Introduction

FMCG The fast-moving consumer goods sector is the India’s 4th largest sector
Growing awareness, easier access and changing lifestyles have been the key growth of the
FMCG sector. It is considered as a barometer of consumer demand in every country.
The FMCG market has grown at a faster pace in rural India compared to urban India.

Economic analysis
An economic analysis of a company focuses mainly on how much profit it is making.
Economists say that economic analysis is a systematic approach to find out what the
optimum use of scarce resources is.
The following are the fundamental analysis of the Economic analysis

1. GDP
Means the final value of Goods and services produced in a company / country with in a
particular period, let say a year.

GDP contribution to the country by FMCG sector. FMCG stood at 4 th place in the Indian
economy. The revenue generated in the year 2018 was 3.4 lakh crore and it is estimated to
reach 7.6 lack crore in 2020. The market is expected to grow at 9-10% and it contributes
around 36% to the overall FMCG spending.
This sector is mainly divided into three categories Household & Personal care products cover
almost (50%) of the total sales, Healthcare (31%), Food & Beverages (19%) accounts FMCG
sales

Here is the list of top 10 players in the industry and its

market share percentage.
 2. Inflation and Deflation

Inflation means the rise in the level of prices whereas deflation means fall in prices

Indian consumers are price sensitive, as the economy was growing at a faster rate along
with low input prices therefore the inflation is low. A higher inflation might actually be good
for the overall sustenance of wages and incomes and also of employment in this country,
says Suresh Narayanan, Chairman & MD, Nestle India NSE 0.97 %.
Once the panic of this covid situation settles down, most certainly, some amount of
inflation would come in. This year the food inflation is very high around 12%, and the raw
material cost has increased up to 15 to 20 percent compared to last year. Therefore the
demand will come back gradually. Certainly there would be some higher inflation which
might actually be good for the overall sustenance of wages and incomes and also of
employment in this country.

3.Fiscal and Monetary Policies

Fiscal policy involves the use of government spending, direct and indirect taxation and
government borrowing to affect the level and growth of aggregate demand in the economy,
output and jobs.
Monetary policy refers to the actions of central banks to achieve
macroeconomic policy objectives such as price stability, full employment, and stable
economic growth. 

Net Financial Expenses and Income Tax

Net financial expenses grew by 33.5% to CHF 1.0 billion, largely reflecting an increase in
average net debt during the year.
The Group reported tax rate decreased by 550 basis points to 21.0% due to exceptional
items including the sale of Nestlé Skin Health. The underlying tax rate declined by 220 basis
points to 21.6%, mainly due to the evolution of the geographic and business mix.

Future of FMCG Sector in India

India has a rapidly growing demand for daily use of goods and services.
In the FMCG sector, new production facilities are equipped with machinery to decrease the
wastage during production.
The transportation facility and infrastructure development are improving the methods of
distribution in many areas including remote areas of India.
There are economical packages and one-time use packs for the general population who
have less spending capacity or need the simplicity of unit packs.
With the most recent packaging technologies, FMCG companies are able to innovate and
manufacture long-lasting products with minimum damage to packages during
transportation.

Driving factors leading to growth rate

• Increased population of working women
• Increased disposable income and growing per capita expenditure
• Increased purchasing power of the customers
• Increased awareness of online shopping
• Higher brand recognition and consciousness
• Constant change in consumer preference
• Banking policies and government's regulations
• Growing interest for foreign investors

Characteristics
1.Technology
Since the emergence of internet, people have adopted the Research online, purchase offline
(ROPO) method. As a result, FMCG companies have installed advanced manufacturing
machines for better quality purpose and have decreased their profit margin to match with
their competitors.

2.Marketing drive and research

Indian customers prioritise getting the best deals possible and as a result are less likely to
stay loyal to a brand. Thus, FMCG companies are constantly trying to influence customers
with their promotional deals and many firms offer combo deals to attract customers to buy
their product.[8]

3.Low capital intensity

Most of the companies operating in FMCG require relatively less capital for investments in
manufacturing plants, machinery, equipment and other fixed assets. Companies have low
capital intensity as transactions in businesses are still carried out on credit and cash basis.

4.High initial launch cost

India's industry is highly fragmented. Increasing the market share for companies is getting
more challenging due to increase in number of competitors. Promotions and
advertisements, the launch of the product to create awareness requires high initial costs.

Trends
1.Increase in number of government initiatives
focus has been shifting towards education, agriculture, healthcare, infrastructure, tax rebate
and micro, small and medium enterprises. any increment in income will be directly
proportional to demand in FMCG products.

2.Changes in lifestyle and traditional culture

Change in lifestyle and traditional culture is also having a positive impact on the FMCG
industry. population in urban areas are diverging towards premium products because of rise
in income of the middle class people

3.Changes in policies and regulations

With the implementation of Goods and Services Tax GST council has reduced the tax rates
down to 5% on most of the processed food items, increasing the consumption of food
products.[7] Other personal care products have also seen a reduction in GST to 18% against
the previous 23-24%.

4.Rising advertisement cost by FMCG companies

FMCG companies in India have increased their expenditure cost for sales promotions and
advertisements by 10-20% to establish a strong customer base and also to reduce market
competition.

Government Initiatives to Promote FMCG Sector

The government has allowed 100% Foreign Direct Investment (FDI) in food processing and
single-brand retail and 51% in multi-brand retail.
Consumer Protection Bill came with a special focus to ensure simple, speedy, accessible,
affordable and timely delivery of justice to consumers.
The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG
products are under 18% tax bracket against the previous 23-24% rate.
The 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 facilities