Executive Summary

Products which have a quick turnover, and relatively low cost of are known as
‘Fast Moving Consumer Goods (FMCG)’. FMCG products are those that get
replaced within a year. FMCG products include a wide range of frequently
purchased consumer products such as toiletries, soap, cosmetics, tooth
cleaning products, shaving products and detergents as well as non-durable
products such as glassware, bulbs, batteries, paper products, and plastic goods
etc.
India’s FMCG sector is the fourth largest sector in the economy and creates
employment for more than 3 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 85000 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 costs, lower per capita consumption and
intense competition between the organized and unorganized segments
 Introduction
Fast-moving consumer goods (FMCG) sector is India’s fourth largest sector
with household and personal care accounting for 50% of FMCG sales in India.
Growing awareness, easier access and changing lifestyles have been the key
growth drivers for the sector. The urban segment (accounts for a revenue
share of around 55%) is the largest contributor to the overall revenue
generated by the FMCG sector in India. However, in the last few years, the
FMCG market has grown at a faster pace in rural India compared to urban
India. Semi-urban and rural segments are growing at a rapid pace and FMCG
products account for 50% of the total rural spending.
Main Characteristics of FMCGs:
 From the consumers’ perspective:
o Frequent purchase
o Low involvement
o Low price
o Strong brand loyalty
o Little or no effort to choose the item

 From the marketers’ perspective:

o High volumes
o Low contribution margins
o Extensive distribution network
o High stock turnover
 List of Some Companies in the Industry
Hindustan Unilever Ltd
ITC Ltd
Pidilite Industries
Amul
Godrej Consumer Products Ltd
Dabur India Ltd
Emami
Colgate Palmolive India Ltd
Zydus Wellness
Britannia
Wipro Consumer Care & Lighting Ltd
Marico
CavinKare
Parle Agro
Nirma
Himalaya Healthcare Ltd
Nestle India
Cadbury India
 Evolution of the Industry
Between 1950 and 1980, there was limited investment in the FMCG sector.
Local people had lower purchasing power, which meant that people opted for
necessity products rather than premium products. Indian government was
inclined towards favouring the local shops and retailers. Between 1980 and
1990, people wanted more variety of products which encouraged FMCG
companies to increase the availability of products. FMCG Industry started
getting traction and other companies started entering the industry. Media
industry in India also boomed during the same time which gave new
companies even more incentive to make their business profitable. Prior to
1991, when globalisation and liberalisation occurred in India, western apparels
and foreign food products were not available to local customers. Common
people weren’t very aware of brand recognition. After 1991, FMCG industry
was inspired by the international companies which also allowed government
intervention to incentivise foreign FMCG companies to operate in India.

The Indian FMCG industry generates massive employment opportunities and

currently employs more than 3 million people. Departmental stores, grocery
stores, and supermarkets are the places where consumers buy the necessary
products for daily consumption. In the 21st century, people don’t want to
move across different stores to acquire the common household goods. Hence,
the introduction of supermarkets, where customers have a variety of choices
for different household products, into localities are proving to be extremely
convenient to the customers.

Some of the most common stores in India are: Reliance Retail, Big Bazaar, D-
Mart, Easy day, MORE, Spencer’s, Spar, HyperCity, and Star Bazaar. Although
the operations of supermarkets are profitable, local grocery stores are
suffering due to lack of variety of products. Unlike other emerging FMCG
industry around the world, FMCG sector in India is still quite conventional.
Despite street markets are still one of the most visited places for shopping in
urban and rural settings, online platforms are leading the way to buy FMCG
products.

Between 1980 and 1990, people wanted more variety of products which
encouraged FMCG companies to increase the availability of products. FMCG
Industry started getting traction and other companies started entering the
industry. The media industry in India also boomed during the same time which
gave new companies even more incentive to make their business profitable.

Prior to 1991, when globalization and liberalization occurred in India, western

apparel and foreign food products were not available to local customers.
Common people weren’t very aware of brand recognition. After 1991, the
FMCG industry was inspired by international companies which also allowed
government intervention to incentivize foreign FMCG companies to operate in
India.
FMCG Sector- Present

Being the second most populated country in the world, there is no doubt that
India should be one of the countries with a pioneering and growing FMCG
market. Apparently, that is indeed what is happening right now and what is
more interesting are the products that have a greater market share.

Consumer Profile of the Industry

With an overwhelming variety of options on the market, the success of these
products depends on a huge range of factors including consumer trends,
packaging, distribution channels, brand equity, and marketing strategies.

Buyer behaviors towards traditional FMCG is pretty indifferent. There’s no

emotional connection to a disposable razor, but sure there is a growing
consciousness of the way it's impacting the environment. Combined with
wavering loyalty and demand for online convenience, a major FMCG problem
is that it isn’t changing at the pace of consumer expectations.

The next generation of consumers has higher expectations and demands for
convenience. They would happily bypass brick and mortar stores and well-
known household products, to purchase from new direct-to-consumer brands.

They’re over one-size-fits-all marketing and are increasingly drawn to

personalized and customized goods because they help eliminate the
overwhelming choice of products on the market.

Savvy and connected consumers are challenging an industry that’s historically

targeted the masses with one-size-fits-all goods. When discussing hygiene and
beauty products, there’s generic segmentation of male, female and age-
specific goods. But what’s changed is the consumer demand for higher levels
of personalization and customization. 

To ensure sustainable growth in the future, avoid leftover stock, lower margins
and lower revenue, brands need to realize the advantage of knowing more
about their individual customers.

Consumers play a crucial role in the Indian FMCG sector as the price band of
each FMCG product is fixed depending largely on the consumer class which the
particular company is targeting. A number of variants is offered by each brand
in the FMCG sector. For example, the personal care, home care, bakery
products, dairy products, processed foods are more consumed by the urban
classes whereas the personal care items and fabric care are consumed more by
the rural population.

Some of the FMCG companies like Nestle India, Cadbury, Procter & Gamble
(P&G) and SmithKline Beecham offer high-priced branded products as these
companies target the elite and upper middle-class consumers. These high-
priced branded products do not have high sales in the rural regions as much as
it does in the urban section of India.
The FMCG sector has attracted a large number of consumers in both the urban
and rural sectors in India the past few decades through better penetration and
low-priced products. Various manufacturers of FMCG products are
concentrating on increasing the sales volume due to the rising demand of the
consumers. Creativity and innovation are the major attributes required for
success in the sector. Large-scale FMCG companies have won the hearts of
consumers by delivering high-end and innovative products at affordable range.

Suppliers of FMCG Goods

ITC Ltd: Established in 1910, ITC Limited is a diversified conglomerate
with businesses spanning Fast Moving Consumer Goods comprising
Foods, Personal Care, Cigarettes and Cigars, Branded Apparel, Education
& Stationery Products, Incense Sticks and Safety Matches; Hotels,
Paperboards, and Packaging, Agri-Business and Information Technology.
ITC is among the top FMCG brands in India.

Nestle India Ltd: Nestlé is the world’s largest food and beverage
company. The company has more than 2000 brands ranging from global
icons to local favorites, and are present in 191 countries around the
world. After more than a century-old association with the country,
today, NESTLÉ India has a presence across India with 8 manufacturing
facilities and 4 branch offices. It is the third Largest in Top FMCG
Companies in India

Britannia Industries Ltd: Britannia Industries is one of India’s leading Top

FMCG Companies with a 100-year legacy. Britannia is among the most
trusted food brands and manufactures India’s favorite brands like Good
Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are household
names in India. Britannia’s product portfolio includes Biscuits, Bread,
Cakes, Rusk, and Dairy products including Cheese, Beverages, Milk, and
Yoghurt.

Dabur India Ltd: The world’s largest and leading Ayurvedic and Natural
Health Care company with 135 years of rich heritage and experience. It
is sixth in the list of top 10 FMCG companies in India 2019.Business is
divided into three Strategic Business Units, i.e., Consumer Care Business,
Foods Business, and International Business. Consumer Care Business
covers interests in Health Care and Home & Personal Care. Dabur is 7th
in the list of top FMCG brands in India.

Marico Ltd: Marico Limited is one of Top FMCG Companies in India in

the beauty and wellness sector. It is seventh in the list of top 10 FMCG
companies in India 2019. Over the last 25 Years, Marico has established
itself as a leading consumer goods company with a product portfolio
spanning across Haircare, Skincare, Edible oils, healthy foods, Male
Grooming and fabric care. Brands such as Parachute, saffola, Hair& Care,
Nihar Naturals, true roots, Livon, Set Wet, Coco Soul, Kaya Youth.

Hindustan Unilever Ltd: Hindustan Unilever Limited is India’s largest

fastmoving consumer goods (FMCG) company with a Historical presence
in India of over 80 years. It is the largest in the list of top 5 FMCG
companies in India. Nine Out of ten Indian households use one or more
of HUL Brands. Divisions – Home Care, Beauty & Personal Care and
Foods and Refreshment – includes a portfolio of brands that serve
consumers across the length and breadth of India.
 Stages of a FMCG Product
The four stages of a typical fast-moving consumer good are:

I. Introduction Stage: When the product enters in the market for the first
time, the demand for the product needs to be increased and this is
usually done by giving free samples to customers so they can try the
product before actually purchasing the full size. This stages helps the
company to identify potential issues the product might have from the
consumer’s point of view.

II. Growth Stage: After the product is introduced into the market, the sales
increase as people start to buy the product when required. The target
audience becomes aware of the product features and its benefits at this
stage.

III. Maturation Stage: Production costs usually reduce at this point as the
product would have been sold several times during the growth stage.
The price of the product usually drops and the sales are the peak.

IV. Decline Stage: Sales drop significantly at this stage, the price of the
product increases and customers tend to buy competitors’ products.
Earning profits becomes difficult
 Competition Analysis
India's huge population has always been a significant factor for the growth of
FMCG sector in the country. Between 1950 and 1980, the consumption of
FMCG products were relatively low due to the low per capita income. The post-
liberalization era in India has witnessed a massive growth in the selling of
products in the domestic market. The Indian market also imported loads of
products from overseas markets which made increased the competition
between the organized and the unorganized sector.
The easing of the trade barriers encouraged the MNCs to invest in the Indian
market to cater to the needs of the consumers. The living standards rose in the
urban sector due to high disposable income along with the rise in the
purchasing power of the rural families which increased the sales volume of
various manufacturers of the FMCG products in India. The large-scale
companies such as HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser
and Colgate have targeted the rural consumers and have also expanded their
retail chain in the mid-sized towns and villages. On the contrary to this, Nestle
has always targeted the market of urban India and focuses largely upon the
value added products for the elite class or upper middle class population.
 Economic Factors Influencing the FMCG Sector
I. Employment and Wage Levels: One of the main factors influencing the
demand for consumer goods is the level of employment. The more the
people receive a steady income the expect to continue receive one, the
more the people are up to make a discretionary purchase. Therefore the
monthly unemployment rate report is one of the economic leading
indicator that gives clues to demand for consumer goods. Another factor
would be the level of wages that influence consumer spending. If the
wages are stagnant or falling, demand for optional goods is likely to fall.
Median income is one of the best indicators of condition of wages.
II. Price and Interest Rates: Prices, affected by the rate of inflation impact
consumer spending on goods significantly. This is the reason ‘Producer
Price Index’ and ‘Consumer Price Index’ are considered as the leading
economic factor. High inflation erodes the purchasing power making less
likely that the consumers excess income to spend after spending on
essentials. Interest rates can also influence the level of spending on
goods substantially. Many consumer goods such as cars or jewellery are
purchased on credit and if the interest rates are high it may discourage
the purchase on these goods.
III. Consumer Confidence: This is also an important factor influencing
purchase of consumer goods. Regardless of their financial situation
consumers will continue to purchase greater amounts of consumers
 goods if they feel confident about both overall condition of the economy
and the personal finance future. Overall demand for consumer goods
increases if the economy producing the products is growing. An
economy that is growing will be accompanied by corresponding growth
in the demand of goods and services.
IV. Political: Political factors will have a greater influence on the
organization and industry and it is the duty of the organizations to
comply with it. It is necessary for the organizations to comply with the
legislations implemented non - conformance of which may lead to
serious implications on the organization. The government has
implemented certain restriction in the import policies.
V. Technological: Advancement in technology boost the production with
enhancement in quality of products and services rendered to the
customers. Organizations began to adopt e-business to improve brand
communication and market. Technological advancement makes the
supply chain and transactions along the chain simple. Organizations
reduced costs with effective IT technologies and increased the rate of
information transactions. Technology is playing a key and huge part in
the FMCG sector by developing the new packaging, increasing
productivity and longer shelf life of food products.
VI. International Trends: The economic crisis and slowdown had greatly
affected the sales FMCG goods across the world. However emerging
economies like India, China and Brazil are not greatly affected and
manage to do well to recover quickly. A common trend that was
followed across the world during economic slowdown was trading down.
Because, customers became more cautious looking for less expensive
brands, special offers and discounts. This added tremendous pressure on
the market prices due to severe competition and down trading. However
emerging economies like India, China and Brazil saw development in
hypermarkets helping the growth of FMCG markets in these countries.
 Degree of
Rivalry
Threat of New The degree of
Entrants rivalry is high in
Threat of new this industry.
entrants is limited There are
in this industry many local as
since the new well as global
entrants generally Threat of players. the
cater to the local Substitutes consumers
or small markets.
Also this industry The FMCG industry have a wide
requires high bears a high threats choice of
of substitues. The products and
initial cost and industry possesses
distribution many organized the switching
network which is players and the cost is almost
a challenge for products in the negligible
new entrants. industry can be
easily imitated.

Supplier Power
Supplier power is little or
limited in this industry. It has
a number of great number of
Buyer Power suppliers and the
manufacturer can easily shift
The consumer base of this industry is larger than any from one supplier to another.
other industry. The consumers have a great choice of
brands within each product. The consumers exercise
their power when they tend to shift from one brand
to another.

Porter's Five
Competitive Forces
 Government Regulations

1) Goods and Service

Tax (GST) – GST
upon being
implemented has
replaced all the
multiple indirect
taxes on the FMCG
sector with a
uniform, simplified
and single- point
taxation system.
2) Food Security Bill – The Food Security was passed recently by the
Union Cabinet. As per this bill, 5kg of food grains per person per
month will be provided at subsidized prices by the State Government
under the PDS system
3) Excise Duty – Excise Duty on other beverages and lemonade would
be decreased to reduce retail sale price by 35%. Excise duty on
various tobacco products other than beedi would be increased,
resulting in retail price of tobacco going up by 10-15%
4) Relaxation of License Rules – Industrial license is not required for
almost all the food and agro – processed industries, barring certain
items such as alcoholic beverages, cane sugar and hydrogenated and
animal fats as well as items reserved for exclusive manufacture in the
small-scale sector.
 Challenges Faced by the FMCG Sector

1) Poor Supply Chain Infrastructure: Lack of storage and transport facilities

coupled with rising costs of raw materials and energy has been a major
challenge for the Indian FMCG market. Food items tend to have a
significantly shorter shelf life and requires quick delivery systems,
regular replenishment of products on the shelf, and vast different
distribution and storage requirements. It is easier to bring home and
personal care products to consumers in rural areas of India, as the shelf
life is comparatively longer compared to food & beverage products such
 as milk, chocolate, and ice-cream, which have a shorter shelf life and
need investments in cold storage facilities.

2) Multiple Micro Markets: Multiple micro-markets across geographies

have distinct needs, which triggers category preferences that vary from
state to state and from one district to another. This poses a continuous
challenge for players to balance out the market needs and the
inefficiencies related to customization.

3) Large Geographical Expanse: Large states in India such as Madhya

Pradesh presents a problem of large distances between two adjacent
markets. This has a crippling effect on viability of channel partners,
which are serving the isolated markets.

4) Limited Cold Chain Infrastructure: Growth of many categories have

been severely constrained by the lack of cold chain infrastructure in the
Indian market landscape.

5) Multiple Layers of Taxation: Multiple and inconsistent taxes levied on

FMCG products have made it difficult for the companies to offer their
products at a proper/consistent price. Implementation of GST would
simplify taxation system in the country; thereby, reducing the burden of
optimum product pricing amongst the companies.
PESTEL ANALYSIS
 Low operational costs
Presence of establised distribution
networks in both urban and rural areas
Strengths Well known brands in FMCG Sector

Lower scope of investing in technology and achieving

economies to scale, especially in small sectors
Low export levels
Weaknesses Counterfiet Products

Untapped rural market

Rising Income levels ie increase in purchasing power
Large domestic market
Opportunities Export Potential

Removal of import restrictions resulting in

replacement of domestic brands
Slowdown in rural demand
Threats Tax and regulatory structure
 Future of the FMCG Sector
India has rapidly growing demand for daily use of goods and services.

In the FMCG Sector, new production facilities are equipped with

machines to decrease wastage during production

The transportation facility and infrastructure development are

improving the methods of distribution in many areas including remote
areas in India

There are economical packages and one time use packs for the general
population who have less spending capacity or need simple unit packs

With new packaging technologies, FMCG companies are able to innovate

and manufacture long lasting products with minimum damage to
packaging during transportation.
 Government Initiatives
Some of the major initiatives taken by the Government to promote FMCG
sector are as follows:
1. On November 11, 2020, Union Cabinet approved the production-linked
incentive (PLI) scheme in 10 key sectors (including electronics and white
goods) to boost India’s manufacturing capabilities, exports and promote
the ‘Atmanirbhar Bharat’ initiative.
2. Developments in the packaged food sector will contribute to increased
prices for farmer and reduce the high levels of waste. In order to provide
support through the PLI scheme, unique product lines with high-growth
potential and capabilities to generate medium- to large-scale jobs have
been established.
3. The Government of India has approved 100% FDI in the cash and carry
segment and in single-brand retail along with 51% FDI in multi-brand
retail.
4. The Government has drafted a new Consumer Protection Bill with
special emphasis on setting up an extensive mechanism to ensure
simple, speedy, accessible, affordable and timely delivery of justice to
consumers.
5. GST is expected to transform logistics in the FMCG sector into a modern
and efficient model as all major corporations are remodelling their
operations into larger logistics and warehousing.
Executive Summary 6

Research Methodology 7

Project Objectives 8

Introduction 10-14

Consumer profile 15-16

Suppliers of FMCG Goods 17-21

Competition Analysis 22

Financials of sector 23

Factors Affecting the sector 24-28

PORTER’S 29

Government regulation 30

Challenges 31-32

SWOT Analysis of the Sector and PESTEL 33-34

Future of the FMCG Sector 35

Company Analysis 36

About the Company 37-40

Purpose & Principles 41-42

Genesis of the Company 43

Products Offered 44-47

Position of HUL 48-49

Rural Marketing Strategy 50

Stakeholders 51-54

Challenhes 55-56

Locational Details 57-58

Financials 59-60

SWOT & Porter’s 61-62

Conclusion 63-64

Ref 65