SECTOR

S. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Companies Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestl India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Hygiene and Health Care Marico Industries

Source: The companies mentioned in Exhibit I, are the leaders in their respective sectors. The personal care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG sales, and just below the personal care category. ITC alone accounts for 60% volume market share and 70% by value of all filter cigarettes in India. The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury. This category seems to have faster development than the stagnating personal care category. Amul, India's largest foods company, has a good presence in the food category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a series of products at various prices. In the household care category (like mosquito repellents), Godrej and Reckitt are two players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the top 100, although P&G's Head and Shoulders and Pantene are also trying hard to be positioned on top. Clinic is nearly double the size of Sunsilk. Dabur is among the top five FMCG companies in India and is a herbal specialist. With a turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East, South Pacific, Caribbean, Africa and Europe. Asian Paints is India's largest paint company, with a turnover of Rs.22.6 billion (around USD 513 million). Forbes Global magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the World.

Cadbury India is the market leader in the chocolate confectionery market with a 70% market share and is ranked number two in the total food drinks market. Its popular brands include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380 Million) Marico is a leading Indian group in consumer products and services in the Global Beauty and Wellness space. Outlook: There is a huge growth potential for all the FMCG companies as the per capita consumption of almost all products in the country is amongst the lowest in the world. Again the demand or prospect could be increased further if these companies can change the consumer's mindset and offer new generation products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of different brands are available and the same consumers are willing to pay more for branded quality clothes. It's the quality, promotion and innovation of products, which can drive many sectors.

Scope Of The Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterize the sector. FMCG Sector is expected to grow 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 56,500 crores 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 the fastest growing segments, says an HSBC report. Though the sector witnessed a slower growth 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 last quarter. An estimated double-digit growth over the next few years shows that the good times are likely to continue. Growth Prospects With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%.

However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas.

Indian Competitiveness and Comparison with the World Markets The following factors make India a competitive player in FMCG sector: Availability of raw materials Because of the diverse agro-climatic conditions in India, there is a large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits &vegetables. India also produces caustic soda and soda ash, which are required for the production of soaps and detergents. The availability of these raw materials gives India the location advantage. Labor cost comparison Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest in the world, after China & Indonesia. Low labor costs give the advantage of low cost of production. Many MNC's have established their plants in India to outsource for domestic and export markets. Presence across value chain Indian companies have their presence across the value chain of FMCG sector, right from the supply of raw materials to packaged goods in the food-processing sector. This brings India a more cost competitive advantage. For example, Amul supplies milk as well as dairy products like cheese, butter, etc.
Analysis of FMCG Sector I]\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Strengths: Low cost of production owing to labour-intensive techniques of production. Intense network of distribution in both urban and rural areas. Innovative brand promotion strategies that help to create a larger market share. Weaknesses: FMCG companies do not invest much in technology and hence fail to enjoy lower costs in long-run or economies of scale. Inflationary pressures hit the production costs. Imitated products in market hurt the brands. Opportunities: Unexplored rural markets. Increasing disposable income of consumers. Large and expending domestic market. Changing tastes and preferences of consumers- preference to packaged goods.

FMCG Companies in India

Recently, the FMCG industry in India is undergoing sea changes with both domestic and international brands trying to attract more number of consumers.

FMCG companies in India have always enjoyed a vast potential market because of the large population of the country. The improved economic situation of both the rural and urban consumers has helped FMCG companies to further expand their market to the hinterlands of the country. The fast moving consumer goods have lower shelf life. These are normally goods that are frequently bought and used by households. The profit on each unit of an FMCG product is less but they enjoy higher volume of sales. As a result, the profit of an FMCG company is always measured in terms of the number of units sold by it.The Indian FMCG companies enjoy a diverse industrial base and offer a variety of products to consumers, namely toiletries, personal care products, soaps, detergents, oral hygiene, packaged foods, beverages, grooming products, healthcare products, plastic products, bulbs, batteries, glassware etc. The FMCG industry is the fourth largest sector in India, creating employment for more than 3 million people in the country. It also enjoys high penetration in the rural areas of the country. The Indian FMCG market offers a level playing ground for both domestic and international players. When the all India brands and international brands enjoy higher acceptance in the urban market, the rural market is often dominated by the regional and local producers.

List of Top FMCG Companies in India:

Hidusthan Unilever Ltd.: It is a leading name in India in producing personal and healthcare products. The company was awarded the Golden Super Star Trading Company status from the Government of India.

Dabur India Ltd.: Dabur India produces a variety of healthcare products and enjoys a turnover of approximately INR 1899 crores.

Indian Tobacco Company: ITC is in existence since 1910 and has diversified its business in producing a variety of consumer goods. The company is known for ensuring the highest level of employee satisfaction.

Marico Industries: Marico is known for producing home care and personal care products in India. The company also enjoys a wide consumer base in different SAARC, Middle-Eastern states, Bangladesh, UAE, USA, Egypt etc.

Nestle India: It started its journey in 1912 as an Anglo-Swiss collaboration for condensed milk export. It produces a variety of dairy products of international standard.

Amul: The first cooperative milk marketing initiative in India. Currently, it is the market leader in producing milk, butter, cheese, ghee, chocolates, ice cream and other dairy items.

Cadbury India: Cadbury is synonymous with chocolates in India. But apart from chocolates, the company also manufactures other food and health drink products like Bournvita.

Procter & Gamble Hygiene and Health Care: The product range of P&G comprises personal care products, pet foods and variety of domestic cleaners.

Britannia Industries: Britannia is known for manufacturing varieties of biscuits, cookies and also milk, cheese, butter, ghee etc and enjoys all India market.

GlaxoSmithKline: It is one of the leading medicine and vaccine manufacturers in the country. It is currently employing around 3500 employees.

Colgate Palmolive: It is a trusted name in India for personal care, home care, pet care and oral care products. Colgate is named as Indias Most Trusted Brand in 2011 in the survey conducted by Nielson.

FMCG As A Career
Industry Background FMCG is one of the most dynamic domains of the business world. A career in this sector encompasses a large number of job roles like market research, pricing and product development, purchasing, advertising and brand awareness. FMCG is a sector where graduates can gain excellent rewards if they work hard. FMCG products are those that move off the shelves in retail outlets very quickly. In the Fast Moving Consumer Goods (FMCG) sector, one needs to be fast in translating the ideas into new products. There is a requirement to create the products that people trust, enjoy and use in their daily lives. Advertising and marketing have a vital role to play in this. Qualifications Required

FMCG career structures are fairly slow to progress. One may not get as high a package initialy as in some other sectors like IT, Real Estate, etc. Having once entered the secotor, however, candidates would find any number of opportunities and would see their salary packages rise fast enough.There are plenty of options in FMCG sector if you entere as a graduate, but strong educational qualifications are an advantage. Skills Required FMCG sector requires huge amount of commercial awareness; one must have the skills of a team player. Apart from that, good numerical skills, communication and organisational skills are all essential for a successful career in this industry. Key skills will also depend upon the type of position you want to pursue, i.e. marketing, human resources, finance, etc. Here are seven good reasons why one should pursue one's career in FMCG sector: 1. Job security It is a stable industry. Unlike some other industries, such as automobiles, computers, and airlines, FMCG industry does not suffer from mass layoffs, every time the economy starts to dip. One may drop the idea of buying a car but not the idea of having dinner. This lends FMCG a level of job security unknown in other industries. 2. A high profile industry India has 1.1 billion people and all are consumers. Therefore everyone is affected by FMCG sector. People now are getting more & more health conscious. They are getting concerned about what they are eating. All this has become possible because of the frequent display of various advertisements, such as protests against the genetic modification of foods, the growing problem of obesity, etc. 3. Quick experience Consider an example: One person is working in the sales of cars while the other one is working in the sales of juice. At the end of the month, the person who is working for the sales of cars makes a maximum of 2 or 3 sales, if he is fortunate. On the other hand, the other person sells a large number of products every day. Definitely, the juice seller will get more experienced in less time working in FMCG than any other sector, no matter whether in sales, marketing, operations, accounting, etc. In the end, one will land up learning more and gaining a firm grasp of basic business skills. 4. A wide range of experience One can have a wide range of choices if one desires a career path in FMCG sector. Wide availability of options for working in a large MNC or a small local company ensures that people in FMCG sector have a range of job roles available to them. The "fast moving" part of FMCGs requires people who are flexible. Transfer from sales to marketing or to operations is very common. In fact all three roles can be played at once in smaller firms. One will get to learn a lot, even if one enters this sector for a short duration. 5. An industry that thrives on innovation FMCG sector gives the opportunity to do creative work. There is a constant requirement of innovation in production, advertising, packaging and branding. FMCG offers an opportunity to express your creativity through developing new ideas for products, as brands compete head to head on the shelf.

6. Nationwide opportunities, both urban and rural FMCG sector offers opportunities through its connection to the primary sector in rural and urban areas. The sector is particularly attractive for those interested in working in different parts of the country, as it has a nationwide base, unlike many other sectors confined to particular locations. 7. Offshore opportunities The International offices of most FMCG multinationals regularly recruit staff from our country, either for short projects or for longer stints.

Fast Moving Consumer Goods (FMCG) goods are all consumable items (other than groceries/pulses) that one needs to buy at regular intervals. These are items which are used daily, and so have a quick rate of consumption, and a high return. FMCG can broadly be categorized 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 Nestl, ITC, Hindustan Unilever Limited, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi, Gillette etc.

Overview The burgeoning middle class Indian population, as well as the rural sector, present a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. This sector is expected to grow to a 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 distribution network. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. There is also intense competition between the organised and unorganised 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 for consumption, and demand for these goods remains more or less constant, irrespective of recession or inflation. Hence this sector will grow, though it may not be a smooth growth path, due to the present world-wide economic slowdown, rising inflation and fall of the rupee. This sector will see good growth in the long run and hiring will continue to remain robust.

Salary Comparison of Top FMCG Companies in India

FMCG are Fast Moving Consumer Goods or Consumer Packaged Goods. These are the products that are non durable and hence are sold in large quantities, at a fast pace. These products are used up within short time periods, say a week, a month or in some cases a year; and the products could be any thing from a soft drink to a grocery item. These goods have a high demand in the market, as in most cases they are day to day regular items, so they offer a huge market to the sellers and are generally low cost goods for the buyers.
A few popular FMCG items are:

Vegetables Meat Bakery Products Fruits Packed Food Toiletries Alcohol Soft Drinks

Soaps Cookery Items

Some of the popular FMCG companies in India are:

Hindustan Unilever Limited Marico Industries Nestle India Amul Cadbury India Dabur India Ltd. Britannia Industries Ltd. Indian Tobacco Company (ITC) Proctor and Gamble Hygiene and Health Care Colgate Palmolive GlaxoSmithKline Asian Paints Gillette India Ltd. Godrej Consumer Products Ltd. Johnson and Johnson

Career and Benefits in FMCG companies:

FMCG is one of the top most sectors in India, which brings great profit to the countrys economy. Both young and experienced professionals have a lot of working opportunities in this industry, which offers them a brilliant platform to learn and get acquainted to a world of consumer market from a very unique perspective. A lot of areas get covered in this sector in terms of employment, including, marketing, services, sales, retail and supply.
Some top salaries in FMCG companies by designations:

Area Sales Manager Brand Marketing Manager Marketing Manager Brand Manager Marketing Director Finance Manager Operations Manager

Rs 626,572 Rs 1,956,655 Rs 2,244,000 Rs 1,065,000 Rs 4,750,000 Rs 1,500,00 Rs 1,199,877

Salary comparison of top FMCG companies in India: Proctor and Gamble salaries:

Project Manager: Rs 1,340,000 Financial Analyst: Rs 1,430,000 Associate Brand Manager: Rs 1,450,000 Product Supply Associate Manager: 1,440,000

Hindustan Unilever Limited salaries:

Manager: Rs 1,700,000

Production Manager: Rs 730,000 Project Manager: Rs 1,600,000 Senior Manager: Rs 2,200,000

Marico Industries salaries:

Manager: Rs 1,600,000 Brand Manager: Rs 1,000,000 Production Executive: Rs 275,000

Johnson and Johnson salaries:

Manager: Rs 1,100,000 Marketing Manager: Rs 1,800,000 Associate Brand Manager: Rs 9,00,000 Trainee: Rs 630,000

Nestle India Ltd. salaries:

Sales Officer: Rs 300,000 Sales Executive: Rs 300,000 Nutrition Officer: Rs 400,000 Production Engineer: Rs 750,000

Indian Tobacco Company salaries:

Assistant Manager: Rs 1,390,000

Sales Executive: Rs 1,800,000 General Manager: Rs 2,400,000 Area Manager: Rs 26,000

Salaries in FMCG companies by popular degrees:

Master of Business Administration: Bachelors Degree MBA, Marketing Management

Salaries in FMCG companies by Gender:

Rs 300,000 Rs 2,000,000 Rs 380,000 Rs 1,529,412 Rs 353,749 Rs 925,104

The percentage of male employees working in FMCG companies is: 83%, while earning, Rs 498,998 Rs 1,943,397 The percentage of female employees working in FMCG companies is: 17%, while earning, Rs 258,433 Rs 610,419.

Top cities to work with FMCG companies are:

Mumbai,Maharashtra Kolkata,West Bengal New Delhi,Delhi Bangalore, Karnataka Pune,Maharashtra

FMCG industry economy

FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector with total market size of US$13.1 billion. FMCG Sector in India is estimated to grow 60% by 2010. FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product (GDP).
FMCG Product Categories There are mainly 4 product categories in FMCG: 1. 2. 3. 4. Home and Personal Care (Home Care and Personal Care) Foods and Beverages Cigarettes Alcohol

These categories can be divided in sub categories. Lets take one by one: 1a. Household Care: It can be divided into the following categories

Fabric wash - Laundry soaps and Synthetic detergents Household cleaners - Dish/utensil cleaners, floor cleaners, Toilet cleaners, Air fresheners, Insecticides and Mosquito repellants, Metal polish and Furniture polish

1b. Personal Care: It can be divided into the following categories

Oral Care - Toothpaste Skin Care - Creams, Lotions, Gellies Hair Care - Hair Oil, Shampoos Personal Wash - Soaps Cosmetic & Toiletries Talcums Deodorants Perfumes Paper Products - (tissues, diapers, sanitary) Shoe care

2a. Foods

Confectionary Staples/ Cereals Bakery products - Biscuits, bread, cakes Snack food Chocolates Ice cream Processed fruits Vegetables Meat Dairy products Branded flour, rice, sugar

2b. Beverages

Tea Coffee Juices Bottled water Health beverages Soft drinks

Common FMCG products

Some common FMCG product categories include food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. and some of the

examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc.
Market potentiality of FMCG industry

Some of the merits of FMCG industry, which made this industry as a potential one are low operational cost, strong distribution networks, presence of renowned FMCG companies. Population growth is another factor which is responsible behind the success of this industry.
Leading FMCG companies

Some of the well known FMCG companies are Sara Lee, Nestl, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.
Job opportunities in FMCG industry

FMCG industry creates a wide range of job opportunities. This industry is a stable, diverse, challenging and high profile industry providing a wide range of job categories like sales, supply chain, finance, marketing, operations, purchasing, human resources, product development, general management.

Changing Trends in FMCG MCG sector in India is experiencing a tremendous growth. The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterize the success of the sector. The changing dynamics in the FMCG sector through the late 20th century, which forced the FMCG majors to revamp their product, marketing, distribution formats to meet the changing customer requirements or preferences. A survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) has shown positive growth trends of the FMCG sector. In the light of this, there has been some innovative customer-centric initiatives taken by companies such as HLL, CavinKare and TVS. The changing dynamics in the Indian retailing industry at the turn of the 20th century, which is mainly driven by the growth of organized retailing sector and increased personal consumption of customers on account of rising disposable incomes, increased exposure to foreign goods and growth in nuclear families and double income families. These factors contributed majorly for the rise and shine of FMCG in India. Marketing and distribution are very important in FMCG companies. New products require a large investment in product development, market research, 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. Thus in order to match up with the changing and ever increasing demand of the consumers FMCG giants should buckle up and come up with new innovative products and services.

FMCG Business Expansion - Stage by Stage Approach Have written this post specifically for regional FMCG companies and FMCG manufacturers who are planning to extend their footprints in different geographies in different markets. Let me explain this stage by stage: 1. Category Feasibility: Before you decide on the markets to expand, it is critical to analyze the category construct and trends. Let me start with some examples. In dish wash category, there are 3 key segments - Powder, Bar and Liquid, dominated by Bar sub-category. Now here the first step is to see the trends in each sub-category. In this case, Powder is a dying category, Liquid is an upcoming & fastest growing category and Bar is already established. Bar is dominated by Vim with a market share of 70%. Liquid was dominated by Pril, but Vim Liquid is also catching up. Post this contribution analysis is required, where i will compare all three sub-categories and may conclude that Liquid is more profitable. Also as the urban lifestyles are changing and are moving towards evolved products. With this you will also do an exhaustive competition analysis. At the end, you may decide to expand with Liquid Dish Wash Category. 2. Differentiation/ Innovation: Once you freeze on the category to enter, the next step is to do a positioning mapping of all brands in the category (What do they all stand for in the consumers mind? What are their key proposition?) Rather than making a me-too product, it is also advisable to provide differentiation in the product. The differention may be in form of product improvements/ benefits etc or may be packaging innovation, which comes from some consumer insights. At the end, the consumer should find some value addition in the product. Last year, Dabur enterted into floor cleaning category with Dazzl, which has a unique Dirt Trap Technology, which ensures that the muddy solution settles down in the bucket, offering a clear solution every time for mopping. This is something, which consumers may find different from other products. The differentiation may be marginal or exponential. But its paramount. Otherwise the brand will die its natural death. 3. Distribution: Once you are confident of your Offer, the next step is to increase the increase your distribution depth. There can be multiple approaches to it. First is to roll-out pan India in all markets. But here you should have strong distribution network, which is possible for big FMCG companies like HUL, ITC etc. Second is to identify the right markets for the category. The right markets can be the top markets for the category. Lets take an example of aerated drinks. The biggest selling market is North, especially the prosperous towns like Ludhiana etc. Here even if you capture a market share of 5%, you can have big volumes, as compared to 20% market share in Kolkata. I think the best indicator to look at is the sale per outlet per month. The volumes in a town may be high because of the geographical spread (No. of target outlets), which is not the right indicator. The sales per outlet per month in Ludhiana is much higher than Kolkata. So logically, i should enter into Ludhiana. But thats not all. You also need to look at other things like competition, consumer experimentativeness etc. So the point i want to make here is that, before increasing your footprint, you need to assess the right markets to enter.

Indian FMCG Sector Trends - 2008 In this post i have covered multiple trends happening in the Indian FMCG sector. 1. Focus on Health Companies are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. In recent we have seen flurry of products in this segment. Have a look of some of them: 1.1) Sugar free Chywanprash 1.2) Organic spices/ pulses 1.3) Multi grain pastas/ Biscuits 1.4) Processed foods particularly juices 1.5) Probiotic Ice Creams 1.6) Butter Lite (Nutralite) 1.7) Corn Flakes/ Oats 1.8) Lays (40% less saturated fats) Snack Smart 1.9) Low Calorie Sweetners 2. Impact of Inflation: The expenditure of FMCG in the consumer's wallet is coming down year on year. This is leading to low sensitivity with price increases. ALmost a decade back people use to downtrade from expensive brands to value for money ones. But now the trend is changing. Consumer are not switching to cheaper substitutes. Rather companies have come with lower quantity SKUs and make consumers switch from higher to lower SKUs and not from premium to popular brands (like Dove to Lux International). Just to give you an example, Henkel instead of increasing the price of their Henkwl detergent from Rs. 46 to Rs. 50, they have launched a new SKU of 400gms for Rs. 40. During the time of inflation, people shift to sachets of their brands. Sales numbers of FMCG companies are quite robust. FMCG spend now comprises a smaller share of consumers wallet 3. Micro Segmentation/ Niches: Its interesting and funny to see that companies are not leaving any opportunity to micro segment the market. I can forsee that we are here to see further segments in different categories. Here are some examples: Age a) Junior Horlicks b) Junior Chyawanprash c) Pepsodent Barbie for Kids/ Colgate Strawberry Sex a) Womens Horlicks b) Male fairness cream Specialized Household Cleaners a) Kitchen Cleaner: Mr. Muscle b) Power Cleaner (Rust): Easy Off Bang 4. Low value SKUs - Sachetization: You name the category it has a sachet !! We all know that it all started in 1980's with shampoos. I think Nano is an interesting example of an automobile sachet. Here is a small list of sachets: 4.1) Shampoos

4.2) Butter (Munna Pack) 4.3) Hair Oils (Navratan Thanda Thanda Cool Cool) 4.4) Noodles (Chotu Maggi) 4.5) Ketchup (Pichko) 4.6) Toilet Cleaner (Harpic) 5. Jet Age Consumer Products: Becasue of changing lifestyles, busy jobs etc marketers are coming up with Jet Age consumer products. Ready to Eat a) Con Flakes/ Oats b) Pastas c) Biscuits d) Noodles e) Pizzas f) Burgers Ready to Drink a) Energy Drinks b) Non-Cola Drinks (Juices) Ready to Cook a) Cut Vegetables b) Soups c) Paranthas/ Rotis d) Snacks 6. Mainstream Penetrated Growth Categories: The high penetrated categories like Hair Oils, Washing Detergents, Detergent Cakes, Soaps etc are expected to grow at a healthy rate of 10%, attributed to price increases (not much impact of inflation - explained in point 2) and low volume growth. 7. Under-penetrated Growth Categories: Barring few main mainstream categories as mentioned above, there are number of FMCG categories with low penetration and are expected to grow by 20% during 2008-2009. Have a look of that list: 7.1) Mens grooming products 7.2) Skin care & Cosmetics 7.3) skin/fairness cream 7.4) Anti-aging solution 7.5) Shampoos 7.6) Toothpaste 7.7) Hair Colour 7.8) Deodorants There lies a huge potential in these categories. 8. Low Per Capita Consumption: Currently we are nowhere near to other developing countries in terms of per capita consumption. Be it Laundary, Skin Care, Shampoos or deodarants. Marketers have put in efforts to increase the consumption frequency or quantum of consumption per occasion.

Colgate started the "twice a day" campaign few years back. Recently we have Good Night coming up with Double power pack. Per Re1 increase in per capita consumption of a category will lead to growth of more than 100 crores (with a popular base of more than 1 Billion) 9) Evolved Product Forms: 20 years back consumers had limited choices to pick from. The days of Tortoise Mosquito repellent coils are gone. This is the age of aerosols with value added functionality. I have picked up some examples, were we have seen a change in the product forms. Here is the list: Dish Wash: Powder to Bar to Liquid Shaving: Creams to Foams/ Gels Repellents: Coils to Aerosols/ Body Creams/ Gels Air Freshners: Sprays to Electric Toilet Cleaner: Acid to Harpic to In-Cistern SOME FUTURE PREDICTIONS ?? 1. Increased Competition: In last few years, we have seen large number of companies expanding their portfolio into other categories, which is leading to fragmentation of market. This will lead to cut throat competition from regional/ national companies, giving the ultimate benefit to the consumers. In this environment, only the innovators will survive. Focus will be the key to profitability 2. Micro Segmentation: In recent past we have seen companies developing products targeting niche segments, by addressing specific needs. Some time it looks logical and sometimes absolutely silly!! Lets look at few examples. Marketers are segmenting Horlicks into Women and Junior Horlicks. Fairness cream for men. Pepsodent Barbie Toothpaste for Kids. I think this is just the start!! I think many marketers are ready for further segmentation of many FMCG categories. 3. Growth of Under-penetrated Categories: There is huge scope in lot of under-penetrated categories like Household Cleaners, Deodorants, Skin Creams, Shampoos, Coffee etc 4. Consumer will move from the status of KING to GOD: Undoubtedly, all this is good for the consumers, who can now choose a variety of products, from a number of companies, at different price points. 5. Organized Retail: The modern retail format will slowly occupy a bigger share. This will lead to change in shopping behavior and growth in FMCG sector Indian FMCG Sector Growth Drivers and Category Trends: 2008-09 The fourth largest sector in the Indian economy is all set for 16% growth during 2008-09, from a base of Rs. 85470 crores, as predicted by FICCI. Going forward, as anticipated by CRISIL, FMCG sector will touch around Rs. 140000 crores by 2015 (33.4B$). This post will through some pointers for growth in FMCG Sector and update with the contemporary category trends. Growth Drivers: FMCG Sector 1. Disposable Income: There is increase in disposable income, observed in both rural and urban consumers, which is giving opportunity to many rural consumers to shift from traditional

unorganized unbranded products to branded FMCG products and urban fraternity to splurge on value added and lifestyle products. The increasing salaries, along with rising trend of perks in the corporate sector at regular intervals, have increased peoples spending power. As per some research, there is a high correlation between Disposable per capita and HPC per capita. 2. Organized Retail: The emergence of organized retail have lead to more variety with ease in browsing, opportunity to compare with different products in a category, one stop destination (entertainment, food and shopping) etc, which is playing an important role in bringing boom in the Indian FMCG market. Currently the modern trade is capturing 5% of the total retail space, which will increase to 10% and 25% in 2010 and 2025 respectively. Also, as the credit card and organized retail trend picks up, people wont think much while buying and buy more. 3. Distribution Depth - Rural Penetration: There are 5500 towns and 6.38 Lacs villages with 2.5Mln and 5Mln outlets respectively. Due to saturation and cut throat competition in urban India, many FMCG companies are devising strategies for targeting rural consumers in a big way. Many FMCG companies are focusing on increasing their distribution network to penetrate with a step by step plan. This is the reason that FMCG urban market size has dropped from 50% to 29% in last 5 years. The FMCG market size for semi-urban and rural segment was 19% and 52% respectively for the year 2006-07. As per FICCI, the FMCG market size for urban, semi-urban and rural for year 2007-08 was expected to be 57%, 21% and 22%, which clearly shows that rural market is the growth engine for FMCG growth. Though the urban markets are growing too, the incremental addition in consumers households is much more in rural space as compared to urban markets. The planned development of roads, ports, railways and airports, will increase FMCG penetration in the long term. 180 million rural and semi-urban peoples attention has already been diverted towards FMCG products, according to latest estimates released by industry chamber, Assocham in 2008. The estimated number of households using FMCG products in rural India has grown from 131 million in 2004 to 140 million in 2007, according to market research company IMRB. Over 70% sale of FMCG products is made to middle class households and over 50% of middle class is in rural India. 4. Buying Pattern Shift: The crisis of declining FMCG markets during 2001-04 was driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as many consumers have already upgraded, their income is being directed towards pampering themselves. 5. Favorable Indian Economy & Demographics: 45% people in India are under 20 years of age. Per capita disposable income has increased from $550 to $600 in 2007 (9% increase). GDP is growing at a CAGR between 8 to 9%.In the next five years, affluent and aspirers as a total will supersede strivers and will be dominated by aspirers, as per NCAER. FMCG Category Trends 1. Underpenetrated Growth Categories: Within the Indian FMCG industry, there are few categories that will grow more than 20% during 2008-2009, like shaving cream, skin/fairness cream, shampoos, skin care & cosmetics, tooth powder. Some other growth categories will be hair colour, skin care, anti-aging solution, deodorants and mens products. Most of these categories are under penetrated and there is a huge scope for growth. 2. Penetrated Growth Categories: Even mainstream categories with high penetration levels such as washing detergents, soaps and hair oils have shown strong underlying volume growth, despite sharp inflation led price increases in FY08. This is partly related to the growth in organised retail (3-5% of

turnover for most FMCG players) that gives more visibility to national brands with strong brand equity. 3. Anand Shah, an FMCG research analyst at Angel Broking, says most FMCG companies are responding to the new demand by concentrating on developing a big theme and building a portfolio around it. Nestle, for example, has identified 'health and wellness' as its focus area, while Dabur is positioning itself around ayurvedic (a traditional Indian system of healthcare), natural and herbal products. At the higher price end, companies are leveraging health and wellness trends by focusing on providing 'experiential' and 'higher order' benefits rather than purely functional ones. 4. Health Food Categories: FMCG majors are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. Sugar free Chywanprash, organic spices and multi grain pastas and biscuits are few examples. Urban India is high on health and FMCG majors are cashing in on the opportunity. Processed foods particularly juices that are based on the health platform would see stronger growth. Also, with the Indian consumer becoming increasingly health conscious, the demand for juices has witnessed rapid growth. 5. Impact of inflation in 2008: Even if consumers don't switch to cheaper substitutes during inflation, they normally switch from higher SKUs to lower SKUs of the same product. This is the reason the companies have come up with smaller SKUs. In line with this trend, Henkel has withdrawn its 500gm pack washing powder which was priced at Rs.46 and has replaced it with a new 400gm pack that costs INR40. A couple of months back, Amul introduced 25gm packs of butter. Not surprisingly, this pack is fetching more sales than 100gm and 500gm packs. In the first 10 months of 2007, there were 251 product launches, including 28 new brands, compared with 191 for the same period of 2006. Snacks and foodstuffs remain the category leaders, with recent launches of several health and beauty products, particularly in urban markets. FMCG WIZARDS CONTEST: Future of FMCG in India (5 years from now)

I am rolling out a contest on FMCG sector in form of a Reaserch Paper. As many people in FMCG marketers community are interested in doing projects in FMCG sector, i am starting this Contest FMCG WIZARDS. CONTEXT There are different FMCG categories existing in India. At a macro level there are mainly four categories Home & Personal Care, Foods & Beverages, Cigarettes and Alcohol and at a micro we sub categories under HPC and F&B. Some of them are quite established in India. Just to name a few, the established ones are Soaps, Shampoos, Biscuits, Confectionary, Cigarettes, Salt, Snack Foods(Chips & Namkeens) are more than 1000 Cr. categories. Other FMCG categories are in nascent stage like Ready to Eat, Breakfast Meals, which are well within 100 Cr. There are some categories like Chips & Namkeens, which today has a huge market of 2000 Cr. and was miniscule 6 years back. One thing is very important to understand here is that the smaller FMCG categories today will be more than 1000 Cr. and will contribute a considerable percentage in the portfolio of FMCG categories. Apart from the already existing categories in India, there are many other niche FMCG categories, which are non-existent in India but are well established in developed

nations. But gradually India will experience those categories in India. The deliverables of the research paper are: 1. List of all FMCG categories and their current potential in Crores. Do refer: 2. Split the categories into established and nascent categories 3. List of untapped categories in India which are prevalent in other nations 4. Viewpoints on the scope/ potential of nascent and untapped product categories in India in next the 5 years, looking into the changing consumer behavior 5. Lastly, what all FMCG companies in India should enter into these categories The essence, which should come out from the project are the budding FMCG categories, which has a huge potential in India in next 5 years.