A PROJECT REPORT ON

A Study on Changing trends in the FMCG

Industry in India

Yash Mahendra Kadam Meenakshi

Under the guidance of

Prof. Abhijit Rane

Head of the Department

Prof. Mangal Singh Rawat

Vidyalankar School of Information Technology

Wadala (E), Mumbai 400037

2020 - 2021
I hereby acknowledge all those who directly or indirectly helped me in drafting
of this project report. It could not have been possible for me to complete the
task without their help and guidance.

First, I would like to thank the principal Dr. Rohini Kelkar and Vice
Principal Mr. Vijay Tawde, and my project in charge Mr. Abhijit Rane who
gave me the opportunity to do this project work. They also conveyed the
important instructions from the university time to time. Secondly, I am very
much obliged of Mr. Abhijit Rane for giving the guidance for completing this
project.

Last but not the least: I am thankful to the university of Mumbai for
offering the project in the syllabus. I just mention my hearty gratitude
towards my family, other faculties and friends who supported me to go
ahead with the project.
 Declaration
Vidyalankar School of Information Technology
(Affiliated to University of Mumbai)
Vidyalankar Marg, Wadala (E),
Mumbai 400 037.

I Yash Kadam , student of T.Y. Bachelor in Management studies

Semester VI, Vidyalankar School of Information Technology, hereby
declare that I have completed the project on “A study on changing
trends of FMCG sector in India ” in academic year 2020-21.
The information submitted is true and original to the best of my
knowledge.

Signature of student

Yash Kadam
 Abstract
The study taken up by us pertains to the study Dynamics of distribution of FMCG
industry. We have tried to study and understand the ideologies of the distribution
with regards to FMCG sector and further how much interaction is there, how much
feed back is there, how much successful are the companies in utilising distribution
network in boosting the sales and establishing its brand equity. The project can
be divided in two parts. In the first part – the current or the present status of
distribution, its changing face and the transition from push to pull environment
and lastly current distribution set up of FMCG sector is studied by means of
literature survey. In the second part -we visited companies like HLL, AMUL,
NESTLE, and BRITANNIA and administered questionnaires to the executives of
the concerned department and studied the distribution set-up of the respective
company. Secondly also studied the implication of the companies in near future
i.e. in the era of globalisation and IT. This part was cumbersome as nothing was
organised and as such I had to go in a random fashion. On a whole it was a good
learning experience, as one is able to understand distribution dynamics not with
the help of books but with the help of real learning – in the real world
 Executive Summary
This report an analysis and evaluation of the current and prospective profitability
and financial performance of FMCG industry mainly in India. We look in the 5 major
FMCG player in India. HUL ITC ,GODREJ ,DABUR ,and P&G .We get an insight
into their sales product segment ,profitability ,flexibility, brand loyalty as well as
consumer’s awareness .The report consist of all the acquisition and mergers
respective company have done . PEST analysis of the FMCG industry talks about
the basic Political, Social, Economical and technology of the respective FMCG
industry . PEST analysis help the respective industry to overcome the future
challenges . The methods of the data collection is done in term of the net sail ,RSD
,AD expenditure ,Fund flow and PBITM . We have also analyzed the data with the
help of hypothesis testing . As there are more than 2 company , we have taken
ANOVA test to compare the profitability of the respective FMCG companies in
India . we have also compared the FMCG of India with BRICS nation .We have
also looked in the future outlook and opportunities of the industry as whole

The report draws attention to the facts that getting insides the FMCG industry is
quite easy but sustaining in the market in the marketing is the big challenges .In
order to obtain sustainability ,they need to build a brand value inside the mind of
consumer . Moreover the results data analysis show that different FMCG
companies have different level of profitability as well as brand value . Their net
sales , operating profit and PBIT also differs as per the company and years . ITC
is leading company among these 5 FMCG players

As we know, a business start with customers and ends with the consumers ,
company should focus on the need and wants of the consumer’s and try to provide
value added services and products. They should try to differentiate themselves
from their competitors. Differentiating the product in FMCG industry can be only

pg. 6
be done by creating the brand value among the consumer’s

Recommendation discussed includes

In order to make their business more profitability and to satisfy their consumer as
far as possible they need to carry out different approach towards different product.
They should now focus more into the rural area. The main reason is because
targeting rural areas will be lucrative for them. FMCG players have already covered
urban area

Moreover, as the profitability of different FMCG industries varies, they need to

focus on promotional activities in order to increase their sales. others options is
trying to increase their sales in other countries that by increasing export

FMCG players should try to provide product that are different from other
companies that will help to differentiate from others and also helps to create a
brand value as well as loyalty

pg. 7
 Index
Sr. no Particulars Page no.
1. Cover page 1
2. Certificate by college 2
3. Acknowledgement 3
4. Declaration 4
5. Abstract 5
6. Executive summary 6
7. Index 8
Chapter 1 Introduction to the study 10
1.1 Objective of the study 34
1.2 Hypothesis of the study 35
1.3 Limitations of the study 35
1.4 Scope of the study 36
1.5 Methodology 38
Chapter 2 Introduction to the study 39
Chapter 3 Review of literature 63
Chapter 4 Analysis and case study 70
Chapter 5 Findings 75
Chapter 6 Annexures: questionnaire 82
Chapter 7 Conclusions 85
Chapter 8 Suggestions 87
Chapter 9 Bibliography 90

pg. 8
 ‘’ A STUDY ON
CHANGING TRENDS IN
THE FMCG INDUSTRY IN
INDIA ‘’

pg. 9
 Chapter -1
Introduction
Overview of Indian FMCG Sector

Evolution of FMCG In India

The Indian Fast Moving Consumer Goods (FMCG) industry began to shape during
the last fifty odd years. The growth of FMCG industry was not significant between
1950’s to the 80’s. The FMCG industry previously was not attractive from investor’s
point of view due to low purchasing power and the government’s favoring of the
small-scale sector. FMCG’s growth story further continued following the
deregulation of Indian economy in early 1990s. With relatively lesser capital and
technological requirements, a number of new brands emerged domestically as
well, while the relaxed FDI conditions led to entry of many global players in this
segment. These factors made FMCG market in India highly competitive and one
of the important contributor in the Indian economy. In the mid - nineties, the growth
of the sector was very fast where as it declined rapidly at the end of the decade.
The initial growth was due to increase in product penetration and consumption
levels.Riding on a rapidly growing economy, increasing per-capita incomes, and
rising trend of urbanization, the FMCG market in India is expected to further
expand to $100 billion by 2025.

India has always been a country with a big chunk of world population, be it the
1950's or the twenty first century. In that sense, the FMCG market potential has
always been very big. However, from the 1950's to the 80's investments in the
FMCG industry were very limited due to low purchasing power and the
government's favouring of the small-scale sector. Hindustan Lever Limited

pg. 10
(HLL) was probably the only MNC company that stuck around and had its
manufacturing base in India. At the time, the focus of the organised players like
HLL was largely urbane. There too, the consumers had limited choices. However,
Nirma's 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.

MNC's like HLL, which were sitting pretty till then, woke up to new market realities
and noticed the latent rural potential of India. The government's relaxation of norms
also encouraged these companies to go out for economies of scale in order to
make FMCG products more affordable. Consequently, today soaps and
detergents have almost 90% penetration in India.

Post liberalisation not only saw higher number of domestic choices, but also
imported products. The lowering of the trade barriers encouraged MNC's 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
everything from a low-end detergent to a high-end sanitary napkin. Their strategy
has become two-pronged in the last decade. One, invest in expanding the
distribution reach far and wide across India to enable market expansion of FMCG
products. Secondly, upgrade existing consumers to value added premium
products and increase usage of existing product ranges.

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 major's distribution network (P&G-Marico). Consequently,
companies that have taken to rural India like chalk to cheese have seen their sales
and profits expanding.

pg. 11
There are others, like Nestle, which have till date catered mostly to urban India but
have still seen good growth in the last decade. The company's focus in the last
decade has largely been on value added products for the upper strata of society.
However, in the last couple of years, even these companies have looked to reach
consumers at the slightly lower end.

One of the biggest changes to hit the FMCG industry was the 'sachet' bug. In the
last 3 years, detergent companies, shampoo companies, hair oil companies,
biscuit companies, chocolate companies and a host of others, have introduced
products in smaller package sizes, at lower price points. This is the single big
innovation to reach new users and expand market share for value added products
in urban India, and for general FMCG products like detergents, soaps and oral
care in rural India.

Another interesting phenomenon to have hit the FMCG industry is the

mushrooming of regional companies, which are posing a threat to bigger FMCG
companies like HLL. For example, the rise of Jyothi Laboratories, which has given
sleepless nights to Reckitt Benckiser, the 'Ghari' detergent, that has slowly but
surely built itself to take on Nirma and HLL in detergents, and finally, the rise of
'Anchor' in oral care, which has become synonymous with 'cat', which walks away
with spoils when two monkeys fight (HLL and Colgate). There are numerous other
examples of this.

From an investor's point of view, Indian FMCG companies do offer long-term

growth opportunities given the low penetration and usage in most product
categories. To choose the best investment opportunities look at the shapers (i.e.
innovators) that have been constantly proactive to market needs and have built
strong, efficient and intelligent distribution channels. Management vision to growth
is the key, as consumers going forward are likely to become even more
sophisticated in their demand.

pg. 12
INTRODUCTION

The Word FMCG stands for Fast Moving Consumer Goods ; products which are
consumed at faster rate and are recurring in demand. The FMCG sector has
grown at an annual average of about 11% over the last decade. The FMCG
products are generally low cost products such as toiletries, Processed Food, Soft
drinks etc. Indian FMCG industry is the fourth largest sector in the economy with
total market size in excess of US $ 49 billion. Population of India makes our
country an attractive destination for Multinational FMCG rms.

All most all the MNCs have presence in India with their subsidiaries. Cadbury,
Nestle, Unilever, Colgate, J&J are some of the major MNCs which have
substantial exposure in Indian Market. With Increasing purchasing power and
rising middle class the FMCG industry is poised to grow at faster speed. The
distribution network is key to success of any product as its effectiveness will
enhance the consumer experience. Traditionally the FMCG industry depends on
conventional distribution network of Stockiest, Wholesaler And retailor.

With the technological advancement and shift in consumer behaviour the ways of
distributing the products is also changing. The Hyper markets, Super Markets
and modern trades have become integral part of urban lifestyle. Easy home
delivery and convenient payment options have made Online purchase of FMCG
products very popular in Urban India. Online shopping in India is taking new
shape beyond Mobile,

Apparel and electronics items as FMCG rms and modern retailers attempts to
reach out the consumers to sell essential items such as Grocery , Toiletries
through internet. FMCG companies have started using the online medium not
only for promotion of product but also for sales. A recent report says that online
distribution will inuence one third of total sales of FMCG sector in next ve years.
The huge potential of online purchasing has caught the attention of top FMCG

pg. 13
companies such as Dabur, Bisleri, ITC, Marico which have started pushing their
product thorough online route. Some of them have already launched their own e-
commerce portal and many are selling their products through popular online
companies such as Amazon and Flipkart . There are many Ecommerce
companies like BigBasket, AaramShop.com which are exclusively selling only
FMCG products on their platform.

Indian FMCG market can be divided into urban and rural markets. The
purchasing behaviour in these markets gives one the inside into the changing
scenario of the industry. A decade ago it was hard to associate the rural
customers with Brands and value for money concept but with technology and
growing rural economy the rural customers also became cautious and aware
about Brands.

The top FMCG companies have become aggressive in distributing their products
in these markets with retail outlets and strong distribution network. Today's Indian
Urban customers are some of the most condent in the world. They are value
conscious, demanding and evolving bunch of buyers. They are more
experimental and willing to try out new products. One can witness this with the
growth and entry of foreign brands.

Their focus if shifting from regular FMCG products of soaps, oils , creams to
health and wellness product like Olive oils, Sugar substitutes, Breakfast Cereals.
More and more customers are shifting towards online purchase of FMCG
products.

FMCG refers to consumer non-durable goods required for daily or frequent use.
Typically, a consumer buys these goods at least once a month. The sector covers
a wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos,
creams, powders, food products, confectioneries, beverages, and cigarettes.
Conceptually, however the terms refer to relatively fast moving items that are used

pg. 14
directly by the consumer’s. Thus, a significant gaps exist between the general use
and the conceptual meaning of the terms FMCG.

. FMCG sectors is India’s 4th largest sectors with household and personal care
accounting for 50%of FMCG sales in India. Growing awareness, easier access
and changing lifestyle have been the key growth drivers for the sectors. The urban
segment (accounts for a revenue shares of arounds 55%) is the largest contributor
to the overall revenue generated by the FMCG sector in the India. However, the
last few years , the FMCG markets has grown at a faster pace in rural India
compared to urban India . Semi-urban and Rural segment are growing at a rapid
pace and FMCG product account for 50% of the total rural spending

The fast moving consumer goods sectors is the key contributor of the Indian
economy .this 4th largest sector of Indian economy provides employment to around
3 million people which account for approximately 5% of the total factory
employment in the country. These product are daily consumed by each and every
strata of the society irrespective of social class, income, age group, etc . FMCG
sectors is more lucrative because of low penetration levels , well established
distribution network , low operating cost ,lower per capita consumption ,large
consumer base and simple manufacturing process for most of products resulting
in fairly low capita investments

FMCG goods , popularly named as consumer packaged goods ,play a vital roles
as a inelastic products . rural India accounts for 70%of India’s population 56% of
National incomes , 64% of total expenditure and 1/3 of the total savings . The
Indian FMCG sectors is the 4th largest sectors the economy with the total size of
167,100cr

FMCG are slowly gradually positioning and deeply penetrating in the past growing
rural market . The FMCG sectors in India continues on a strong growth path with
both Urban and Rural India contributing to its growth . The rural India contributes

pg. 15
1/3 of FMCG sales in India

Growth driven by increasing consumptions led by rise in incomes , changing

lifestyle and favorable demographic. The industry is highly competitive due to
presence of multinational companies , domestic companies ,unorganized sectors
.A major portion of the markets is captured by unorganized players selling
unbranded and unpackaged products

Packing is critical for FMCG . To become successful in the highly dynamic and
innovative FMCG segment a company not only has to be acquainted with the
consumers , brands and logistics , buts also ,it has to have a sound understanding
of packing and products promotions . The packaging and product promotion .The
packaging has to be both hygienic and customers attracting . Logistics and
distribution systems often requires secondary and tertiary packaging to maximize
efficiency .Units or primary packaging protects product and extends shelfs life
while while providing product information to consumers

The profits margin on FMCG products can be relatively small, but they are
generally sold in large quantities , Thus the cumulative profits on such product can
be substantial According to BASES 84%of professional working for FMCG are
under more pressure to quickly bring new products to the market than 5 or 10 years
ago With this in minds ,47 of those surveyed confessed that product testing suffers
most when deadlines are accelerated

The FMCG segment in India is already the 4th largest sectors of the Indian
economy . The Retail market for FMCG product was$840 bn in 2017 and is
expected to scale $1.1tn by the year 2020 . What is unique about the FMCG
sector is the strong contribution the balance 45% .The overall FMCG segment is
dominated by the house hold and personal care segments , which accounts for
50% of the overall sectors

pg. 16
Urban Indian account for 66% of total FMCG consumption , while rural India
account for the remaining 34% . however , rural India account for than 40% of the
consumption in major FMCG categories such as personal care ,fabric care, and
hot beverage . as per the analysis by ASSOCHAM , company like HUL and
DABUR India generate half of their sales from rural India
While Colgate Palmolive INDIA and Marico constitute nearly 37% respectively

Many fast moving consumer goods have a short life , either as a results of high
consumer demand or as the result of fast deterioration . Some FMCG’s such as
meats , fruits , vegetables , dairy product, and baked product are highly perishable
.Other goods , such as pre-packaged , soft drinks , candies and toilet have turnover
rates .Sales are sometimes influenced by holiday and /or seasonal periods and the
discount offered

FMCG stands for Fast-Moving Consumer Goods. The products you are using in
everyday life - toiletries, dairy products, confectionery items etc. all belong to this
category. In India, the household and personal care categories of FMCG account
for almost 50% of the sector.
Back in 2019, a fall in the demand from rural areas resulted in a slowdown of the
industry. The slowdown crept its way into 2020 and was further worsened due to
the pandemic. However, as the business picks up pace, there are some changing
trends in the FMCG sector worth noting.

The big firms 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 MNC’s and balance by Indian companies .15 companies own these 62
brands .and 27 of these are owned by HUL .Pepsi is at number three followed by
Thumbs Up, Britannia takes 5th place. Followed by Colgate, Nirma, Coca Cola
PARLE these are figures the soft drinks and cigarette have always sied away

pg. 17
revealing , personal care, cigarette and soft drinks are the 3 biggest categories in
FMCG . Between them , they account 35 of the top 100 brands . According to a
report of the federation of Indian Chambers Of Commerce and Industry , several
FMCG registered double digit growth in value terms, for examples shaving cream
20% , hair dyes 25%, shampoos 155 ,Deo 40% , coconut oil 10% ,cleaner and
repellent 20% . On the country , negative growth of up to 8% was register in product
such as personal healthcare ,laundry soap , dish wash , toilet soap and tooth paste.

The FMCG sector has been the cornerstone of the Indian economy. Though, the
sector has been in existence for quite a long time, it began to take shape only
during the last fifty-odd years. To date, the Indian FMCG industry continues to
suffer from a definitional dilemma.

In fact, the industry is yet to crystallize in terms of definition and market size, among
others. The sector touches every aspect of human life, from looks to hygiene to
palate. Perhaps, defining an industry whose scope is so vast is not easy. After
witnessing booming sales and flooding markets with innumerable products, FMCG
companies have had to abruptly apply the brakes and look for various ways to
save costs.

The RS. 52,000 crore (listed companies) FMCG industry in India, which has been
on a roll for many years, faces tough times ahead, although many segments still
shows good growth. Fast Moving Consumer Goods (FMCG) goods are popularly
named as consumer packaged goods. Items in this category include all
consumables (other than groceries/pulses) people buy at regular intervals.

The most common in the list are toilet soaps, detergents, shampoos, toothpaste,
shaving products, shoe polish, packaged foodstuff, and household accessories
and extends to certain electronic goods. These items are meant for daily of
frequent consumption and have a high return. The Indian FMCG sector is the

pg. 18
fourth largest sector in the economy with a total market size in excess of US$ 13.1
billion.

It has a strong MNC presence and is characterised by a well established

distribution network, intense competition between the organised and 9
unorganised segments and low operational cost. Availability of key raw materials,
cheaper labour costs and presence across the entire value chain gives India a
competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in
2003 to US$ 33.4 billion in 2015.

Penetration level as well as per capita consumption in most product categories like
jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped
market

Typical characteristics of FMCG products: -

● Individual items are of small value. But all FMCG products put together
account for a
significant part of the consumers budget.

● The consumer keeps limited inventory of these products and prefers to

purchase them
frequently, as and when required. Many of these products are perishable.

● The consumer spends little time on the purchase decision. Rarely does
he/she look for
technical specifications (in contrast to industrial goods). Brand loyalties or
recommendations of reliable retailer/ dealer drive purchase decisions.

● Trial of a new product i.e., brand switching is often induced by heavy

pg. 19
 advertisement,
recommendation of the retailer or neighbours friends.

● These products cater to necessities, comforts as well as luxuries. They

meet the
demands of the entire cross section of population. Price and income elasticity of
demand varies across products and consumers

● This create huge job opportunity for employment (it may be as a channel
partner of any brand ) Large number of retailer, wholesaler ,distributor or
warehouse and logistics give a huge opportunity for employment

TRENDS
Global Concentration
Major global consumer product companies (such as Unilever, P&G, Colgate,
Nestle, Heinz) have a lion's share of the global market. These companies have
been established for a very long time and possess a clutch of strong brands with
proprietary technology. Most of these companies are cash rich and well managed.

Their brands generate strong cash flows and allow them to reinvest in
strengthening their brand equity further, with continued promotions/
advertisements. (Harvard Business Review, Sept-Oct, 2004) They also have the
financial clout to acquire small local brands to strengthen their position in the
category. These companies also make considerable investment in R&D to
sharpen and maintain their edge in the business.

Growth Is In The Third World

Most of the global majors have their origins in Europe or USA. They find their
home markets saturated and are banking on the third world for future growth.
These companies are setting up shop and are aggressively expanding their base

pg. 20
in these countries. They also look out for opportunities to acquire local brands to
push start or consolidate their position in these markets.

Value For Money

During the last 4-5 years, particularly after reduced consumer spending during the
global recession, the new buzz word is value for money. FMCG companies
globally have embarked upon major re-structuring/ cost cutting exercises as the
business has become fiercely competitive. Also, several innovations in packaging
media have taken place. (CMIE reports)

Adapting To Local Conditions

In the last few years, process of adapting to local conditions has accelerated.
MNCs are adapting their products, process and marketing communication to the
local conditions. They alter the manufacturing process to maximize use of local
raw materials and suit their products to the taste and requirements of local
consumers. This process has been necessitated by the imperative to be cost
effective and be competitive vis-a-vis strong local players.

Packaging
The role of packaging has increased significantly in recent times, partly due to
improvement in packaging technology. Traditionally, packaging was expected to
serve the purpose of protection and economy. Then, packaging was expected to
fulfill the objective of convenience. (Kotler Philip, 2003)Today, packaging is used
as an effective tool for promotion. Besides, new packaging technology has
enabled most FMCG companies to significantly reduce their packaging costs.
Rural distribution Increased focus on rural distribution has increased logistics
spend for the leading companies.

pg. 21
Top 10 FMCG Industry Trends in 2021

1. Sustainability
Consumers are becoming more conscious about climate change and its impact
on the environment. Thus, they pay more attention to companies’ social activity
and seek those that support them in making more responsible choices. As
sustainability comes to the forefront, companies not only address how they
present and package their products but also what materials they use in their
products. To meet consumer demand, more and more FMCG companies
offer compostable, recyclable, and reusable packaging. Additionally, cruelty-free,
vegan ingredients are on the rise not only in food but also in non-food items such
as cosmetics and cleaning products.
o Flexi-Hex produces Plastic-Free Packaging
British startup Flexi-Hex produces environmentally-sustainable packaging that
helps FMCG companies reduce the amount of packaging waste. The startup
offers adaptable, plastic-free solutions their patented honeycomb design made
from recycled paper. The startup aims to remove plastic from the packaging
industry and raise awareness of the threat that plastics pose to the world’s
oceans.
o Vegshelf develops a Digital Platform for Healthy Products
To meet the increasing demand for healthy products, German
startup Vegshelf develops a digital business-to-business (B2B) platform
connecting vegan FMCG brands with online stores, supermarkets, and food
services. The platform enables round-the-clock exposure and direct access to
buyers. Vegshelf shortens the sales cycle, in turn, helping FMCG brands build
and maintain relationships with new and existing customers.

2. Customer Experience
With the demand for convenience increasing in the FMCG sector, companies
strive to significantly improve customer experiences. Startups employ Augmented
Reality (AR) and Virtual Reality (VR) to make products more engaging and

pg. 22
interactive. 3D videos and gamification attract and entertain customers while
providing them with more information about the product. Further, investing in
improving customer experiences builds trust and increases brand loyalty. To this
end, more and more companies are providing higher convenience with digital
technologies.
o Chekkit offers a Consumer Intelligence Solution
Nigerian startup Chekkit offers a consumer intelligence solution to improve
customer engagement. The solution brings FMCG companies closer to
those buying their products through personalized messaging &
communication. Chekkit enables FMCG companies to push product
surveys and messages to consumers based on their purchase behaviors.
Further, the solution runs automated reward campaigns and drives repeat
purchases using loyalty programs.
o DRNKAR develops AR Solutions for FMCG
Singaporean startup DRNKAR’s solution consists of AR Social Media,
an AR Mobile App & AR Platform. AR Social Media entices shoppers
through ads and social media activity and redirects them to make a
purchase on the website. The AR Mobile App offers 2D and 3D animation
to display extended product details while the AR Platform enables FMCG
companies to control and manage their content and product information, as
well as get insights into consumer behavior. Overall, the startup’s solutions
create memorable customer experiences and improve consumer
engagement.

3. Digitalization
Digitization is increasingly becoming a priority for FMCG brands as customers
interact with brands across multiple online and offline channels. Companies get
access to valuable data from multiple sources including various social media
platforms, web, and mobile applications, and also engage with their customers
directly. Integrating digital technologies not only offers an omnichannel
experience to customers but also converts one-time buyers into repeat customers.

pg. 23
 o Gladminds builds a Customer Connect Platform
Indian startup Gladminds offers a cloud-based platform that acts as a two-
way communication channel between brands and customers.
Gladminds’ Connected Platform allows companies to leverage their brand
experience and create value for the customer. For example, the startup
enables optimizing and personalizing services, marketing, and
communication, among other functions. This connects brands with
consumers and ensures prolonged product support and engagement.
o Repeat develops a Smart Replenishment Platform
US-based startup Repeat works on a Smart Replenishment platform to turn
one-time buyers into repeat customers. The startup powers frictionless
reordering experiences that are easy from the customer-end and increase
revenue for companies. The solution analyzes order data to determine
baseline replenishment intervals and automates replenishment workflows
to increase operational efficiency.

4. FMCG e-Commerce
The share of sales coming from e-commerce is increasing exponentially.
The outbreak of the COVID-19 pandemic has further shifted consumers’ shopping
habits towards online channels. Brands are now building their online presence to
boost their engagement with consumers. Social media also plays a significant role
in the world of e-commerce as more items are sold via social platforms such as
Instagram. To this end, FMCG startups actively incorporate diverse social
traditional and media, leveraging mobile and headless commerce, to market their
products.
o Crystallize offers a Headless eCommerce Solution
Norwegian startup Crystallize provides an API driven eCommerce platform
for subscription-based businesses models. The startup’s software delivers
APIs for product information and content management to digitize the sales
process. The headless content management is powered by a semantically
structured content engine that enables brands to build and deliver content

pg. 24
 in different languages, market and sell their products online as well as offer
product subscriptions.
o Squarelovin offers Social Commerce Solutions
German startup Squarelovin offers solutions for Instagram analytics, social
commerce, and visual marketing. The startup enables brands to boost their
eCommerce and visual content strategy with user-generated content to
build marketing campaigns, grow engagement and increase conversion
rates. For example, brand-related content from Instagram can be placed on
all channels, including websites, other social media channels, newsletters,
and offline media.

5. Big Data & Analytics

FMCG companies actively leverage Big Data to innovate and compete in the
industry. As data is becoming more and more accessible with consumers
shopping online, brands explore new ways to increase relationships with their
customers and gain insights from their behavior. Data analytics explores customer
preferences and behavior to provide FMCG companies with a deeper
understanding of their customers. Big data solutions allow brands to optimize
communication with their customers and offer more personalized experiences.
o Zhimatech develops a Consumer-based Data Platform
Chinese startup Zhimatech builds a consumer-based data operation
platform taking into account offline behavior data within shopping centers.
Through its Re-ID technique, the startup accurately analyzes traffic flow
within shopping malls. Combined with online data, Zhimatech creates
customer composition insights. The startup also monitors on-site traffic
distribution and helps determine the value of individual shops. Further, this
data can be used to guide marketing activities from planning to promotion.
o Massive provides a Consumer Reviews Analytics Solution
Italian startup Massive develops a consumer reviews analytics solution.
The company leverages Artificial Intelligence to monitor eCommerce
websites to read and understand consumer feedback. The data collected

pg. 25
 provides FMCG companies with insights that support consumer-centric
business strategies.

6. Artificial Intelligence
AI-powered solutions, such as machine learning (ML) and natural language
processing (NLP) are gaining popularity and create opportunities for the FMCG
industry. For instance, voice-based systems support consumers round-the-clock
to find products and serve customers, in addition to recommendation engines that
provide personalized product suggestions. By implementing AI-based solutions,
FMCG companies provide an enhanced customer experience thereby increasing
customer satisfaction and retention.
o Letmetalk offers Conversational AI Solutions
Canadian startup Letmetalk offers chatbots powered by Artificial
Intelligence to drive up sales and customer satisfaction. The automated
system allows for smooth and personalized marketing, as well as
conversations with more than one client at a time. The startup enables
FMCG companies to make contact with and build relationships with
potential customers, improves conversion rates, and customer service.
o Hosted Bots builds Chatbots and Virtual Assistants
Australian startup Hosted Bots builds chatbots and personal virtual
assistants for multiple platforms to increase customer engagement. The
startup offers a modular system in which companies create building blocks
from small bots, group them together to make a complex chatbot, and
customize it according to their needs. The chatbots can be used in multiple
channels depending on the type of interaction companies have with their
customers.

7. Direct Distribution
More and more FMCG companies are leveraging direct distribution to increase
customer loyalty and ensure growth. For example, manufacturers directly interact

pg. 26
with their end-customers through their own online and offline distribution
channels. This increases their profit margin and offers consumers a direct channel
to their favorite brands. This FMCG industry trend is closely associated with e-
commerce growth as well as the penetration of smartphones and the internet.
o Ivy creates a Sales and Direct Distribution Platform
Singaporean startup Ivy builds an AI and Machine Learning-powered
Platform to automate sales and distribution in the FMCG industry. The
solution enables companies to enhance their customer experience,
increase revenue at the shelf, and improve the productivity of their field
force. Ivy offers a Software-as-a-Service (SaaS) enterprise customer
relationship management (CRM) solution where users can manage stock,
complete in-store selling, and process orders. The solutions support
multiple types of sales channels simultaneously.
o Merlin Tech Labs works on Cloud-based Mobile Solutions
Indian startup Merlin Tech Labs creates a cloud-based SaaS application to
support Direct-to-Customer distribution. The app enables field sales teams
to sell and deliver more goods to people using optimized routes. Further,
the app manages sales and transactions, generates reports, and notifies
customers when the order is placed, delivered, and the payment is
processed.

8. Internet of Things
As IoT evolves, its applications gain popularity in the FMCG sector. IoT sensors
and devices are automated and affordable, enabling FMCG companies to employ
them in brick & mortar stores, warehouses, and manufacturing facilities. One
example of IoT device implementation is to provide targeted messaging to
consumers while they are shopping. Another one is inventory management, both
in stores and in warehouses, for which IoT is widely used. In combination with
related emerging technologies including ambient intelligence and smart objects,
IoT creates new consumer interaction channels and revenue streams for FMCG
brands.

pg. 27
 o Ripen Apps creates iBeacon Solutions
Moving one step ahead of the traditional mobile app development
approach, Australian startup Ripen Apps creates innovative applications
utilizing iBeacon technology. iBeacons enable add-ons to send customers
contextual, hyper-local, meaningful messages and personalized ads on
their smartphones as they evaluate a product.
o Connected Fresh offers Plug & Play Sensors for Temperature
Monitoring
US-based startup Connected Fresh offers plug-and-play sensors that give
FMCG companies instant and continuous access to live data on the
temperature in their storage and warehouses. This includes sensor
readings, historical data, and real-time notifications to key stakeholders
based on temperature fluctuation. Automatically and continuously
monitored products give both companies and their customers peace of mind
knowing that the product is held at specific conditions and any deviations
are reported to team members with enough time to act.

9. Blockchain
The competition within the FMCG industry is increasing and brands invest in
Blockchain to gain a competitive edge. Smart contracts and Blockchain
traceability allows FMCG companies to understand their supply chain bottlenecks
and make necessary interventions. Blockchain also increases transparency for
consumers by allowing them to track the source of their purchases. Additionally,
Blockchain platforms offer cryptocurrencies and loyalty programs that allow
consumers to collect, exchange, and redeem points thereby increasing customer
engagement.
o WABI offers a Digital Loyalty Token
Singaporean startup WABI develops an open platform that supports loyalty
programs and enables a direct two-way communication channel between
brands and consumers. Consumers use WABI to authenticate blockchain-
protected products and share feedback. FMCG companies, on the other

pg. 28
 hand, deploy targeted surveys and opinion polls to get consumer insights
and drive effective decision-making. Additionally, brands can run A/B tests
with a live audience and test pricing, messaging, color, and more, to
optimize their offerings to a specific target audience.

o Greenface provides Self-Serve Blockchain Solutions

US-based startup Greenfence develops an open blockchain platform. The
platform connects the entire value chain of the FMCG industry and enables
remote auditing and certification. The startup helps brands communicate
directly with shoppers thereby increasing trust and interaction while
removing the risk of fraud. This enables marketers to control their budgets
and consumers to participate and interact with a greater level of anonymity.

10. 3D Printing
Additive manufacturing and its applications create disruptive solutions for the
FMCG industry. The vast amount of waste generated by use-and-throw consumer
products, from personal care to food packaging, prompts industry stakeholders to
find sustainable alternatives. 3D printing allows FMCG brands and companies to
design and develop products that use eco-friendly materials and reduce plastic
use. To this end, FMCG companies leverage 3D printing for prototyping,
designing, tooling, and scaling production in a sustainable manner. Further, food
companies are able to offer extra nutritional value in their products by utilizing 3D
food printers.
o Essentium offers a 3D Printing Platform
US-based startup Essentium offers a 3D printing platform specifically for
industrial production. The platform allows companies the flexibility to create
multiple product iterations without impacting quality, strength, or
performance. FMCG companies use the platform for rapid prototyping, to
fine-tune designs and print end-use parts and components with exact
precision and repeatability.
o Mything connects Companies with Local 3D Printing Providers

pg. 29
 Austrian startup Mything is an online marketplace that connects companies
with local additive and digital manufacturers such as providers of 3D
printing. The startup helps brands optimize production and lower costs by
decreasing delivery distances, stock lead times, and material waste.

INDIAN MARKET PERSPECTIVE

Background At the time of independence MNCs were allowed to operate in India,

but the Indian market was too small for global MNCs. HLL had a manufacturing
base, Colgate and Nestle mainly undertook only trading activities. In the early '60s,
several MNCs set up manufacturing base in the country.

The government policies continued to be protective, modelled on socialistic

pattern with strong emphasis on self sufficiency. As a result economic growth was
slow (around 3.5% pa which many economists dubbed as Hindu rate of growth)
and India's share in international trade was nominal (even today India's share in
international trade is only 0.6%).

Slow growth was aggravated by major set backs in the late 60's due to drought
and in the early 70's due to oil shock. The new Government in power reserved
several product categories for small- scale. It also forced MNCs to dilute their
equity stake to 40% or leave the country. IBM, Coca-Cola and several others
decided to leave. Amongst major MNCs, Unilever (HLL) was the only one which
managed to retain 51% foreign stake by complying with the Government
conditions of minimum 10% export and 60% turnover from priority sectors.

Thus HLL got into the business of fertilizer and chemicals. In the '80s, when the
underlying factors for the economy were strong such as major oil discovery at
Bombay High, satisfactory monsoon, stable oil prices etc, the economic growth
averaged 5% pa, much lower than its potential. Several FMCG products such as

pg. 30
toiletries and cosmetics which are essentially mass consumption items, became
luxury products due to exorbitant burden of excise duties, sales tax (which added
up to over 150% on basic price). Local players sans technology and capital were
not able to provide good quality products.

Liberalization
Wave Foreign exchange crisis in 1991 (precipitated by Kuwait war) proved to be
blessing in disguise, due to which IMF suggested reform process began. The
reforms have continued over the last few years. The economic growth rate is
averaging 5-6% pa which is likely to continue. This growth rate in GDP will imply
4-5% volume growth in mature categories and 8-10% pa growth in upcoming
categories where penetration levels are low. More importantly, the organized
sector will witness even a faster growth at the cost of the unorganized sector.

ABOUT THE INDUSTRY IN INDIA

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

pg. 31
owned by MNCs, and the balance by Indian companies.

CRITICAL SUCCESS FACTORS

FMCG business rests on the two pillars of brand equity and distribution network.
Brand Equity

Brand equity refers to the intangible asset in the form of brand names. The
consumer's loyalty for a particular brand is due to the perception that the product
has distinctively superior and consistent quality and also satisfies his/ her specific
needs. Further provides better value for money than other competing brands.
(Kotler Philip, 2003) In FMCG products, brand equities are relatively stronger as
the consumer is reluctant to try unknown brands/ unbranded products as most of
these products are for personal use.

It is often difficult to differentiate a product on technical or functional grounds and

therefore little reason to switch from a known brand. A successful brand generates
strong cash flow, which enables the owner of the brand to reinvest a part of it in
the form of aggressive advertisement/ promotion to reinforce the perceived
superiority of the brand. The worth of a brand is manifested in the consumer’s
insistence on a particular brand or willingness to pay a price premium for the
preferred brand.

Distribution Network
In FMCG sector, one of the most critical success factors is the ability to build,
develop, and maintain a robust distribution network. Availability near the
consumer is vital for wider penetration as most products are low unit value
products and frequently purchased. Distribution network refers to the consumer
buying points where products are available (almost always). It takes enormous
time and effort to build a chain of stockists, retailers, dealers etc and establish

pg. 32
their loyalties. (Poirer C. Charles, 2004)

There are entry barriers for a new entrant as a new product is typically slow
moving and has lesser consumer demand. Therefore dealers/ retailers are
reluctant to allocate resources and time. Established players use their clout to
inhibit new entrants. However, when a product offers a strong breakthrough (such
as Nirma in late 90s), equity we build up rapidly and so does the distribution
network.

Thus, we see that distribution is the critical factor that at times even drives the
brand equity factor.
➢ Assumption is made that views and suggestion given by the respondent are
his own perception and idea.
➢ The study is not free from sampling error
➢ Seasonal changes in sales figures may affect the quantitative data.
➢ My study is based on responses of executives of mentioned companies of
concerned department only, which may not give a true picture.
➢ Last but not the least and the most deciding factor paucity of time

pg. 33
OBJECTIVES
● To analyze the present scenario of FMCG industry in terms of emerging
opportunities &
● challenges
● To measure the status of distribution in overall marketing mix of FMCG
industry.
● To identify the emerging paradigm of distribution in the era of globalization
& IT.
● To critically analyze Indian FMCG sector.
● To understand the Concept of FMCG
● TO Present an overview Indian FMCG sector
● To study the growth of Indian FMCG sector
● To study the profitability and liquidity trends of the selected FMCG
companies
● To make comparative analysis of the selected units based on the various
ratios
● To find out which stocks is worth enough to invest in what will be the
strategy investment
● To study the profitability and liquidity trends of the selected FMCG
components
● To make comparative analysis of the selected units based on the various
ratios
● To find out which stocks is worth enough to invest in and what will be the
strategy of investment .

pg. 34
Hypothesis Of The Study
● H01: There is no significant impact of Sales on Liquidity position of
selected FMCG firms.
● H02: There is no significant impact of Sales on Solvency position of
selected FMCG firms.
● H03: There is no significant impact of Sales on Profitability position of
selected FMCG firms.

LIMITATIONS

Throughout the study utmost care has been taken to avoid biases, errors so as to
ensure authenticity and accuracy. But there is possibility for some discrepancies
to come in between due to following limitations:
● Respondents may give their biased opinion, as they know the identity of
interviewer.
● Some questions are quantitative and respondents are answering without
understanding it fully
● The study would have been more effective if it was conducted for a longer
period to understand the organization
● It was not possible to directly interact with the labours in the company due
to their continuous work schedule
● Strictly following rules and regulations of the company, some of the records
are not available

pg. 35
 Scope of the study

The scope of FMCG industry in India is growing especially in rural areas. There
are 638000 villages in India. 70% of the population live in the rural area. Hence it
is vivid that the rural India is the best market ever for the FMCG industry. FMCG
Sector in India is one of the four largest sectors in Indian economy. The FMCG
(Fast Moving Consumer Goods) companies have faced tough competition among
themselves over the years which is continuously increasing.

This is due to the increase in per capita income among individuals and also various
developments in rural economy. The FMCG sector has changed its strategies and
has opted for a more well-planned marketing of the products to penetrate both the
rural and urban markets. To execute these tasks, the FMCG companies are hiring
more and more people which has led to an increase in the job prospects in this
sector. Thus, FMCG sector is creating massive employment with good career
prospects. Marketing, retail, sales, services and supply are the key areas which
generates maximum career scopes in FMCG Industry in India.

FMCG sector in the Indian rural market is one of the most booming sectors in
Indian economy. The villages of India account for 12.2% of the world's population.
The farm sector has been one of the significant sectors which boosted the rural
economy resulting in the higher consumption of FMCG products.

The consumers in both rural and urban sectors can afford high-priced branded
products nowadays with the high disposable income. The FMCG sector in India
has grown significantly in the year 2007 and this gave rise to huge prospects in the
sector. The rural and urban sectors fared equally well in the processed food items
in the year 2007.

pg. 36
The rural market separately performed well in the personal care, fabric care, and
hot beverages while the urban market did well in home care, personal care, bakery
dairy products, and the like.

There are certain key characteristics of the FMCG sector which have made this
industry grow in leaps and bound and continues to increase its market size and
these can help understand this sector’s scope.

1. Growing technology:
The booming technology has led to speedy growth in this sector, with major
advancements such as ROPO method, research online, purchase offline, quick
deliveries and payments. This increase has increased the number of producers
and competitors of the same product. The FMCG companies which have walked
hand in hand with the technology have been successful with flying colours. These
companies have installed the advanced pieces of machinery to give a tough
competition to their competitors with their product quality. So, as the technology
grows, we can expect this sector to grow, provided the companies to cope with it.

2. Capital intensity ratio:

The FMCG companies are a major advantage as they have low capital intensity
ratio, which shows the low investment or amount of capital required per unit
revenue. The turnover of any fully equipped manufacturing FMCG plant is at least
5 times more than the invested capital and can increase to about 8 percent which
is an impressive deal for any company. The companies’ investment in fixed assets,
equipment, machinery for production is comparatively lower, but the main reason
for this ratio’s attenuation over the period is increasing working population and
mainly the working women, increase in the family’s income, purchasing capacity,
and thus, increasing per capita expenditure. This ratio can have volatility at some
tough times of recession but considering for long term, the FMCG products are in
demand throughout the year.

pg. 37
 3. Market drive and Launch cost:
The competitors in the FMCG sector are increasing and so are the consumers who
critically analyze the quality and quantity of products against the price which makes
it tougher for the manufacturers to compromise on quality. Thus, the launch cost
of these companies is relatively high for the huge advertising and marketing cost
on various platforms. Thus, the FMCG companies which are huge and companies
which are best at marketing have a great scope in this sector.

METHODOLOGY
Primary sources: - The data required for the study would be based on:
● Personal interviews based on pre-decided format of structured
undisguised
questionnaire, which would be administered to the respondents.
● Personal interview with the Company representatives regarding the
various data.
● Short interviews with the customers.

Secondary Sources: - The secondary data consists of information collected from:

● Websites
● Annual Report of the Companies
● CMIE Report
● Business magazines
● Trade guides
● Published data on FMCG industry

pg. 38
 Chapter-2
INTRODUCTION TO THE STUDY
The mighty Indian FMCG is the 4th largest sector in the Indian .The growth rate
has shot up astronomically from $30 billon to a projected $74 billon between 2011
and 2018 .The sector is characterized by a strong presence of global businesses
,intense competition between organized and unorganized players , and a well
established distribution network . The availability of key raw material , cheaper and
a ubiquitous presence across the entire value chain gives the Indian FMCG sphere
a huge impetus

The FMCG sectors also did not evolve into such mammoth proportion overnight .
India has always been one of the most populated countries in the world thus
,leading to even larger demand for consumer goods .A country where reduction in
price of FMCG goods has often been one of the main pointers in election
manifestos , we can well ascertain the importance of this sector .

The period from 1950 to 1980 did not see much of a growth in this sector owing to
the low purchasing power of Indian and the government pushing for small scale
sectors . HUL and Amul were one of the only companies that stuck around and
evolved as market players . Amul metamorphosized the dairy sector in India
.Established in 1946 , AMUL brought about white revolution in India and
transformed the unorganized dairy sector to an organized one . They pioneered
product like milk powder . The brand continues to grow stronger by the day and
sells around 3960 tonnes of milk powder every year.

Another big shot at that time – HUL more focused more on the urban sector which
then made up for the tiny part of the Indian population . A game changing even

pg. 39
took place when NIRMA entered the market and jolted the FMCG sector . It was
the first company that bought the concept of ‘’Value for Money’’ and made FMCG
a common man commodity . MNCs focusing on the urban and middle class woke
up to anew market realities and noticed the latent rural market , thus came WHEEL
yet another house hold item for many families.

Liberalization of the Indian economy saw not only rise in domestic choices but also
rise imported ones . Diminishing trade barrier encouraged MNCs to invest more to
cater to the ever growing 1billon plus population . Rising standard of living in urban
areas coupled with the purchasing power of rural India saw companies introduce
everything from the low end detergent to high end detergent , sanitary napkin .
Their strategy became two -pronged over the last decade one , invest in expanding
the distribution reach far and wide across India to enables market expansion . And
two , upgrade existing consumer to value-added premium product and increase
usage of existing product ranges .

So you could see almost all companies be it an HUL , Godrej , or a Marico outdoing
each other in trying to reach the rural consumer first .Each of them has seen a
significant expansion in their retail reach in mid sized town and village . Some who
could not do it on their own , have pig-backed on others FMCG major distribution
network (P&G and Marico for example) .Consequently ,companies that took to
rural India saw their sales and profits expanding . For example, currently 50% of
all HUL sales come from rural India , making it one of the biggest beneficiaries

One of the biggest changes to hits the FMCG industry was the ‘SACHET’
revolution . One of the biggest changes to hit the FMCG industry was the ‘sachet’
revolution. In the last 3 years, detergent, shampoo, hair oil, biscuit, chocolate and
a host of other companies, have introduced products in smaller package sizes, at
lower price points. This is the single big innovation to reach new users and expand
market share for value-added products in urban India (especially tier II and tier III
cities), and for general FMCG products like detergents, soaps and oral care in rural

pg. 40
India. From being luxuries to becoming necessities, FMCG sector has come a long
way. It has deeply penetrated our lives and spoilt us with choices. These latest
trends have tremendously evolved the face of this sector:
First, the focus on making tasty yet healthy food became almost a sure-shot way
to success. Health and wellness is a mega trend shaping consumer preferences
and shopping habits and FMCG brands are listening. Leading global and Indian
food and beverage brands have embraced this trend and are focused on creating
new emerging brands in health and wellness.

Second, the death of traditional advertising and the success of digital media and
new viewing channels like Netflix, HotStar, Jio Movies have started endangering
events-driven advertising. Even Nestle re-launched its noodles via Snapdeal, a
tribute to the reach of E-Commerce.

Today’s youth embraces speed. They want packaged goods that work better,
faster, and smarter. The “need for speed” trend highlights the importance of speed
as a decisive purchase factor for packaged goods products in a world where
distinctions between products are shrinking.

Some FMCG brands today are also returning to their Indian roots. Be it
Paperboat’s entry into Indian beverages, Chedda foods making banana / tapioca
chips, Balaji Wafers winning the extruded snacks market, those who have grabbed
share from incumbents have been ethnic-focused players as opposed to say
Kellogs or Dominos.

With the implementation of GST, the future of this sector shines bright, apart from
driving supply chain efficiencies, GST will bring untaxed players into the tax net
and level the playing field for the larger, established players in the sector.

FMCG market in India is expected to grow at a CAGR of 20.6 per cent and is
expected to reach US$ 103.7 billion by 2020 from US$ 49 billion in 2016. During

pg. 41
the same time, the rural FMCG market in India is expected to grow at a CAGR of
14.6 per cent, and reach US$ 220 billion by 2025 from US$ 29.4 billion in 2016.
One hotter topic of discussion today is India’s revamp into becoming a cashless
economy and the ever-increasing E-commerce Penetration Aided by GST and
Demonetization.

Rest assured, these are some really interesting and turbulent times for Indian
FMCG industry, having said that FMCG will continue to be the cornerstone of
Indian economy, touching every aspect of human life .

2.1 FMCG INDUSTRY IN INDIA

With demonetization came the squeeze but it also brought about a greater
acceptance of alternate digital payment methods .That is paying off some of the
key trigger for the FMCG sector are as sector are as under

pg. 42
The launch of GST takes away the advantage the unorganized sector enjoyed and
that is leading to a greater shift towards the organized sector . This trend can
become sharper in the coming month

FMCG sales stood at $5 billon as of finical year 2018 but are expected to grow at
an annualized rate 35% to touch $104 billon by the year 2020 .That is a big boost
to the top line of FMCG companies

The GST council has reduced rates on most food items to range of 0-5% and even
hygienic product of mass consumption have been brought into the 12-18% bracket
. GST cyts have been passed on the consumer; opening up to market

Specific initiatives in the last few years like farm loan waiver , spending on rural
infrastructure and the benefits transfer (DBT) scheme has helped . The minimum
income guarantee scheme is also likely to be boost to FMCG demand

The big growth is expected to come from the rural areas .On an average , rural
and semi-urban consumer spend 50-55% of their disposable income on FMCG
product. Any income accretion will have a multiplier impact on the demand Goods
and Service tax (GST) is a broad based, single, comprehensive tax levied on
goods and services consumed in an economy. This is seen as the panacea for
removing the ill-effects of tax-on-tax regime. This is the most signicant tax reform,
so far in India.

Finally , the government has also done its bit . It has permitted 100% FDI in food
processing and single brand retail . In addition , it has increased mega food parks
from 2 to 13 ;food preservation and processing capacity from 3.08 lakhs to 1.41mm
; and number of food lab from 31 to 42 . All these are likely to be major supportive
trigger for the FMCG segment growth. With the approval of GST bill the FMCG
sector is likely to see a signicant impact. The FMCG sector comprise more than

pg. 43
50 percentage of the food and beverage industry and another 30 percentage
personal and household care sector thereby spanning the entire urban and rural
part of the country.

The FMCG sector has growth from US$ 31.6 billion in 2011 to US$ 52.8 billion in
2017-18 . The sector is further expected to grow at a compound annual growth
rate (CAGR) of 27.9% to reach US$ 103.7 billion by 2020 . The sector witnessed
growth of 16.5% in value terms between June- September 2018 ; supported by
moderate inflation increase in private consumption and rural income

It forecasts to grow at 12-13% Between September – December 2018 . FMCG

urban segment is expected to have a steady revenue growth at 8% in FY19 and
the rural segment is forecast to contribute 15-16% of total income in FY19.

Accounting for a revenue share of around 4% rural segment is a large contributor

to the overall revenue generated by the FMCG sector in India . Urban segment
accounted for the revenue share of 55% in overall revenue recorded by FMCG
sector in India. FMCG companies have already started getting their system in
place for business under GST. They are busy in tweaking their warehouse system
and supply chains, modernising IT infra ahead of rollout of GST regime that will
facilitate seamless interstate movements of Goods.

A four tier structure of 5%, 12%, 18% and 28% would in place as part of new tax
regime. While mass market home and personal care and food products are
expected to fall in the 5% bracket, premium products are expected to fall in 28%
bracket. The 12 and 18% rates have been declared as standard rates, which could
see mid price products across the FMCG sector from soaps to detergent, hair oil
to toothpaste to fall in these brackets.

pg. 44
Revenue of FMCG sector reached Rs 3.4trillion (US$ 52.8 billion) in FY18 and are
estimated to reached US$103.7 billion in 2020

Growth awareness, easier access ,and changing lifestyle are the key growth
drivers for the consumer market .The focus on agriculture , MSMEs , education ,
healthcare infrastructure and employment under the union budget 2018-19 is
expected to directly impact the FMCG sector . These initiative are expected to
increase the disposable income in the hands of the common people , especially
in the rural area , which will be beneficial for the sector

FMCG industry stood at US$ 57.4 billion in 2017 and in US $49 billion in 2016 ,
register a sharp growth of over 17 % during the year .Household and personal care
continue to be leading segment according for 50% of the overall market followed
by healthcare and food & beverages segment that segment that account for 31%
and 19% respectively

FMCG are products that are sold quickly and at low cost . example include non
durable goods and soft drinks , toiletries over the counter drugs , processed foods
and others consumable .in 2017 , Urban areas the largest contribution to the
overall generated by the FMCG sector in India with About 55% shares of rural
segment in overall revenue contribution has been consistency growing over the
past few year

Also , with Indian retail market being estimate to reach US$ 1.15 trillion by 2020
from USD 840 billion in 2017 by care rating and modern trade projected to grow at
about 20-22% per annum , it is expected to give an impetus to revenue of FMCG
companies going forward .Our thought leadership report DNA model for a
profitable business ,bank have to become more inclusive in their approach toward
consumer using DNA model . We feel that this is also valuable and applicable to
the India FMCG industry as consumer goods companies step up their efforts to
serve this group of large and underserved consumers .

pg. 45
Patanjali Ayurved Ltd is an Indian FMCG company established by Yoga Guru Baba
Ramdev in the year 2006. The Company produces products in the category of
personal care and food . A The ago it was modern trade which changed the way
Indians' shopped. This time around it is Patanjali Aurveda – the latest force to
disrupt the branded consumer goods sector. Its raging popularity and strong brand
resonance have some incisive lessons for the Indian FMCG sector.

It has changed the entire perception of FMCG sector, most of its products are
cheaper than its peer in the same category which shows that a brand doesn't have
to charge premium to resonate better with its consumers. Patanjali Aurved has
shifted the focus back to Aurveda and Naturals. All the top FMCG companies are
spending huge amount on celebrities to endorse their product whereas Baba
Ramdev himself promoting the herbal and organic Patanjali products. It has
brought back the focus on product efcacy. Rising above the noise of advertising;
the product has to deliver value to the consumer.

Emergence of patanjali helps keep the established players on their toes and
provides the consumers the benets of more efcacious products at lower prices. It
reminds the FMCG companies that peak margins cannot be sustained at the cost
of the consumers.

2.2 GROWTH PROSPECTS OF FMCG IN RURAL INDIA

With the presence of 12.2% of the world population in the village of India , the
Indian rural FMCG markets is something no one can overlook .Increased focus
on the farm sector will boost rural income , hence providing a better growth
perspective to the FMCG companies . Better infrastructure facility will helps to
improve that supply chain

pg. 46
The Accenture report goes on to state that rural income has been growing at more
than 7% over the past few years helping to account for almost India's total
consumption of goods and services . at present , urban India economy for 60% of
total FMCG consumption with rural India accounting for the remaining 34%
however , rural India accounts for more than 40% consumption in major FMCG
consumption in major FMCG categories such as personal care , fabric care, and
hot beverage

In urban areas , home and personal care categories ,including skin care ,
household care and feminine hygiene , will keep growing at relatively attractive
rates .Within the food segment , it is estimated that processed food bakery and
dairy are long term growth at categories in both rural and urban areas.

2.3 IMPACT OF FMCG SECTOR IN INDIA

2.3.1 EMPLOYMENT

Direct employment at the estimate approached 6% of turnover ,i.e US$ 1.5 billion
( Rs 7,000 cr ) approximately 12-13 million retail stores in India , out of which 9
million are FMCG kirana stores . Thus the sector is responsible for the livelihood
of almost 13 million people .

2.3.2 FISCAL CONTRIBUTION

Cascading multiple taxes by the FMCG sector ( import duty , service taxes, CST ,
income taxes) 30%, revenue of the sector goes into both direct and indirect taxes

pg. 47
estimates size of $25 billon ( Rs 120,000 cr ) that would contribute to the exchange
of approximately US$ 6.5 billion ( Rs 31, 000cr)

2.3.3 SOCIAL CONTRIBUTION

Create employment for the people with lower educated qualifications . FMCG
firms have also undertaken some specific projects to integrate with up country and
rural areas for both input and for the distribution as well as to fulfil CSR.

2.4 MARKET SIZE OF FMCG INDUSTRY

FMCG , alternatively known as consumer packaged goods ( CPG ) are products

that are sold quickly and generally consumed as a regular basis to durable goods
such as kitchen appliances that are repaired over a longer period of time . The
FMCG industry primarily engages in the production distribution and marketing
operation of consumer packaged goods . The category In compressed food and
dairy products and many others.

The FMCG sector is an important contributor in India GDP India 's FMCG sector
is the 4th largest sector in the economy and creates employment for many three
million people . Its principal constituents are householder care and food and
beverage . The market is expected to maintain a high growth rate as per the
population ( particular middle class and rural segment ) convert to brand product .
In the 2016 retail e -commerce sales in India generate over 1.5 billion US dollar
and increased to over 45 billion USD dollar by 2021

The retail market in India is estimated to reach US$ 1.1TRILLION 2020 from US$
840 million in 2017 , with modern trade expected to grow at 20 per cent . 25 percent

pg. 48
annum ,which is likely to boost revenue of FMCG companies . Revenue of FMCG
actors reached Rs 3.4 lakhs cr ( US$ 52.75 billion) in FY18 and are estimated to
reach US$ 103.7 billion in 2020 . The sector witnessed growth of 16.5 per cent in
value terms between july- september 2018 exported by moderate inflation
,increase in private consumption and rural income

FMCG goods are popularly known as consumer packaged goods .Item in this
category include all consumable ( other than groceries /pules) people buy at
regular intervals .The most common in the list are toilet soaps , toothpaste ,
detergent , shampoos , shaving cream etc and extend to certain electronic product
. These items are meant for daily or frequent consumption and have a high return.

Rural areas expected to be the major driver for FMCG as growth continues to be
high in these rural regions .Rural areas saw a 16 per cent , on this as they quickly
went about increasing direct distribution and providing better infrastructure .
Companies are also working towards creating specific product especially target for
the rural market

The government of India has also been supporting the rural population with higher
minimum support price (MSP) loan waiver , and disbursement through the national
rural employment guarantee act (NREGA) program .These measure have helped
in reducing poverty in rural Indian and given a boost to rural purchasing
power.Hence rural demand is set to rise incomes and greater awareness of brand

With the rise in disposable income , mid income consumers in urban areas have
shifted their purchasing trends from essential to premium products .In response ,
firms have started enhancing their premium product portfolio . Indian and
multinational FMCG players are leveraging India as a strategic sourcing hub for
cost - competitive product development and manufacturing to cater to international
markets .

pg. 49
2.5 TOP FMCG COMPANIES

According to the study conducted by AC Nielsen 62 of the top 100 brand are owned
by MNCs and the balance by Indian indian companies . 15 companies own these
62 brand and 27 of these are owned by HUL .

THE TOP 10 INDIAN FMCG BRANDS ARE:

1. HINDUSTAN UNILEVER Ltd

2. ITC ( INDIAN TOBACCO COMPANY)
3. NESTLE INDIA
4. DABUR INDIA
5. BRITANNIA
6. GCMMF (AMUL)
7. ASIAN PAINT
8. CADBURY INDIA
9. PROCTER & GAMBLE HYGIENE AND HEALTH CARE
10. MARICO INDUSTRIES

Some common FMCG product categories include food and dairy product ,
glassware paper product , pharmaceutical , consumer electronic , packaged food
, plastic good ,printing and stationary , drinks etc . and more of the of FMCG
product are coffee ,tea,dry cell,greeting card ,gifts ,detergent , tobacco , cigarette,
watches, soaps etc .

pg. 50
2.6 GOVERNMENT INITIATIVES

Some of the initiative taken by the government to promote the FMCG sector in
INDIA as follow

➢ The government capitalisation for forgien FMCG companies to direct

invest in India is US$ 100 million

➢ The government of Indian has approved 100 percent forgien direct

investment (FDI) in the cash carry segment and in single - brand
retail along with 51 per cent FDI in multi - brand retail.

pg. 51
 ➢ The government of India has drafted a new consumer protection bill
with special emphasis on setting up an extensive mechanism to
ensure simple,speedy,accessible,affordable and time delivery of
justice to consumer

➢ The Goods and service tax (GST) is beneficial for the FMCG as
many of the FMCG product such as soap ,toothpaste, hair oil under
18 percent tax bracket against the previous 23-24 per cent rate

➢ The GST is expected is to transform logistic in the FMCG sector into

modern and efficient model as all major cooperation are remodeling
their operation into larger logistic and warehousing

Some of the major initiatives taken by the Government to promote the FMCG
sector in India are as follows:

• 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.
o 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.
• 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.
• 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.

pg. 52
 • The Goods and Services Tax (GST) is beneficial for the FMCG industry as
many of the FMCG products such as soap, toothpaste and hair oil now
come under the 18% tax bracket against the previous rate of 23-24%.
Also, GST on food products and hygiene products have been reduced to
0-5% and 12-18% respectively.
• 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.

2.7 ADVANTAGE TO THIS SECTOR

ROAD AHEAD:
Rural consumption has increased, led by a combination of increasing
income and higher aspiration levels. There is an increased demand for
branded products in rural India. The rural FMCG market in India is
expected to grow to US$ 220 billion by 2025 from US$ 23.6 billion in
FY18.

On the other hand, with the share of unorganised market in the FMCG
sector falling, the organised sector growth is expected to rise with
increased level of brand consciousness, augmented by the growth in
modern retail.
Another major factor propelling the demand for food services in India is
the growing youth population, primarily in urban regions. India has a large
base of young consumers who form majority of the workforce, and due to
time constraints, barely get time for cooking.

Online portals are expected to play a key role for companies trying to
enter the hinterlands. Internet has contributed in a big way, facilitating a
cheaper and more convenient mode to increase a company’s reach. It is

pg. 53
estimated that 40% of all FMCG consumption in India will be made online
by 2020. The online FMCG market is forecast to reach US$ 45 billion in
2020 from US$ 20 billion in 2017.

It is estimated that India will gain US$ 15 billion a year by implementing

GST. GST and demonetisation are expected to drive demand, both in the
rural and urban areas, and economic growth in a structured manner in the
long term and improved performance of companies within the sector.

GOVERNMENTAL POLICY:

Indian government has enacted polices aimed at attaining international

competitiveness through lifting of the quantitative restriction ,reducing
excise duties , automatic forgien investment and food law resulting in an
environment that foster growth 100% export oriented units by government
approval and use of foriegn brand name is now freely permitted

CENTRAL & STATE INITIATIVE :

Recently government has announced a cut of 4% in excise duty to fight with

the slowdown of the economy . The announcement has a positive impact
on the industry .But the benefits from the 4% reduction in excise duty is not
likely to be uniform across FMCG categories of players . The changes in
excise duty do not impact cigarette ( ITC , GODFREY., PHILIPS ) biscuits

pg. 54
 (Britannia industries , ITC ) or ready-to-eat foods , as these products are
either subject to specific duty or are exempt from excise . Even players with
manufacturer facilities located mainly in tax-free zones keys ones to eat and
gain excise cut

FOREIGN DIRECT INVESTMENT ( FDI):

Automatic investment approval ( including foriegn technology agreement

within specific norms) up to 100% foreign equity or 100% for NRI and
Overseas corporate bodies ( OBCs) investment is allowed for most of the
food processing sector expect malted food,alcoholic beverages and those
reserved for a small industries (SSI) there is a continuous growth in net FDI
inflow . There is an increasing of about 150% in net flow for vegetable oils
& vanaspati

2.8 NEED OF THE STUDY

To start any business capital player major role .Capital can be required in two
ways by issuing shares or by taking debts from financial institutions or borrowing
money from financial institutions . The owner of the company has to pay regular
interest and principal amount at the end .Stock is ownership in a company , with

pg. 55
each share of stock representing a tiny piece of ownership .The owner shares you
own , the more of the company you own . The more share you own the dividend
you can earn when the company makes profit . In the financial world , ownership
is called ‘’equity’’

ADVANTAGE OF SELLING STOCKS

1. A company can raise more than it coil borrow

2. A company does not have to make periodic interest payment to creditor
3. A company does not have to make principal payment

Stock / shares play a major in acquiring capital to the business in return investor
are paid dividend to the share they own .The more share you own the more
dividend you receive

The role of equity analysis is to provide information to the business .An efficient
markets relies on information a lack of information creates inefficient that results in
stocks being misrepresent ( over or under value ) this is valuable because it fills
information gaps so that each individual investor does not need to analyze every
stock thereby making the markets more efficient

SWOT ANALYSIS OF FMCG INDUSTRY

Strengths:
1. Low operational costs
2. Presence of established distribution networks in both urban and rural areas
3. Presence of well-known brands in FMCG sector

pg. 56
4. deep roots in local culture & "great understanding" of consumer needs

Weaknesses:
1. Lower scope of interesting" in technology" and achieving" economies of scale
especially in all sectors
2. Low reports levels
3. Counterfeit Products. (these products narrow the scope of FMCG products in
rural and semi-urban market.

Opportunities:
1. untapped rural market
2. Rising income levels & i.e. increase in purchasing" power of consu#ers
3. Large domestic market- a population of over one billion.
4. Export potential
5.High consumer goods spending

Threats:
1. Removal of import restrictions resulting" in replacing" of do#estic brands
2. lowdown in rural demand
3. Tax and regulator & structure

PESTEL ANALYSIS:-

Pestel analysis is a tool to understand the environment in which business operates,

& the opportunities & threats that lie within it. By understanding the environment in
which it operates, it can take advantage of the opportunities & minimizing the
threats. Specifically PESTEL analysis is useful tool for understanding risks

pg. 57
associated with markets growth or decline, & directing business to grow.

P–Political factors
E–Economic factor
S–Socio-cultural factors
T–Technological factors
E –Environment factors
L –Legal factors

A PESTEL analysis is a measurement tool, looking at all the external factors of

the organization. It is often used within a strategic SWOT analysis (strength,
weaknesses,opportunities & threats analysis).

PESTEL ANALYSIS ON FMCG INDUSTRY:-

POLITICAL FACTORS-

Political stability : Political stability is one of the most important factor which
influence the growth of business directly. If Political stability is higher, then it leads
to perfection inbusiness & on the other hand if there is unstability the business will
have to suffer.Taxation policy : Tax policy of government will affect the price of
inputs & it ultimately affect the prices of final products & it will directly affect the
sale of product.Government intervenes : This indicates that at what level the
government intervenes in the economy. If the government intervene is more
sometimes it helps the organization at large extent

Subsidies : The subsidies which are provided by the government to different

organisation at different level also helps it grow at faster rate and helps the
organisation in reducing the finance which is to be funded from outside and it
directly reduce interest amount paid in favour of fund raised from outside

pg. 58
Trading policy : This indicate the policy related to import and export of good and
service from different nations .If the policies are favourable more goods and
service will e imported and exported on the other hand if policies are unfavorable
it will restrict the import and export

Labour law : labour law also effect the organisation , for example - child labour , a
child below 14 year of age can work in factory or any hazardous place.

ECONOMIC FACTOR -

Interest rates : interest rate directly affects the cost of capital , if the interest rate is
higher than the cost of capital will increase and if it is lower than the cost of capital
will be lower . this directly affect the profit of the organisation and its growth

Tax charges : If the tax charged by the government is lower then it will reduce the
productprice & if it is higher then it will increase the prices of the products

Exchange rates : This shows what is the exchange rate or foreign currency rate.
Exchange rate is higher, more amount is paid on import of goods & if it lowers less
amount isto be paid & on the other hand if it is higher the amount received will be
more & if it is lower the amount received will be low.

National income : National income is important factor as if affect the growth of the
organisation. If per capita income is more the amount spend will be more & if it will
be lower the amount spent will be less.

Economic growth : Economic growth is an important factor in the development of

the organization. If economy grows at a higher speed it will directly affect the

pg. 59
growth of theorganization.Inflation rate : Inflation means the rise in the value of all
the product in the economy, if inflation rate is higher the cost of products will be
higher & if inflation rate is lower the cost of product will be lower. This directly affect
the growth of the organization

SOCIO– CULTURAL FACTORS

Demographics : Demographics is the study of human population in the economy.

It helps theorganzation to divide the markets in different segments to target a large
of customers. ForExample- according to race, age, gender, family, religion, & sex.

Distribution of income : This shows that how income is distributed in the ecconomy.
It directly affects the purchasing power of the buyers. And ultimately leads to
increase or decrease in the consumption level of the products.

Changes in lifestyle : Change in lifestyle also leads to increase or decrease in the

demand for different commodities. For example-presently LCD & LED TV’s have
replaced Digital displayed on the TV set, this shows the changes in lifestyle of
consumers.

Consumerism : This indicates that a large number of options are available while
purchasing goods to consumers, so the choice becomes easy & quality products
can be chosen by consumers. So while purchasing a consumer have different
choices to select product according to his needs

Education levels : Education is one of the most important factor which influence
the buying
power of consumer, while selecting a particular good a consumer should know all
it’s features so it can differentiate them with other products

pg. 60
Laws affect social behaviour : Different laws are made by the government to
safeguard the rights of consumers. For example- Consumer protection act, this law
indicates that a consumer can file a case against a seller if he finds that he is
cheated.

TECHNOLOGICAL FACTORS –

Advancement in technology : New technology helps in economising the scale of

production,this means that new technology helps in increasing the level of
production, & reducing the costs of inputs, & maximising the level of profits

Discoveries & innovation : Advancement in technology will leads to discoveries or

innovations & further improvements in technology so as to improve perfections in
the production process.Competitive forces : Advancement in technology will also
leads to competition in themarkets, more quality products will be provided to
consumers to cover a large number of market.

Automation : Change in technology will leads to automation, this means that with
new technology labour required is less as machines are automatic. All the works
are done automatically by the machines as earlier it is labour oriented. Now all the
work is machine oriented.

Obsolete rate : Day-by-day new inventions are made so the rate of obsolete is
higher, as inComputer LAPTOPS have replaced the PC. This shows that the
technology becomes obsolete very fast.

Research & development : This department plays a vital role in the development
of the organization. As this department always does research on what are the
demands of themarkets & how to make advancements so the organization can
survive in the competitive world.

pg. 61
ENVIRONMENTAL FACTORS –

Ecological : The ecological and environment aspects such as weather, climate, &
climate changes, which may especially affect industry such as tourism, farming, &
insurance. In FMCG Air conditioner’s demand increases in the summer season.

Environmental issues : Global warming is one of the major issue now-a-days as

external factor is becoming a significant issue for firms to consider. Many remedies
have been taken to reduce Global warming.

Environmental regulations : Various regulations have been declared by

government to safeguard the environment. For example-no company should throw
its waste in rivers.

LEGAL FACTORS –

Employment law : Employment law provides equal opportunities to every citizen to

work & earn his livelihood. It provides equal opportunities to every citizen.

Consumer protection : This law helps to protect the rights of consumers & he can
file a case against the seller if he is cheated.

Industry-specific regulations : These laws are related to industry for example- no

industry can establish in between cities i.e. it should be outside the cities.

pg. 62
 CHAPTER -3

Review Of Literature
The review of literature guides then researches for getting better understanding of
methodology used ,limation of various available estimation producers and
database and lucid interpretation and reconciliation of the conflicting results .
Besides this , the review of empirical studies explore the revenue for the future
result and present research efforts related to the subject matter .In case of
conflicting and unexpected results , the research can take the advantage of
knowledge of their researchers simply through the medium of their published
works.

The FMCG sector has been the cornerstone of the Indian economy. Though, the
sector has been in existence for quite a long time, it began to take shape only
during the last fifty-odd years. To date, the Indian FMCG industry continues to
suffer from a definitional dilemma. In fact, the industry is yet to crystallize in terms
of definition and market size, among others. The sector touches every aspect of
human life, from looks to hygiene to palate. Perhaps, defining an industry whose
scope is so vast is not easy

After witnessing booming sales and flooding markets with innumerable products,
FMCG companies have had to abruptly apply the brakes and look for various ways
to save costs. The RS. 52,000 crore (listed companies) FMCG industry in India,
which has been on a roll for many years, faces tough times ahead, although many
segments still show good growth. Fast Moving Consumer Goods (FMCG) goods
are popularly named as consumer packaged goods. Items in this
category include all consumables (other than groceries/pulses) people buy at
regular intervals.

pg. 63
The most common in the list are toilet soaps, detergents, shampoos, toothpaste,
shaving products, shoe polish, packaged foodstuff, and household accessories
and extends to certain electronic goods. These items are meant for daily of
frequent consumption and have a high return. The Indian FMCG sector is the
fourth largest sector in the economy with a total market size in excess of US$ 13.1
billion.It has a strong MNC presence and is characterised by a well established
distribution network, intense competition between the organised and 9
unorganised segments and low operational cost.

Availability of key raw materials, cheaper labour costs and presence across the
entire value chain gives India a competitive advantage. The FMCG market is set
to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level
as well as per capita consumption in most product categories like jams, toothpaste,
skin care, hair wash etc in India is low indicating the untapped market

Major global consumer product companies (such as Unilever, P&G, Colgate,

Nestle, Heinz) have a lion's share of the global market. These companies have
been established for a very long time and possess a clutch of strong brands with
proprietary technology. Most of these companies are cash rich and well managed.
Their brands generate strong cash flows and allow them to reinvest in
strengthening their brand equity further, with continued promotions/
advertisements. (Harvard Business Review, Sept-Oct, 2004) They also have the
financial clout to acquire small local brands to strengthen their position in the
category. These companies also make considerable investment
in R&D to sharpen and maintain their edge in the business.

Most of the global majors have their origins in Europe or the USA. They find their
home markets saturated and are banking on the third world for future growth.
These companies are setting up
shop and are aggressively expanding their base in these countries. They also look

pg. 64
out for opportunities to acquire local brands to push start or consolidate their
position in these markets.

During the last 4-5 years, particularly after reduced consumer spending during the
global recession, the new buzzword is value for money. FMCG companies globally
have embarked upon major restructuring/ cost cutting exercises as the business
has become fiercely competitive. Also, several innovations in packaging media
have taken place. (CMIE reports)

Adapting To Local Conditions. In the last few years, process of adapting to local
conditions has accelerated. MNCs are adapting their products, process and
marketing communication to the local conditions. They alter the manufacturing
process to maximize use of local raw materials and suit
their products to the taste and requirements of local consumers. This process has
been necessitated by the imperative to be cost effective and be competitive vis-à-
vis strong local players.

The role of packaging has increased significantly in recent times, partly due to
improvement in packaging technology. Traditionally, packaging was expected to
serve the purpose of protection and the economy. Then, packaging was expected
to fulfill the objective of convenience. (Kotler
Philip, 2003) Today, packaging is used as an effective tool for promotion. Besides,
new packaging technology has enabled most FMCG companies to significantly
reduce their packaging costs. Increased focus on rural distribution has increased
logistics spend for the leading companies.

Relevant existing literature and studies have been clipped below . A researchers
has studies this literature for gaining insight into the problem :

Bennet , James A.et.al (2001) have conducted a study on ‘’ can money flow
predict is defined as the difference between up stick and down stick dollar trading

pg. 65
volume .The study says that despite little published research regarding its
usefulness , the measure has becoming an increasing popular technical indicator
because of its own means . the study summarizes its most important finding that
money flow appear to predict a cross sectional variation in future returns . Their
predictive ability is sensitive , however , to the method of money flow measurement
(eg. exclusion or inclusion of block trades ) and the forecast horizon.

AN ARTICLE AUTHORED BY SAHU(2002) shows that for the successful

functioning of a firm , the role of management is required to focus on maintaining
short term liquidity in a scientific manner. The study revealed that the short
financial position of the companies in the FMCG sector was not satisfactory . An
empirical study was conducted by Vishnani and shah (2007) covering the indian
consumer electronic industry from 1994-95 to 2004-05 .

From the results of regression analysis it was concluded that working capital
management plays an important role in the profitability of any company. higher
investment in current assets could not yield proper return for the firm which
hampered the liquidity and profitability , a huge amount of funds became idle which
thus could not generate any return . Bhunia (2010) , in this study on paper
purchasing companies suggest that improper liquidity is a major threat for the
survival of the firm . Payment of short term obligation reflects the liquidity position
of any company.

MICKO TANAKA YAMAWAKI et. AL (2007) 7 Have conducted a study on

‘’adaptive use of technical indicator for predicting the Intra - Day movement’’ . The
researcher has proposed a system to select the best combination of technical
indicators and their parameter value adaptively by learning the pattern from the
tick wise financial data . In this paper, the researching has shown that this system
gives goods prediction of the directors of motion with the hitting rate at 10 ticks
ahead of the decision point as high as 70% for foriegn exchange rates (FX) in 5
years from 1996 to 2000 and 8 different stock prices in NYSE market in 1993 the

pg. 66
study conclude that tick wise price time series cary a long memory of the order of
a least a few minutes , which is equivalent to 10 ticks

ACCORDING TO MARIMUTHU (2012) The ratio analysis technique gives a clear

picture about the financial position of any firm .He has suggested in his study that
the sample companies reflected to mark the current and quick ratio expect the
interest coverage ratio. His study concluded that the firm should focus on their
working capital management properly and maintain receivables , liquidity and more
properly than big firms. He has covered a period of 10 years in his study .He has
focused mainly on the short term financial position of the firms .

R. AMSAVENI AND S. GOMATHI (2013) found that through economic analysis

the GNP interest rate , exchange rate , FER , Agriculture production ,government
receipt and expenses has a growth rate during the study period . the co. Analysis
done with the help of ratio analysis indicates that colgate and HUL companies are
financially in satisfactory positions during the study period.

RANJIT KUMAR PAWAN, (2013) Found that ITC ,emami,dabur,colgate has been
able to repay its debt during the study period . DTR of nestle and colgate show the
efficiency of debt management debt to total asset ratio of emami and dabur shows
that more assets of the co is financial through debt .

A STUDY WAS CARRIED BY HETAL GAGLANI AND SMITA RAO (2015) On

financial health of sun pharmaceutical industry ltd by observing the liquidity and
profitability through the application of Altman’s Z-score test which depicted a
moderate correlation between liquidity and profitability and the sample firms were
in green zone

AMANJOT KAUR SODHI AND SIMRAN WARAICH (2016) Found that SBI score
the highest average term of EPS also for SBI the CAGR is negative in all parameter
expect for NPM .BOB has positive CAGR in P/E ratio and D/P ratio . PNB has

pg. 67
performed the best in OPM along with positive CAGR only in D/P ratio .HDFC bank
scores higher avg then other do in NPM,ROE and highest CAGR in NPM .ICICI
has highest CAGR in OPM and ROE stand the best performance in D/P Ratio.

MS.J. HEMA AND V. ARIRAM (2016) Found that indian pharmaceutical industry
has a high growth rate and its sales and net profits also shows increasing trend
and the company analysis revealed that its financial performance through the
financial ratio which include that lupin and torrent pharma are financial in
satisfactory position during the study period

DHANABHAKYAM AND SAROJA ( 2016) ‘’ Financial performance of selected

FMCG company using ‘’z’’ score model’’ the study was based on the objective to
analyse the performance of FMCG company in India and predict the solvency of
model which is based on discriminant analysis . it also proposes to identify the
company’s financial indicators like working capital management retained earnings
,BIT and total assets would be used . The trends will help the company and initiate
steps to avoid financial distress and bankruptcy .Therefore the study of financial
ratios and observing trends will help the management in evaluating the
performance of the company.

DR .AMIT KUMAR SINGH , PREETI BANSAL (2016) conducted a study on

impact of financial leverage on firm performance and valuation in a panel data
analysis . To assess empirically (from 2007 to 2016) the impact of financial
leverage on the performance and valuation of firms in the selection 58 BSE FMCG
firms that constitute the S&P BSE FMCG index . The results showed that financial
leverage has significant and negative impact on performance and valuation when
firms financial performance indicates ROA and EVA and validation indicator is
tobin’s out of the control variables ,R&D spending ,size,growth in sales and WACC
significantly impact hge firm performance and validation . remaining control
variable like tangibility and profitability are found to have insignificant impact on
firm financial performance and validation.

pg. 68
There is only one formula to win a 100-meter race --- run faster than the other
guys. To do that, you need to be learner and fitter than the competition. The same
applies to business as well. The only way to stay ahead in business is to be faster
and fitter. Indian business realized this clearly during the tumultuous decade of the
90’s, which changed the rules of the game forever. No longer does any artificial
wall protect any business. In the race to get more competitive, an area that is
increasingly coming under focus is Distribution i.e. the physical movement of good.
Here an attempt is made to study aspects of distribution, along with its changing
face. Further the transition from push to pull environment is also studied. Thus in
nut shell to study the current status of distribution in FMCG industry. 19

In the heydays of 1980’s the business Mantra was distribution reach. Every
distribution manager believed the way to market dominance was by reaching the
greatest number of brands to the maximum number of outlets across India
(Carvalho, 2002) The large scale and geographical diversity in retail outlets spread
across the country meant that all FMCG markets needed to service a large
percentage of these outlets to really reap economics of scale.

Over the period companies like HLL, Godrej, P&G along with recent entrants like
Nirma and Wipro have build their distribution networks diligently. Distribution is the
crucial success factor for FMCG, but distribution at best cost, is vital. For
Company’s like GCMMF (Maul) distribution is literally all, since it deals in
perishables like milk and milk products. For all higher product visibility and lesser
inconvenience for the customer in obtaining the product results in more sales.
(Mitra, 2003).

pg. 69
 CHAPTER - 4
ANALYSIS & CASE STUDY

FMCG CHAIN USES CUSTOMER SEGMENTATION TO DETERMINE

PROFITABILITY

THE CHALLENGE

A large FMCG chain aimed to:

Shift from a product focus to a customer centric approach

Improve the effectiveness of its marketing spend
Improve its customer insight & understanding

THE SOLUTION

Datamine transformed transactional data into actionable marketing knowledge by:

➢ Obtaining daily transactional data from over 60 stores

Merging and analysing the data to create a customer centric view.
This was done by identifying households and their ‘shopping basket’

➢ Using data analytics to generate critical marketing information about each

household, including:

➢ Potential spend

pg. 70
 ➢ Price sensitivity
➢ Share of wallet
➢ Categories shopped
➢ This customer insight was delivered via a secure online dashboard and key
management reports were provided.

THE RESULT

The analysis identified the top segment of the retailer’s customer base in terms of
spend and profitability. The customers within this segment were shown to be more
likely than the base to:

Be high income earners

Be tertiary qualified
Be self-employed, earn interest, dividends, or rent
Work in professional industries
Although this segment only accounted for 8% of the retailer’s total customer base,
they accounted for 29% of its total customer spend. As these high-value
customers were already spending, the retailer focused on providing more relevant
and timely offers to this group — and achieved greater promotional response rates
and a significant return on investment.

FMCG ORGANISATION EVALUATES PRINT ADVERTISING

EFFECTIVENESS
THE CHALLENGE

A major FMCG group were running full page newspaper ads showcasing discounts
at one of their supermarket brands. This type of advertising is expensive and the
company wanted to assess its short-term return on investment and discover

pg. 71
whether or not the ads were actually impacting sales.

THE SOLUTION

Datamine used supermarket checkout data to analyse the impact of the newspaper
ads. Sales in the promotional periods were compared to before and after the
promotions and to those during the advertising period.

Datamine also assessed the effect of the product specials themselves, measuring
increased sales of the advertised products and the revenue change of products
within the corresponding category.

THE RESULT

The analysis found no significant increase in sales revenue or store visits during
the promotions. In line with this, there was no evidence that the newspaper ads
affected customer behaviour.

This data-driven strategy has assisted the company in optimising future media
planning and ensuring the best return on investment from its campaigns

FMCG ORGANISATION UNDERGOES CUSTOMER PROFITABILITY

ANALYSIS

THE CHALLENGE

Consider the following:

Fact one most companies are in business to make a “profit”

Fact two most companies derive value from customers

pg. 72
Fact three few companies know the profitability or relative value of individual
customers, products, or channels

Competition in saturated markets being as fierce as it is today means it’s vital that
businesses know the profitability of customer segments, individual customers,
different products and services, and different channels of distribution.

Datamine’s client, a wholesaler of FMCG, wanted to analyse the net profitability of

individual customers in order to focus marketing activities on its most profitable
markets and customers.

THE SOLUTION

Datamine takes a practical approach by approximating value to give relative

profitability, or provide profit at a very precise level.

In this case, Datamine merged the customer billing and cost databases to calculate
the gross profit for several million retail customers purchasing more than 100k
different products.

Datamine then took historical customer transaction data and evaluated the activity
based costs of supporting each individual customer across three different sales
and service channels.

THE RESULT

The resulting net profitability analysis enabled Datamine's client to identify and
focus marketing initiatives on those customer groups and market opportunities
providing the highest profitability to the company.

The client gained a new understanding of the value of products, services, channels
and customers in relation to each other.

This enabled them to see where value or profitability can be improved, identify
those customers who are not worth actively retaining and take a step toward
determining the lifetime value of their customers.

In addition to helping focus marketing campaigns, the analysis can drive

pg. 73
development of new products and services based on their likely profitability across
all customers as well as identifying which activities are adding value to the
business, those that do not, and those that are business sustaining.

pg. 74
 CHAPTER - 5

FINDINGS

When asked the age of the individual this form . 8.5% were in the below 18 age
group . 88.1% were in the 18-25 age group , 2.2% were in the below 25-30 age
group . 2.2% were in below 40 and above age group .

When asked the above question 89.7% replied by student , 8.6% replied by the
service people , 2.7% replied by other. This shows that the area of respondants
was maximum in student.

pg. 75
When asked the above question 64.4% replied ‘YES’’, 18.6% replied as ‘’NO’’
and 18.9% replied as ‘’MAYBE’’ . by this we come to know that many of the
students are aware of FMCG brands.

When asked this question 10.2% replied as ‘’ ROUTE , 22% replied as ‘’ MORE
THAN ONCE A WEEK ‘’ , 28.8% replied as ‘’ WEEKLY ‘’ , 1.7 % replied as ‘’
FORTNIGHTLY ‘’ , 24 % replied as ‘’ MONTHLY ‘’ 0% replied as ‘’ LESS THAN
A MONTH ‘’. This shows that people prefer buying in bulk goods at once than
going for smaller short trips for the same in lesser quantities.

pg. 76
When the question asked , 5.5% replied as ‘’ BRAND ‘’ and 47.5 % replied as ‘’
PRICE ‘’. Here we can see that the influence of brand is slightly higher than
price. Often it is confused for that branded products being higher for the reason
of its quality and hence the corresponding lower priced ones are considered
inferior. But after this analysis we can agree that price and brand are almost
equally important for purchasing behavior of the consumers.

When this question is asked , 79.7% as replied ‘’ INCREASED ‘’, 10.2% as

replied ‘’ DECREASED ‘’ and 9.1 % replied as ‘’ NO CHANGE ‘’.
According to this, we know that our respondents are aware of the global
scenarios and have kept their knowledge of its changes well.

pg. 77
When asked this question 83.1% of people said ‘’ YES ‘’ and 16.9 % of people
said ‘’ NO ‘’. Promotion is another way of marketing the brand. Considering the
promotion done well, it will attract more and more consumers to purchasing the
product.

When asked this question , 54.2 % replied as ‘’ COUPON ‘’ , 66.1 % replied as ‘’

PRICEOFF ‘’ , 16.9% , replied as ‘’ FREEBIES ‘’ , 18.6 % replied as ‘ SCRATCHES
CARD ‘’ , 11.9% replied as ‘’ LUCKY DRAW ‘’ , 13.6% replied as ‘’ BUNDLING ‘’
and 40.7 replied as ‘’ EXTRA QUANTITY ‘’. This shows that coupons and price off
are one of the major reasons to have purchased the product. Buying in bulk is
always a plus point and some agree to it too. Others use the menial but also
effective methods of scratch cards and other promotional routes.

pg. 78
When asked this question , 3.2% replied as ‘’ REGULARLY ‘’ , 67.8% Replied as
‘’ IRREGULARLY ‘’. This shows that home goods are much preferred for our
consumers than compared to ready to eat goods. It may be for the reason of
safety or even just price rates and quantity proportions.

When asked this question , 83.1% replied as ‘’ YES ‘’ and 16.9% replied as ‘’ NO‘’.
Packaging is an important part while buying a product. A poorly packed material
might not attract consumers for purchasing it for the reason of it being exposed
and might have some quality issues later. Or may not be as preferred and helpful
as other well-packaged goods.

pg. 79
When I asked this question to people than i got replies from people that , 96.6%
of people prefer eco - friendly product and 4.4% people by non eco- friendly. This
shows that nature is also considered while purchasing of a good. Sometimes even
if the price us more than that of non-ecofriendly products, people prefer to buy it
only for the reason of easy disposal and convenience.
When asked this question to people
‘’Brand management’’ most rating is given to good performance to branding ,
‘’ Advertising management ‘’ most rating is given good performance to advertising
, ‘’ Sales promotion ‘’ most rating given to equal performance to sales performance
. ‘’ ‘’ Distribution management ‘’ most ratings are given to good performance . ‘’
Physical distribution ‘’ most rating given to equal performance .

‘’ Demand distribution ‘’ most ratings are given to good performance . ‘’ Sales

administration and management ‘’ most rating is given to equal performance when
asked. This shows that our respondents have mostly a average view for all. It
means that they consider all methods to be equally important and necessary.

pg. 80
When asked this to people
‘’ Suitable business ‘’ most rating is given to good performance
‘’Growth and long term performance ‘’ most rating is given best performance
‘’Greater market dominance ‘’ most rating is given to equal performance
‘’ Competitive advantage ‘’ most rating is given to good performance
‘’Total cost ‘’ most rating is given to good performance
‘’ Dev and maintenance of harmonious channel ‘’ most rating is given to good
performance
‘’ improvement of eco and social welfare ‘’ most rating is given to good
performance

When asked this question to people they replied , 76.8% replied as both equally
they want 14.3% replied as more advertising and less sales promotion , 8.9%
replied as more sales promotion and less advertising

pg. 81
 CHAPTER 6
Annexures: Questionnaire

QUESTIONS :

NAME

Your Answer ___________

AGE GROUP

o Below 18
o 18-25 years
o 25-30 years
o 30-40 years
o 40 and above

CURRENT EMPLOYED AS

o Student
o Services
o Professional
o Others

1. DO YOU BUY SAME BRAND FOR ANY SPECIFIC

o Yes
o No
o Maybe

2. HOW OFTEN DO YOU CARRY OUT YOU MAIN GROCERY

SHOPPING I.E EXCLUDING SHORT VISIT FOR THE GROCERIES

 Route
 More than once a week
 Weekly
 Fortnightly
 Monthly

pg. 82
3. WHILE BUYING A PRODUCT WHICH FACTOR INFLUENCE THE MOST
o Brand
o Price

4. DO YOU THINK THAT IN THE GLOBAL COMPETITIVE SCENARIO AND

THE ERA OF INFORMATION TECHNOLOGY , THE ROLE OF
DISTRIBUTION CHANNEL MEMBERS HAVE INCREASED
o Increased
o Decreased
o No change

5. DO YOU CONSIDER PROMOTIONAL SCHEME WHILE PURCHASING

ANY PRODUCT

o Yes
o No
6. WHICH PROMOTIONAL SCHEME ATTRACT YOU THE MOST

 Coupon
 Priceoff
 Freebies
 Scratch card
 Lucky draw
 Bundling
 Extra quantity

7. WHAT IS THE FREQUENCY TO BUY READY EAT TO PRODUCT

o Regularly
o Irregularly

8. DOES PRODUCT PACKAGING INFLUENCE YOUR BUYING

BEHAVIOR

o Yes
o No

9. DO YOU PREFER TO BUY A PRODUCT WHICH IS ECO FRIENDLY

o Yes
o No

pg. 83
10. SPECIFIC THE IMPORTANCE OF VARIOUS FUNCTION OF
MARKETING IN THE PRESENT DAYS COMPETITIVE SCENARIO IN
THE SCALE OF 1-5 : 1 BEING THE LEAST IMPORTANCE AND 5
BEING THE MOST IMPORTANT

o 1
o 2
o 3
o 4
o 5

11. PLEASE SPECIFY VARIOUS PURPOSE BEHIND EFFICIENT

DISTRIBUTION MANAGEMENT ON THE SCALE 1-5 : 1 BEING NOT
IMPORTANT AND 5 BEING MOST IMPORTANT

o 1
o 2
o 3
o 4
o 5

12. PLEASE INDICATE THE COMBINATION OF ADVERTISING AND

SALES PROMOTION FOR THE PRODUCT OF THE COMPANY

o More advertising and less sales promotion

o More sales promotion and less advertising
o Both equally

pg. 84
 CHAPTER 8
Conclusions
It is concluded from this study that FMCG sector is growing and will continue to
grow very fast. This sector provides quality and quantity with reasonable cost to
the consumers not doing away with its competitive edge. Consumer satisfaction
is its ultimate objective.

Equity analysis is the most measurement techniques used to measure the

movement of share as well as the profitably and liquidity position of the
respective companies in the share , market which helps the investor to take
decision either to buy or sell to the securities.

From basic foods to processed foods, supply chains are equally important. In
India, all the various elements of the chain already exists, but none work in a
cohesive entity. The disparate players even today look no further than their
immediate supplier and dealer. On one hand the farmer get one-third of the final
retail price, while on the other, high prices of value added processed foods limits
the demand. There is an urgent need to address these issues.

Today, Fast Moving consumers goods have become an integral

part of human life. This sector is recession proof and created huge employment
opportunity in India , hence becoming one of the key pillar of the Indian economy.
FMCG companies should encash opportunities like increasing consumer income,
changing consumer life style, aspiring rural consumer, consistent economic
growth by utilizing its strengths . The competition from unorganized sector can be
overcomed by increasing brand awareness and by reducing cost through sharing
resources such as distribution network. Favorable developments happening in
demand side, supply side and systematic drivers shows that this sector has very
bright future.

pg. 85
It can be conclude that ,there is significant difference in the profitability as well as
liquidity of performance of the selected FMCG units during the study period .
Means every company has different liquidity so they having different profitability
among the selected companies form this analysis it is found that ITC Limited
shows more liquidity compared with other FMCG companies for the study

The aim of any company of the FMCG industry should be to satisfy the needs
and wants of their customers with their product offering. Therefore, selecting the
right products to sell is essential, as selling the wrong products can result in loss
of profit and/or customer value. It is thus important for the businesses to have a
strategy, when selecting the correct products to offer as businesses that
historically show product strategic focus, perform substantially better over
extended periods of time than businesses that do not. In order to achieve the
strategy of a product, the literature highlights the significance of individual
product, product line and product mix decisions,

NPD and PLC to realise a successful product strategy. Furthermore, the impact
of product strategy on customer satisfaction has been highlighted. Yet,
implementing these aspects in the strategy comes along with the disadvantage of
being time-consuming and risky. Apart from this, marketers should be aware of
ethics, public policy issues and regulations during the set of new product
strategies. In respect to this, mimicking offering strategies of pioneers of the
market with an imitation strategy, is not sustainable for FMCG firms. They should
rather focus on product diversification when developing product strategies.

pg. 86
 CHAPTER 8
Suggestions.

On the basis of the project done and the before said analysis we may conclude
that the distribution management has emerged from the back-benches of the
marketing discipline and is all set to become a specialized area of expertise,
critical to the success of any brand. Till date the distribution strategies of FMCG
companies were evolutionary, but from now onwards the strategies would be
revolutionary and in this regard LL is leading from the front.

I don't think the demand in high end consumer products will grow as much now.
There'll be a tremendous increase in demand for branded FMCG products that
are affordable, available in smaller packs and mainly cater to Tier II III cities.

The pandemic has accelerated the growth of snacking. As per Mondelēz International’s
recently released second annual State of Snacking report, 9 in 10 Indian adults (88%)
say they are snacking more or the same (22%) during the pandemic than before it, with
millennials being especially likely to say they prefer snacks over meals (85%).

A majority expect this trend to continue, saying they plan to continue eating small snacks
throughout the day, as opposed to fewer large meals (82%), and that snacking will be
part of their “new normal” even after the pandemic ends (81%). Ultimately, 8 in 10
believe “the current pandemic will have a long-term impact on how we consume snacks
as a society” (81%).

This unprecedented year has also brought about a significant behavioral change
especially on how consumers are purchasing snacks. A majority say they have
started to buy snacks online more often than they do in-store or offline (74%),
with 8 in 10 planning to continue shopping for snacks online once the pandemic
is over (81%).

pg. 87
A similar percentage also say the pandemic has opened their eyes to so many
more ways to get snacks than they knew existed before (80%), including half
who have discovered snacks to try on social media (50%). It was also very
heartening to note that, even while at home this year, Indians are social
snackers.
Today’s young ‘woke’ consumers were already moving away from the excesses
of consumerism and leaning towards sustainable conscious brands before the
pandemic and lockdowns hit their lives.

The all-round strain of the pandemic from volatile job markets and a possible
looming global recession to health and environment concerns; along with the way
lockdowns were framed as health versus economy predicaments—as if one has
to be sacrificed for the other—has left many questioning the very basis of our
consumer-driven economy.

I feel, the months in lockdown have only strengthened that introspection and has
further fueled the young consumers’ move towards purpose and value, making
them think-twice before buying by taking in to consideration the long-term impact
of their spends not only on their finances, but on their own beliefs, on society and
on the planet.

Keeping this in mind a big communication trend I see emerging as we move into
2021 is brands engaging more purposefully with deeper more sentient
conversations. These could include brands talking about their environmental and
sustainability efforts, community initiatives, health impact and most importantly
value addition.

Hence, it’s not only our communication like our recent Park Avenue Germ Protect
soap film about our protagonist helping his community but at every level we are
constantly taking steps to enhance efficiencies for a better world like our soon to

pg. 88
be launched sustainable and eco-friendly packaging.

The pandemic is a black swan event that brought several changes at the
economic and societal levels. Consumers had to face economic stress which
made them more discretionary in their consumption choices. Our virtual connects
with over 450 consumers amidst the lockdown made it clear that items which
they do not deem to be too essential are unlikely to find a place in their shopping
carts. Come 2021, only brands solving a real consumer problem or adding value
to their lives will be on top of their minds.

It has become increasingly important for brands to feel the pulse of the consumer
and provide authentic solutions to stay relevant. Kellogg’s has paid attention to
the consumer’s shifting needs and adapted with agility to ensure it solves
consumers’ nutritional demands in the most convenient manner and this will
continue to be our focus in the coming year.

The pandemic has accelerated the growth of snacking. As per Mondelēz

International’s recently released second annual State of Snacking report, 9 in 10
Indian adults (88%) say they are snacking more or the same (22%) during the
pandemic than before it, with millennials being especially likely to say they prefer
snacks over meals (85%). A majority expect this trend to continue, saying they
plan to continue eating small snacks throughout the day, as opposed to fewer
large meals (82%), and that snacking will be part of their “new normal” even after
the pandemic ends (81%).

Ultimately, 8 in 10 believe “the current pandemic will have a long-term impact on

how we consume snacks as a society” (81%). This unprecedented year has also
brought about a significant behavioral change especially on how consumers are
purchasing snacks. A majority say they have started to buy snacks online more
often than they do in-store or offline (74%), with 8 in 10 planning to continue
shopping for snacks online once the pandemic is over (81%).

pg. 89
 CHAPTER 9
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