MARC Insights –

FMCG Industry
Overview
2023
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The FMCG Industry In India

FMCG Industry In India Mainly Consists Of: Rise Of FMCG Industry

Household &
Healthcare Rising
Personal Care Rising Brand
Disposable
Awareness
Income
Food &
Beverages

Rising youth
The FMCG sector in India is one of the country’s largest and
fastest-growing sectors that spans a wide range of products Population
including packaged food, beverages, personal care
products, and household goods.

Being India’s fourth-largest sector, rising disposable

High competition, ever-shifting consumer preferences, and
income, a rising youth population, and rising brand
a mix of international and domestic players make it a
awareness among consumers has led to its immense
dynamic and fast-growing industry with boundless
growth and prominence over the years.
potential for growth and innovation.
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Market Size & Growth Drivers

Market Size Growth Drivers

Growth of Growing awareness regarding well-being

has led to people becoming more
• The FMCG market is expected to increase at a CAGR the Health watchful of what they buy. Organic,
of 14.9% to reach $220 billion by 2025, from $110 and Wellness superfood-based, nutritious, natural
billion in 2020. segment products are in high demand due to this.

Disposable income in rural India has

220
USD Billion Rural increased because of the direct cash
192 transfer scheme. Rural India accounts for
167 Growth more than 40% of consumption in major
145 FMCG categories.
126
110 During and post the pandemic, the
personal care segment saw an uptick in
Personal sales. Google searches for face masks
Care Boom and hand wash swelled up during the
outbreak but the increased demand for
these products is here to stay.

2020 2021 2022 2023 2024 2025 India’s growing online userbase and
deep smartphone penetration, will make
Source: ‘FMCG Industry in India’: https://www.ibef.org/industry/fmcg
Market Size online and digital marketing the
frontrunners in converting passive
consumers into active ones.
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State Wise Income & Spending

State Wise Average Monthly Consumption
State Wise Average Monthly Income
Expenditure per Household (in Rupees)

Punjab and Kerala

stood at the top
end of the
hierarchy with
monthly
expenditures
exceeding ₹11,000.
While West
Bengal, Uttar
Pradesh, Odisha,
Madhya Pradesh,
Jharkhand,
Chhattisgarh, and Less than ₹7,000
Andhra Pradesh
₹9,001 to ₹11,000
fared poorly with
the monthly ₹7,001 to ₹9,000
expenditure being
lower than ₹6000. ₹11,000 and above

Source: MARC Research

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Household & Personal Care Industry In India

Indian Household Care Market Breakdown of Household Consumption
(in Billion $) Expenditure in India
2.8 Sector Percentage
2.5
2.3 Food and non-alcoholic drink 32.5
1.7 Misc. Goods and services 15.0
1.3 Transport 14.6
1.0 Water, gas and electricity 14.4
Clothing 4.8
Health 5.1
2022 2023 2024 2025 2026 2027 Education 4.6
Household equipment 2.6
The Household Care segment in India is projected to Communication 2.5
reach US $1.3 Billion in 2023 with a CAGR (2023-2027) of Tobacco, alcoholics drinks 2.2
21.64%. In general, Indian consumers are attached to a
Restaurants and hotels 1.0
particular brand but are not exclusive. They seek, above
all, the added value from the purchase, more than its Culture and leisure 0.8
reputation. Companies wishing to reach as many
consumers as possible must make significant efforts to Source: Statista, Household Care In India
showcase that added and differentiated value. Source: https://santandertrade.com/en/portal/analyse-markets/india/reaching-the-
consumers
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Healthcare Industry In India

The healthcare segment of the FMCG industry mainly
consists of Over-the-counter (OTC) products. OTC drugs Market Drivers For OTC Drug Market
are non-prescription drugs that can be consumed by
individuals without requiring a prescription from a
healthcare professional.

Growing geriatric population

Indian OTC Drugs Market (in Billion $) suffering from various diseases.

19.4
16.6 Prevalence of disease among
14.3 the youth due to their everyday
12.2 lifestyles.
10.5
9.0
7.6

Easy availability, affordability,

and increased awareness
among patients.
2022 2023 2024 2025 2026 2027 2028

Source: MARC Research

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Packaged Food Industry In India

The packaged food market in India is predicted to Growth Drivers
develop at a CAGR of 4.6% from 2022 to 2027, reaching
a value of $3.4 billion by 2027

Growing size of middle-class

Indian Packaged Food Market (in Billion $) population and Rising
disposable income

3.4
3.1 3.2
2.8 3.0
2.7 Inclination of millennials
toward the western lifestyle

Internet penetration in rural

areas, and technological
2022 2023 2024 2025 2026 2027 breakthrough

Source: Industry Arc


Impact Of Covid 19
E-Commerce Boost
The e-commerce companies operating in
the grocery segment saw an initial spike in
demand as more people ordered online.
Focus On Digital Marketing
With more consumers buying FMCG
products online, companies are shifting
their marketing budgets towards digital
channels. This includes investing in SEO,
social media marketing, and online
advertising.
Better Inventory Management
Companies are using technology to
manage their inventory better. This
includes using RFID tags to track inventory
levels and locations and predictive
analytics to forecast future demand.
Source: MARC Research, Ollen Group
www.marcglocal.com
Health Consciousness
The demand for organic and natural
ingredient infused food products
increased at an exponential growth rate.
Shift In Supply Chain
The shift to online purchases has changed
the FMCG supply chain. To meet the
needs of online consumers, companies
are investing in new technologies such as
warehousing and fulfillment solutions.
Improved Logistics
Technology is also being used to improve
the logistics and transportation of FMCG
products. This includes using GPS
tracking to optimize delivery routes and
the use of drones and robots for last-mile
delivery.
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Key Figures To Consider

India’s online shopper base is estimated to Percentage of buyers whose buying

increase to 400–450 million by 2027. Most of decisions were influenced by
these shoppers are already in the digital funnel. different attributes
Presently, 450–500 million people have used
social media, out of which 180–190 million have
shopped online in 2021, which is expected to 66 – 77% Natural Ingredients
increase significantly.
66 – 77% Not Tested On Animals

25 %
of the total household 66 – 77% Gluten Free
expenditure in India comes from
just 5% of the households
52 – 57% Organic Ingredients

Executives at supermarkets and online stores 33 – 38% Botanical Ingredients

said ‘natural’ products have been flying off store
shelves clocking 20-25% year-on-year growth. 31 – 35% Free From Label Claims

Source: MARC Research

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M&A Activity
Date Acquirer Acquiree Deal Value Deal details
(in million $)

100% equity share deal; backed TCPLs push

Tata Consumer
Nov 2021 Tata SmartFoodz 53.13 to strategically expand to value-added
Products (TCPL)
categories

Combined with Emami's Navratna Cool Talc,

Emami will become leader in this niche
Mar 2022 Emami Dermicool 55.37
category which would also help realise
synergetic benefits and optimize costs.

Acquired 30% stake in the company; strategic

July 2022 Emami Cannis Lupus Not Available acquisition to help Emami enter the petcare
segment

71.81 less
proportionate Acquired 51% stake; in line with Dabur’s goal
Oct 2022 Dabur Badshah Masala
debt on closing to expand into the food business.
date

Source: MARC Research


FMCG Industry – Trends To Look Out For
Online Retail
In 2021, almost 10.7% of retail sales were executed
digitally compared with 4.7% in 2019. As consumer look
for better and faster ways to shop, the introduction of
Swiggy mart and similar apps will continue to penetrate
the market and become mainstays.
Disruption By Smaller Brands
There has been an increase in Homegrown Brands
offering chemical-free, all-natural FMCG segment. This
coupled with the D2C model adopted by some smaller
brands brought them success rapidly.
Word-of-mouth
Unlimited access to the internet can easily lead to
consumers being lost in choice. This leads to many
shoppers choosing brands and making purchase
decisions based on word-of-mouth.
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Home Delivery
The D2C model helps manufacturers cut down on
distribution costs and has attracted major players to set
up direct sales channels, set up multiple channels
through digital platforms and their own websites.
Doorstep delivery has led to a shift in how customers
buy products.
Sustainable Supply chains
The topic of climate change and the need for
environmentally friendly practices has been a part of
public discourse for decades, however, its impact on
purchasing decisions is only just rising and starting to
have a real impact on the FMCG market. Brands are also
shifting their business models to be more sustainable
and match these consumer needs.
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Ever wondered MARC’s detailed and

if your business comprehensive analysis of
your business performance,
is performing up as well as of your
competitors and their
to its full strategies and how your
own business is performing
potential or if its against the industry
benchmarks, all of this with
in-tune with the MARC’s personalized
recommendations.
industry?
Note: Financial figures used in the following
section of the report are fictional and are used to
represent MARC’s capabilities.
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Profit & Loss Snapshot

PL Snapshot (ABC Company)
Particulars FY20 FY21 FY22
Revenue from Operations 100% 100% 100%
Total Income 100% 100% 100% 25% 25% 25%
Expenses
Cost of Materials Consumed 46% 47% 49%
Employee Benefits Expense 5% 5% 5%
Advertising and promotion 12% 10% 9%
Other Expenses 13% 13% 13% 39,783 47,028 52,446
Total Expenses 75% 75% 75%
FY20 FY21 FY22
EBITDA 25% 25% 25%

Finance Costs 0% 0% 0%
Depreciation and Amortisation Expense 3% 2% 2% The company’s EBITDA margin has remained stable at 25% from FY20
to FY22 even though a major expense head, that is cost of materials
Other Income 2% 1% 0%
EBT 24% 23% 23%
consumed as a % to revenue increased from 46% in FY20 to 49% in
FY22.

• Cost of materials consumed constitutes a major expense head. YoY it has been witnessing an increasing trend from comprising 46% of
revenue in FY20 to 47% in FY21 and it further increased in FY22 and stood at 49%.
• Employee benefit expenses and Other expenses as a % to revenue have remained constant YoY, comprising 5% and 13% of revenue
respectively.
• The EBITDA margin remained constant YoY at 25% even though the Cost of materials consumed increased. This was because the Advertising &
Promotion expense declined YoY from 12% in FY20 to 9% in FY22.
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Key Metrics (1/2)

Segment-wise Revenue & EBIT Analysis ROCE
43%
38% 37%
34%
32%
30% 23%
28% 27% 22%
17% 18%
19% 15%
29% 29%
28%
19% 17% 20% 19% 19%
17%

FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22

Beauty & Personal care Home care Foods & Refreshment
ROCE

ABC Company’s produces products that cater to 3 major segments –

Beauty & Personal Care, Home care and Foods & Refreshments. ROCE shows the relationship between a company’s operating
• Beauty & Personal care segment has been observed to generate the profit and capital employed and can be used to assess a
highest EBIT margin. However, as a % to total revenue, it has been company’s profitability and capital efficiency.

decreasing YoY. ▪ From FY18 to FY22, ABC company witnessed an increase in its
• Home care segment comprised c. 32% of total revenue YoY. ROCE from 119% in FY18 to 176% in FY22, thus indicated better

• Food & Refreshments segment’s share of total revenue increased from profitability and capital efficiency
19% in FY20 to 28% in FY21 and slightly decreased in FY22 to 27%.
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Key Metrics(2/2)
Operating Cash Flow Cash Conversion Cycle
17% 17% 17%

15% FY20 FY21 FY22

15%

-64

6,059 5,800 7,623 9,163 9,048 -83

FY18 FY19 FY20 FY21 FY22

-101

Operating Cash Flow is a measure of the amount of cash generated from a

The Cash Conversion Cycle (CCC) is a metric used to
company’s normal business operation.
determine how many days it takes a company to convert the
• ABC Company’s Operating cash flow has been witnessing an increasing
cash it spends on inventory back into cash by selling its
trend from INR 5,800 in FY19 to INR 9,163 in FY21. This indicates that the
products.
company is generating sufficient funds to maintain and grow its
• ABC company’s negative CCC implies that the inventory is
operations.
sold before the company pays for it.
• In FY20, while the Net Profit margin increased by just 2%, the Operating
• This is a desirable situation
cash flow increased by 31% compared to FY19
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Competitor Analysis
Financial Analysis Of Competitors

Particulars ABC Company Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5

Revenue 52,446 65,205 12,425 10,889 9,811 14,136

Compounded Sales Growth (3years) 10% 8% 20% 9% 24% 9%

EBITDA Margin 25% 32% 14% 21% 11% 16%

Net Profit Margin 18% 26% 8% 16% 3% 11%

Compounded Profit Growth (3years) 13% 6% 33% 6% 118% 9%

ROCE (3 Years average) 21% 28% 8% 22% 9% 36%

Interest Coverage Ratio 129.2 451.3 23.5 57.7 4.2 15.3

Current Ratio 1.3 2.7 2.3 1.3 2.8 0.9

Inventory Turnover ratio 13.8 6.1 0.4 1.0 0.3 1.2

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