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Analysis of FMCG sector Project Report Submitted to (SIBAR) In Partial Fulfillment of Requirement for the Award of PGDM- MARKETING

By Jaspreet Singh bhamra Under the guidance of Prof. Shital Bhusare

Sinhgad Institute Of Business Administration And Research, Kondhwa (Bk), Pune. 2010-2012

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almost everyone's lives are touched by FMCG. The industry also engaged in operations. those categories of products that are consumed at regular intervals. Procter & Gamble. pharmaceuticals. The industry is vast and offers a wide range of job opportunities in functions such as sales. invented mass marketing almost single-handedly and grew to become multinational giants in the process. purchasing. operations. Examples include food & beverage. distribution and marketing of consumer packaged goods. personal care. Pepsi and Mars etc FMCG industry. and now increasingly in the rest of the world. human resources. purchasing. supply chain. FMCG MARKETINGMarketing fast-moving consumer goods (FMCG) is one of the ³purest´ and most sophisticated forms of selling there is.e. Carlsberg. production and general management. The Fast Moving Consumer Goods (FMCG) is those consumables which are normally consumed by the consumers at a regular interval. alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production. Coca-Cola. FMCG played a major role in the rise of consumerism during the twentieth century and drove the development of the media from the days of the sponsored radio show of the 1920s. product development and general management. plastic goods. General Mills. Selling FMCG provided the funds for the mushrooming growth of television and the establishment of advertising agencies as a vast. such as Procter & Gamble and Coca-Cola. marketing. Definitions of FMCG vary. lucrative industry. Unilever. financing. supply chain. Reckitt Benckiser. finance. Global leaders in the FMCG segment are Sara Lee.INTRODUCTION The Fast Moving Consumer Goods (FMCG) industry primarily deals with the production. Nestlé. In the West. paper & stationery and household products etc. Kleenex. Some of the prime activities of FMCG industry are selling. i. distribution and marketing of consumer packaged goods. but generally the term is used to mean branded products that are: Page 2 of 17 . etc. marketing. The great FMCG-selling companies.

bottled water. vegetables. ‡ used directly by the end-consumer. ice cream. and ‡ spirits and tobacco. ³Green´ issues.. however. ‡ non-durable. health issues. cosmetics. snack food. In much of the developing world. coffee. FMCG firms are easy targets of consumer boycotts. OVERVIEW OF FMCG SECTOR: Page 3 of 17 . cereals. and numerous lobby groups pressurize large corporations as part of a general attempt to foster many kinds of social reform. and ‡ sold in packaged form. The main FMCG segments are: ‡ personal care ± toothpaste. chocolates. the real opportunities for growth lie in these newer markets. It's not hard to see just how deeply they penetrate our domestic lives. ‡ household care ± fabric wash (laundry soaps and synthetic detergents) and household cleaners (such as dish/utensil cleaners. Many people in Russia and China. tea. and fears about biotechnology are just a few matters that companies cannot afford to ignore. and must pay closer attention to notions of corporate responsibility than ever before. air-fresheners and insecticides). FMCG are still welcomed as a symbol of progress towards prosperity. soap.‡ used at least once a month. for instance. In the ³post-modern´ West. For leading brand manufacturers. want as much FMCG as they can get. etc. skincare. meat. attitudes towards FMCG are changing along with consumer behavior. biscuits. hair-care. ‡ branded and packaged food and beverages ± soft drinks. and paper products such as tissues and sanitary towels.

investment in FMCG industry is also increasing. mp3 players . GPS systems and laptops. rising fuel costs. Items in this category include all consumables that people buy at regular intervals.000 crore in 2010. persistent rise in raw material price. The competition among FMCG manufactures is also growing and as a result of this. dipping industrial growth. Intense competition between the organized and unorganized segments is the other characteristics of this sector. New entrants who wish to bring their product in the national level needs to spend huge sum of money for promoting brands. FMCG companies are equipped with intense distribution network. slowing global economy together with an overall moderating consumer sentiment might lead to a slow volume growth of FMCG segment in 2012 COMMOM FMCG PRODUCTS Page 4 of 17 . digital cameras . These are more frequently replaced than any other electronic product. specifically in India. fluctuation in the currency. A subset of FMCG are fast moving consumer electronics which include innovative electronic products such as mobile phones .Products which have quick turnover and low cost are known as fast moving consumer goods. A major portion of the budget of a household is reserved for FMCG products. These goods are also popularly named as consumer packaged goods Fast moving consumer goods (FMCG) sector in India is one of the largest sectors in the economy with estimated total market size of around Rs 110. FMCG INDUSTRY ECONOMY FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. Input cost inflation. They spend huge sums to maintain their distribution network.

greeting cards. dry cells. Carlsberg. tea. pharmaceuticals. Unilever. Population growth is another factor which is responsible behind the success of this industry. strong distribution networks. photography. consumer electronics. gifts. Procter & Gamble. plastic goods. tobacco and cigarettes. and some of the examples of FMCG products are coffee.Some common FMCG product categories includes food and dairy products. soaps etc. which made this industry as a potential one are low operational cost. drinks etc. Reckitt Benckiser. General Mills. watches. printing and stationery. detergents. Nestlé. MARKET POTENTIONAL of FMCG INDUSTRY Some of the merits of FMCG industry. packaged food products. presence of renowned FMCG companies. LEADING FMCG COMPANIES Some of the well known FMCG companies are Sara Lee. Coca-Cola. paper products. Pepsi and Mars etc NATIONAL SCENARIO Page 5 of 17 . glassware. household products. Kleenex.

which has become the new demand heaven for the industry.Fast moving consumer goods (FMCG) sector in India is one of the largest sectors in the economy with estimated total market size of around Rs 110. remained largely aloof from the slowdown. After sluggish growth for couple of years through 2002-2004. resulting in a spurt in new companies and entry of a number of foreign brands. Availability of key raw materials. a number of new brands emerged domestically as well while the relaxed FDI conditions led to induction of many global players in the segment. the industry has massive potential to grow further. particularly in rural Indian and the high end products. increasing per-capita incomes. the segment has picked up the speed again and has been clocking substantial growth numbers during last 5-6 years. With the Indian economy now back on the high growth trajectory. FMCG¶s growth story started following the deregulation of Indian economy in early 1990s which saw dismantling of the µlicense raj¶. Riding on a rapidly growing economy. Both these factors resulted in leading to rapid development of the FMCG market in India. cheaper labour costs and presence across the entire value chain has provided Indian companies with a key competitive advantage in the twenty-first century. With relatively lesser capital and technological requirements. The sector also continued to do reasonably well following the global financial crisis as the rural India.000 crore in 2010. and rising trend of Page 6 of 17 .

Hindustan Unilever. Dabur. differential pricing and highlighting the functional aspect of their products. But the sector demands high expenditure on branding and distribution. Unorganized segment: The market is characterized by huge presence of unorganized sector which. Less capital requirement: Compared to other manufacturing sectors. still constitutes around 30% of the total market. Global majors like P&G. ITC and Nestle compete with indigenous houses like Godreg. Jyoti Laboratories and Emami etc. despite decline in share after the deregulation. package innovation.000 crore by 2015. FMCG is relatively much less capital-intensive. Page 7 of 17 . the FMCG market in India is expected to further expand to Rs 1. Industry Characteristics MNCs¶ heaven: Indian FMCG sector is characterized by strong presence of multi national companies.80. Most companies in the sector create value through product differentiation.urbanization. Unorganized sector products are particularly popular in rural and semi urban areas of the country.

This will lead to increasing expenditure on FMCG products and hence higher demand in going forward.the size of middle class and its real disposable income are bound to rise rapidly in coming years. nearly all the products like oil. both.Nano marketing: One of the greatest achievements made by the FMCG industry has been the µnano marketing¶. living habits of people are changing fast with greater emphasis being put on life style products and personal care items. as is visible already over last few years. at lower price tags and reach new users from the lower income group as well as to expand market share for value added products in urban India. which has helped the companies to introduce products in smaller package sizes. Changing lifestyle: As a result of rising income and urbanization in the country. Opportunities Large middle class: India has a vibrant middle class of 350 million which generates huge local demand. a subsidiary of Unilever in mid 1990s when it started packing products in small sachets. the Indian economy is currently going through a major structural transformation seen not too often in the world and. Page 8 of 17 . The trend was introduced by Hindustan Lever. detergents etc are available in sachet form in the market. the rising middle class will push demand for various FMCG products rapidly. Today. In fact. With economy set to grow at 8-10% per year for next 10-15 years. shampoo.

Quite a number of people of India are dependent on the FMCG products for their day to day operations. Also.Rural markets: Rural markets which were vastly untapped until recently. the penetration of organized sector products will increase rapidly over coming years even in the farthest corners of the country. the demand of lifestyle products is increasing fast in the rural areas. FMCG products are of relatively low cost than any other products and they offer a quick turnover to the manufacturer. providing huge opportunity to the players in organized sector to expand there reach into the rural India. still have a huge scope. FMCG is an ever-growing sector and this sector offers a Page 9 of 17 . There is a vast prevalence of products from the unorganized segment in the rural markets. With rapid penetration of communication and broadcasting services in the rural areas. KEY PLAYERS IN FMCG SECTOR FMCG stands for Fast Moving Consumer Goods and India is a hub for FMCG companies. with Indian government looking to improve the physical infrastructure of the country and planning huge investment.

soap. operations. HR. general management. administration. paper products. product development. cosmetics. sales and supply chain management. finance. FMCG goods might also include products like packaged drinks and food products. The list of top players in India in FMCG sector is given below: Top ten FMCG companies in India: ‡ Hindustan Unilever Ltd ‡ Indian Tobacco Company ‡ Nestle India ‡ GCMMF (Amul) ‡ Dabur India ‡ Asian Paints ‡ Cadbury India ‡ Britannia Industries ‡ Procter & Gamble Hygiene and Health Care ‡ Marico Industries A small description about these top FMCG players in India is given below: Page 10 of 17 . shaving products. Thus. tooth cleaning products. consumer electronics and pharmaceuticals even though these products are categorized separately.wide range of employment opportunities in different departments like marketing. bulbs and glassware. this sector improves the earning capacity of individuals by offering wide range of employment opportunities FMCG products normally include different varieties of frequently purchase consumer products like detergents. purchase. toiletries and other non-durable products like plastic goods. supervision.

The company has been identified as a Golden Super Star Trading Company by the Government of India. The company offers a wide range of employment opportunities in the areas of purchase. Of the different products offered by GCMMF. Indian Tobacco Company: Indian Tobacco Company came into existence in the year 1910 with the name of Imperial Tobacco Company of India. GCMMF (Amul): GCMMF stands for Gujarat Cooperative Milk Marketing Federation and the company aims at offering good returns to the farmers and at fulfilling the requirements of consumers by offering them quality products. The company deals with different FMCG products and it cannot be any more called as Tobacco Company. It has been found that two out of every three Indian who are using food and beverages and home & personal care products are making use of the products of Hindustan Unilever Limited. The company is manufacturing Indian Consumer products with international standards and the company is committed to shareholder satisfaction and constant growth. The company is famous for its employees¶ satisfaction policies and the employees of the organization are happy with their employer.Hindustan Unilever Ltd: Hindustan Unilever Limited was previously called as Hindustan Level Limited and it came into existence in the year 1933 in the name of Lever Brothers India Limited. Amul range of products is the most famous and millions of people in India use Amul products. Some of the products of Page 11 of 17 . finance and corporate development. legal. technical. Nestle India: The journey of Nestle India began in the year 1912 in the name of the Nestle Anglo-Swiss Condensed Milk Export Company Limited and they are dealing with selling and importing finished products in Indian market. The company is one among the top wealth creators of India.

Gwalior. They are manufacturers of FMCG goods namely paints and their plants are located in different states like Tamil Nadu. Uttar Pradesh. hajmola. Some of their popular branded biscuits are milk Page 12 of 17 . Eclairs. Amul Ghee. Amul Cheese. Amul Ice Cream. Amul Milk. Amul Chocolates. The company is divided into two major strategic business units being consumer health division and consumer care division. cakes. Asian Paints: Asian paints came into existence in the year 1942 and they are dealing with industrial and marine coatings. Nutramul. 1899 crores. Amul Milk powder and Amul Butter. Cadbury India: Cadbury came into India in the year 1948 by importing consumer good namely chocolates. Some of their popular products are Cadbury diary milk. Amul Spray. dabur amla. perk and 5 star and they are also popular for their milk drink bournvita. The company has manufacturing units in different countries and some of their popular brand products are Dabur lal dant manjan. dabur chyawanprash. anmol. finish coats and ancillary product in decorative paints. New Delhi. Andhra Pradesh.Amul include Amulya. Pune and Mumbai and sales offices at Chennai. automobile OEMs and refinishes. Bangalore. rusk. vatika and Dabur red tooth paste. Dabur India: Dabur India deals with personal and health care products. celebrations. cheese. Amul Shirkhand. Gujarat and Maharastra. wood finishes. bread and the popular Britannia biscuits. butter. Kolkata and Mumbai. The recent turnover of this company is Rs. but now they have manufacturing units in different parts of India like Himachal Pradesh. Britannia Industries: Britannia industries are dealing with manufacturing of products like milk. They were dealing only with importing chocolates.

Chennai. This is due to the increase in per Page 13 of 17 . vicks cough drops. Marico Industries: Marico Industries is a leading Indian company manufacturing and exporting consumer products to different countries like SAARC Countries. Some of their popular products are Parachute. This company is shortly called as P& G and this company is a parent company of some popular companies like Global Gillette and Clariol. pet food and personal care products. FUTURE GROWTH OPPORTUNITIES Scope of FMCG Industry In IndiaThe FMCG (Fast Moving Consumer Goods) companies have faced tough competition among themselves over the years which is continuously increasing. Delhi. Some of their popular health care products are Vicks inhaler. Egypt. Revive. and Mediker . Vicks VapoRub and Vicks Action 500+. Procter & Gamble Hygiene and Health Care: Procter & Gamble deals with manufacturing of household cleaner. Vicks formula 44 cough syrup. The manufacturing units of the company are located at different parts of India like Uttarakhand. Kolkata and Mumbai. good day. maska chaska. UAE and the USA. the Middle East. Saffola.bikis. Shanti. Bangladesh. treat and marie gold. pure magic.

FMCG sector is creating massive employment with good career prospects.100 crores in 2012. intense competition between the organized and unorganized segments characterizes the sector. Hair care.500 crores in 2010 to Rs 92. retail. says an HSBC report. Thus. Marketing. male grooming. Though the sector witnessed a slower growth in 2002-2004. That will translate into an annual growth of 10% over a 5-year period. To execute these tasks. Hindustan Levers Limited (HLL) has shown a healthy growth in the last quarter. it has been able to make a fine recovery since then. the FMCG companies are hiring more and more people which has led to an increase in the job prospects in this sector. Prospects In The FMCG Sector: Fast moving consumer goods (FMCG) sector in India is one of the largest sectors in the economy with estimated total market size of around Rs 110. 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. household care.capita income among individuals and also various developments in rural economy. services and supply are the key areas which generates maximum career scopes in FMCG Industry in India. For example. An estimated double-digit growth over the next few years shows that the good times are likely to continue. It has been estimated that FMCG sector will rise from around Rs 56. female hygiene. sales. OBSERVATION FROM PERSONAL INTERACTION WITH COMPANY PROFESSIONALS Page 14 of 17 .000 crore in 2010. FMCG Sector is expected to grow by over 60% by 2012. and the chocolates and confectionery categories are estimated to be the fastest growing segments. A well-established distribution network.

Bharat Patel (Brand Manager). It will change the way we organise marketing and delivery of our products´ ± Corporate Office. outlook.´ CONCLUSION Page 15 of 17 . a generous dose of below-the-line and above-the-line activities and constant promotions and schemes in the market. ³Tough market situations and a more aware and savvier demanding consumer have necessitated that yesterday's brand Managers be transformed into Business Managers who understand consumers and can innovate and be flexible to move with the consumer .Gone are the days when brands could be made to gallop with a big budget media plan.³I cannot deny that this brand culture report will have impact on re-structure of our organisation. moods and behavior have rendered conventional Brand Management tools obsolete. GCMMF (AMUL). Consumers who have become demanding yet inscrutable in terms of attitudes. fast moving consumer goods company Mr.

Input cost inflation. With rapid economic growth and rising size of middle class. the demand for FMCG products has been increasing at a fast pace over last one decade or so. persistent rise in raw material price. rising fuel costs. A big opportunity comes to the industry from rural markets. the existing companies in the FMCG space enjoy customer loyalty and hence have easy ride going forward. The government is planning to invest heavily in the infrastructure sector and better infrastructure facilities will improve the supply chain of companies too. Page 16 of 17 . The µBharat¶ is all set to catch up with India and will provide strong engine of growth for the FMCG companies. While the entry cost in terms of capital required is low for new arrivals. Majority of those interviewed cited weakening rupee against the dollar and the imported inflation as the primary reason that might hamper the growth of FMCG in the year ahead. Because of the low per capita consumption for almost all the products in the rural areas. fluctuation in the currency. Existing companies are also spending heavily on product differentiation and adaptation to address particular needs of people. Further. dipping industrial growth. Increased focus on farm sector will boost rural income in the nation. hence increasing the potential of rural areas. FMCG companies have immense possibilities for growth. FMCG is one of the biggest sectors in Indian economy. slowing global economy together with an overall moderating consumer sentiment might lead to a slow volume growth of FMCG segment in 2012. Despite this there is still huge untapped potential in the Indian market and the industry has a massive opportunity at its hands. the brand value of existing players acts as a significant entry barriers and hence.

The spending on rural schemes like NREGA is also likely to continue increasing as the government looks to meet its social inclusion objectives which will provide a sustainable growth channel to the industry. which will be a major positive trigger for the industry.Overall. There have been some pressures in recent period. Also. and any steps taken by the government to ease supply bottlenecks in this regard will help the industry. mainly due to high inflation. the outlook of FMCG industry is very strong. we expect that instead of hiking excise duty in forthcoming budget. The expected implementation of GST tax will streamline a lot of tax related issues and improve efficiency of the industry. the government might choose to implement selective increases and FMCG might be spared in this exercise. Page 17 of 17 .