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A RESEARCH REPORT ON ANALYSIS & ASSESSMENT OF FMCG MARKET OF INDIA
We would like to express our sincere gratitude to _______________, for his inspiration and guidance towards penetration of this report. We are highly indebted to all those who provided us the stimulus of writing this project report on Analysis and Assessment of FMCG Market of India. We are grateful to ____________________________for their valuable advice, continuous support and guidance through various useful discussions at different stages of this work. A humble thanks are also due to ___________________for their useful suggestions and constant help in preparation of this report. We also acknowledge the whole staff at _________________office to render their whole hearted co-operation at times. Our sincere THANKS are due to all of them. They all have been a constant source of inspiration to us throughout our summer training program. Last but not the least, a word of thanks to our entire faculty and staff members at our Institutes for their encouragement at any times.
Table of Contents
INTRODUCTION OF REPORT……………………………………….. RESEARCH PROCESS IN FLOW CHART…………………………… DEFINE RESEARCH PROBLEM…………………………………. • FORMULATE HYPOTHESIS………………………………………. • DESIGN RESEARCH……………………………………………….. • COLLECTION OF DATA…………………………………………… • ANALYSE DATA…………………………………………………… • INTERPRET AND REPORT ……………………………………….. INTRODUCTION OF FMCG MARKET………………………………. " WHAT IS FMCG? "……………………………………………….. • SCOPE OF THE FMCG SECTOR………………………………… • BUDGET 2007-2008 FOR FMCG SECTOR ……………………….
WHY INDIAN MARKET………………………………………………. CONSUMPTION PIE CHART ………………………………………… INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD…………………………………………………………………. TOP TEN PLAYERS IN FMCG SECTOR…………………………….. MARKET OPPORTUNITIES FOR INVESTMENT…………………… ANALYSIS OF FMCG MARKET………………………………………. SEGMENT WISE ANALYSIS………………………………………….. RECOMMENDATIONS FOR FMG MARKET…………………………
RESEARCH PROCESS IN FLOW CHART
REVIEW CONCEPTS & THEORIES DEFINE RESEARCH PROBLEM FORMULATE HYPOTHESIS REVIEW PREVIOUS RESEARCH FINDINGS DESIGN RESEARCH COLLECT DATA ANALYSE DATA INTERPRET AND REPORT
DEFINE RESEARCH PROBLEM
Research encompasses activities that increase the sum of human knowledge. Research and Experimental Development comprises:
Creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of humanity, culture and society, and the use of this stock of knowledge to devise new applications. Any activity classified as research and experimental development is characterized by originality; it should have investigation as a primary objective and should have the potential to produce results that are sufficiently general for humanity's stock of knowledge (theoretical and/or practical) to be recognizably increased. Most higher education research work would qualify as research and experimental development.
Research carries with it a professional and ethical responsibility to disseminate and apply the results of research activity and to conduct research in a manner consistent with the Statement and Guidelines on Research Practice . An essential characteristic is that it leads to publicly verifiable outcomes which are open to peer appraisal. The complementary activity of scholarship refers to possession of an extensive and profound knowledge of an academic discipline and the analysis and interpretation of existing knowledge aimed at improving, through teaching or by other means of communication, the depth of human understanding.
Types of Research Activity
Research includes pure basic research, strategic basic research, applied research and experimental development . Pure basic research is experimental and theoretical work undertaken to acquire new knowledge without looking for long-term benefits other than the advancement of knowledge. Strategic basic research is experimental and theoretical work undertaken to acquire new knowledge directed into specified broad areas in the expectation of useful discoveries. It provides the broad base of knowledge necessary for the solution of recognised practical problems.
Applied research is original work undertaken primarily to acquire new knowledge with a specific application in view. It is undertaken either to determine possible uses for the findings of basic research or to determine new ways of achieving some specific and predetermined objectives. Experimental development is systematic work, using existing knowledge gained from research or practical experience, that is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.
The purpose of the research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet.
Aim: Analysis and Assessment of Fast Moving Consumer Goods, which refer to things that we buy from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper.
A hypothesis is a specific statement of prediction. It is simple; hypothesis is a suggested solution or explanation to a problem or a phenomenon. So you will just write what you think is the solution to that problem. It describes in concrete (rather than theoretical) terms what you expect will happen in your study. Not all studies have hypotheses. Sometimes a study is designed to be exploratory. There is no formal hypothesis, and perhaps the purpose of the study is to explore some area more thoroughly in order to develop some specific hypothesis or prediction that can be tested in future research. A single study may have one or many hypotheses. If your prediction specifies a direction, and the null therefore is the no difference prediction and the prediction of the opposite direction, we call this a one-tailed hypothesis. When your prediction does not specify a direction, we say you have a two-tailed hypothesis The logic of hypothesis testing is based on these two basic principles:
The formulation of two mutually exclusive hypothesis statements that, together, exhaust all possible outcomes The testing of these so that one is necessarily accepted and the other rejected
Research design is the controlling plan for a marketing research study in which the methods and procedures for collecting and analysing the information to be collected is specified. Research design can be thought of as the structure of research -- it is the "glue" that holds all of the elements in a research project together.
Types of Research Designs
• • • Randomized experiment Non-experimental design Quasi-experimental design
We can classify designs into a simple threefold classification by asking some key questions. First, does the design use random assignment to groups? [Don't forget that random assignment is not the same thing as random selection of a sample from a population!] If random assignment is used, we call the design a randomized experiment or true experiment. If random assignment is not used, then we have to ask a second question: Does the design use either multiple groups or multiple waves of measurement? If the answer is yes, we would label it a quasi-experimental design. If no, we would call it a non-experimental design. A randomized experiment generally is the strongest of the three designs when your interest is in establishing a cause-effect relationship. A non-experiment is generally the weakest in this respect.
COLLECTION OF DATA Methods of primary data collection Semi-structured interview / unstructured interview Focus groups Diaries / written accounts Participant observation / non-participant observation Media sources Through schedule Warranty cards Distributors or Store audits Pantry audits Consumers panels Use of mechanical device Projective technique
Methods of secondary data collection Various publications of the central, state local governments Various publication of foreign governments or international bodies and their subsidiary organisations Reports and publication of various associations Reports prepared by research scholars Public records and statistics, historical documents Technical and trade journals Newspapers Magazines Books
This will be much more substantial, and much more discursive, than the results section of a typical experimental report. Your purpose here is twofold - you need to give an account of your data (to communicate a sense of ‘what it is like’) and to offer an interpretation of (to make a case for ‘what it means’). This should be based upon your codes and/or themes, but there is plenty of scope for you to be imaginative in both the way that you choose to structure your analysis section, and in the way that you choose to lay out your evidence. Many of your decisions will depend on your chosen approach. By the time you get to the analysis of your data, most of the really difficult work has been done. It's much more difficult to: define the research problem; develop and implement a sampling plan; conceptualize, operationalize and test your measures; and develop a design structure. If you have done this work well, the analysis of the data is usually a fairly straightforward affair. In most social research the data analysis involves three major steps, done in roughly this order:
• • •
Cleaning and organizing the data for analysis Describing the data Testing Hypotheses and Models
(Data Preparation) (Descriptive Statistics) (Inferential Statistics)
involves checking or logging the data in; checking the data for accuracy; entering the data into the computer; transforming the data; and developing and documenting a database structure that integrates the various measures.
are used to describe the basic features of the data in a study. They provide simple summaries about the sample and the measures. Together with simple graphics analysis, they form the basis of virtually every quantitative analysis of data. With descriptive statistics you are simply describing what is, what the data shows.
investigate questions, models and hypotheses. In many cases, the conclusions from inferential statistics extend beyond the immediate data alone. For instance, we use inferential statistics to try to infer from the sample data what the population thinks. Or, we use inferential statistics to make judgments of the probability that an observed difference between groups is a dependable one or one that might have happened by chance in this study. Thus, we use inferential statistics to make inferences from our data to more general conditions; we use descriptive statistics simply to describe what's going on in our data.
INTERPRET AND REPORT
The best advice is to consider your particular writing context carefully and to let it guide your writing. If you’re writing in a workplace context, find out if your organization has document or style guidelines and look at previous reports put out by the organization. Whenever you write, you should keep your purpose and audience clearly in focus. Begin by considering
what you want to accomplish with your report: what are your primary and secondary objectives? who will be reading your report and for what purposes: What is their background? What questions might they have? What might they expect in terms of content and format?
INTRODUCTION OF FMCG MARKET
INTRODUCTION 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 wellestablished distribution network, intense competition between the organised and 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 potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry. Automatic investment approval (including foreign technology agreements within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment, is allowed for most of the food processing sector.
" WHAT IS FMCG? " FMCG’s or fast moving consumer goods are the products which are frequently purchased by consumers including toiletries, soaps, cosmetics, teeth cleaning products, shaving products, detergents, other non-durables such as glassware, bulbs, batteries, paper products ,plastic goods etc. It used to be called the grocery industry, now it’s just called FMCG. FMCG is an ugly acronym for Fast Moving Consumer Goods , which translated into English means 'things you buy on a regular basis at places like your local supermarket. Scope of the FMCG Sector The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterize the sector. FMCG Sector is expected to grow by over 60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the fastest growing segments, says an HSBC report. Though the sector witnessed a slower growth in 2002-2004, it has been able to make a fine recovery since then. For example, Hindustan Levers Limited (HLL) has shown a healthy growth in the last quarter. An estimated double-digit growth over the next few years shows that the good times are likely to continue. Recent Developments in Fast Moving Consumer Goods (FMCG) Sector FMCG sector is no doubt registering an up trend in growth. According to CNBC, FMCG sector growth story will continue because of the positive budget. Nevertheless, there are some barriers to the growth of the sector. Indirect taxes constitute no less than 35% of the total cost of consumer products - the highest in Asia. Last year, Finance Minister proposed to introduce an integrated Goods and Service Tax by April 2010.This is an exceptionally good move because the growth of consumption, production, and employment is directly proportionate to reduction in indirect taxes.
Budget 2007-2008 for FMCG Sector
Reduction of duty on edible oil will have a positive impact on Marico. Full exemption of excise duty on biscuits priced at 50 rupees or less per kg is positive for ITC, Britannia, and Parle. Reduction of custom duty on food processing machinery and their parts from 7.5% to 5%. Reduction of excise duty on food mixes from 16% or 8% to nil is positive for ITC. Development of rural infrastructure is in focus, which is beneficial for FMCG companies because it is a big market for FMCGs. Better infrastructure will improve the supply chain. Exemption of free samples and displays from the purview of FBT will be beneficial for FMCG companies because they spend huge amount of money on advertising and brand building. HLL, Dabur, ITC, and Marico will be amongst the most benefited companies.
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 characterized by a well established distribution network, intense competition between the organized and unorganized 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 potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.
WHY INDIAN MARKET Large Domestic Market India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million.
Around 70 per cent of the total households in India (188 million) resides in the rural areas. The total numbers of rural households are expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural and the urban level, the market potential is expected to expand further. India - A Large Consumer Goods Spender An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makes India one of the largest FMCG markets.
CONSUMPTION PIE CHART :-
Even on an international scale, total consumer expenditure on food in India at US$ 120 billion is amongst the largest in the emerging markets, next only to China.
Change in the Indian consumer profile
Rapid urbanisation, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of age and the young population is set to rise further. Aspiration levels in this age group have been fuelled by greater media exposure, unleashing a latent demand with more money and a new mindset.
Demand-supply gap Currently, only a small percentage of the raw materials in India are processed into value added products even as the demand for processed and convenience food is on the rise. This demand supply gap indicates an untapped opportunity in areas such as packaged form, convenience food and drinks, milk products etc. In the personal care segment, the low penetration rate in both the rural and urban areas indicates a market potential.
INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD MARKETS
Materials Availability India has a diverse agro-climatic condition due to which there exists a wide-ranging and large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables. India also has an ample supply of caustic soda and soda ash, the raw materials in the production of soaps and detergents – India produced 1.6 million tonnes of caustic soda in 2003-04. Tata Chemicals, one of the largest producers of synthetic soda ash in the world is located in India. The availability of these raw materials gives India the locational advantage.
Apart from the advantage in terms of ample raw material availability, existence of low-cost labour force also works in favour of India. Labour cost in India is amongst the lowest in Asian countries. Easy raw material availability and low labour costs have resulted in a lower cost of production. Many multinationals have set up large low cost production bases in India to outsource for domestic as well as export markets.
Leveraging the cost advantage Global major, Unilever, sources a major portion of its product requirements from its Indian subsidiary, HLL. In 2003-04, Unilever outsourced around US$ 218 million of home and personal care along with food products to leverage on the cost arbitrage opportunities with the West. To take another case, Procter & Gamble (P&G) outsourced the manufacture of Vicks Vaporub to contract manufacturers in Hyderabad, India. This enables P&G to continue exporting Vicks Vaporub to Australia, Japan and other Asian countries, but at more competitive rates, whilst maintaining its high quality and cost efficiency.
Presence across value chain
Indian firms also have a presence across the entire value chain of the FMCG industry from supply of raw material to final processed and packaged goods, both in the personal care products and in the food processing sector. For instance, Indian firm Amul's product portfolio includes supply of milk as well as the supply of processed dairy products like cheese and butter. This makes the firms located in India more cost competitive. Trends and Players The Indian FMCG sector is the fourth largest sector in the economy and creates employment for three million people in downstream activities. Within the FMCG sector, the Indian food processing industry represented 6.3 per cent of GDP and accounted for 13 percent of the country's exports in 2003-04. A distinct feature of the FMCG industry is the presence of most global players through their subsidiaries (HLL, P&G, Nestle), which ensures new product launches in the Indian market from the parent's portfolio.
Top Ten Players in FMCG Sector:-
Companies 1. Hindustan Unilever Ltd. 2. ITC (Indian Tobacco Company) 3. Nestlé India 4. GCMMF (AMUL) 5. Dabur India 6. Asian Paints (India) 7. Cadbury India 8. Britannia Industries 9. Marico Industries 10.Procter & Gamble Hygiene and Health Care
Critical Operating Rules In Indian FMCG
Heavy launch costs on new products on launch advertisements, free samples and product promotions. Majority of the product classes require very low investment in fixed assets Existence of contract manufacturing Marketing assumes a significant place in the brand building process Extensive distribution networks and logistics are key to achieving a high level of penetration in both the urban and rural markets Factors like low entry barriers in terms of low capital investment, fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganised sector Providing good price points is the key to success
Penetration And Consumption:-
Penetration level in most product categories like jams, toothpaste,
skin care, hair wash etc in India is low. The contrast is particularly striking between the rural and urban segments - the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories (including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer "upgrading", especially in the matured product categories.
Detergent per capita Consumption (in Kg)
Tea per capita Consumption (in Kg)
Tooth paste per capita Consumption (in Kg)
Personal wash per capita Consumption (in Kg)
Tea per capita Consumption (in Kg)
Skin care products per capita Consumption (in Rs)
Ice Cream per capita Consumption (in Lit.)
Shampoo per capita Consumption (in Kg)
MARKET OPPORTUNITIES FOR INVESTMENT:According to estimates based on China's current per capita consumption, the Indian FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. The dominance of Indian markets by unbranded products, change in eating habits and the increased affordability of the growing Indian population presents an opportunity to makers of branded products, who can convert consumers to branded products.
A recent survey of industries in the Fast Moving Consumer Goods (FMCG) sector conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) has shown positive growth trends and signs of recovery in various segments .The survey notes, some sectors showing negative growth in terms of value have recorded positive growth in volumes. The survey attributes the reflected buoyancy to the following factors: 1) Several cost saving measures 2) Various tax benefits 3) Rising demand 4) Growing GDP 5) Good monsoon 6) Strong economic fundamentals 7) The expected policy packages to be announced by the new government for farmers for raising rural income is bound to stimulate growth further
GROWTH PROSPECTS With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in
terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas. The survey confirms higher growth rates for some FMCGs belonging to personal care products, fabric & personal wash products, oral care products and Hair care products. The sectors which have recorded double digit growth in terms of value are shaving cream (20 per cent), deodorant (40 per cent), branded coconut oil (10 per cent),anti dandruff shampoos (15 %), hair dyes (25 per cent), cleaners & repellents (20 per cent). Some sectors which have recorded negative growth are personal health care (-3 %) Laundry soaps (-5 percent), dish wash (-3 %), toilet soap (-4.5%) Tooth paste (-5 percent),toothpowder(8percent).
ANALYSIS OF FMCG MARKET
The research report offers insights into the dynamics of growth in a competitive market environment. The salient features of development the survey has identified include:
• • •
The improvement has been much more pronounced in volume terms than in value terms for most of the products. Post liberalization period provided the consumers the opportunity to make choices amongst the products of domestic companies and imported products. One of the greatest achievements made by the FMCG industry has been the ‘sachet’ bugs which have helped the companies to introduce products in smaller package sizes, at lower price points and reach new users and to expand market share for value added products in urban India. Several cost saving measures, various tax benefits, rising demand, good monsoon have helped the industry to achieve positive growth.
Most of the multinational companies have started sourcing their products from India. HLL has become the production center in respect of personal consumer products like oral care, skin care products, soap, detergents globally for Unilever. There has been a trend from shift to own manufacturing from third party manufacturing or procuring goods from third party small-scale manufacturers. Though the companies are going global, they are focusing on the overseas markets like Bangladesh, Pakistan, Nepal, Middle East and CiS countries because of the lifestyles, consumption habits similar to India. Godrej Consumer, Marico, Dabur, Vicco laboratories are among the companies. The offshoots and mushrooming of regional companies which are posing a threat to bigger FMCG companies like HLL. The rise of Jyothi Laboratories, throwing challenge to Reckitt Benckiser is a case in point. FMCG market remains highly fragmented with almost half of the market representing unbranded, unpackaged home made products. This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products. There is competition between the organized and the unorganized sectors in the FMCG sector. Marketing and distribution are very important in FMCG companies. New products require a large investment in product development, market research, and awareness campaign, developing franchise for a new brand advertisements, free samples and product promotions. All these developments have made the consumers strong, who are in a position now to choose a variety of products, from a number of companies, at different price points. Bargaining power of customers is high. Key factors to success are distribution (in rural markets) and advertising (in urban markets). Critical factors for success are the ability to build, develop and maintain a robust distribution network. The fact that a lot of women have started looking for specialized products has driven growth.
SEGMENT WWISE ANALYSIS
Fabric wash market: The demand for detergents has been growing at an annual growth rate of 10-11 per cent during the past five years, while the laundry bar market has witnessed a negative growth. This year growth rate is low at 2 per cent for detergent cakes and 2.5 per cent for washing powder. In the urban markets, people prefer to use washing powder and detergents, instead of bars, on account of convenience of usage, increased purchasing power, aggressive advertising and increased penetration of washing machines.
Personal wash market: While the growth rate for the overall personal wash market is only 1 per cent compared to average growth rate of 5 per cent, premium and middle-end soaps are growing at a rate of 10 per cent. The leading players in this market are HLL (Lux, Lifebuoy, Breeze, Rexona), Nirma (Nima), Godrej Soaps (Cinthol, FairGlow, Shikakai, Nikhar), and Reckitt & Colman (Dettol).
Oral care market: The oral care market valued at Rs. 26 bn has suffered a negative growth of 5 per cent in 200304. Toothpaste and toothpowder have suffered negative growth of 5 % and 8 % respectively. The market for tooth brushes valued at Rs 4 bn has grown at 5 per cent.
Skin care and cosmetics market: Skin care and cosmetics valued at Rs 12 bn and includes cold creams, lotions, moisturizers, cleansers, talcum powders, deodorants, lipsticks, nail enamels, etc. The shaving cream market valued at Rs 1.1 bn, has grown by 20%. The market is dominated by C-P, Gillette India and Godrej Soaps. The skin care market has seen the entry of a number of international brands, like Oriflame, Avon and Aviance. The herbal-based products are also quite popular in this market.
Hair care market: Hair care includes a variety of branded and unbranded products like hair oils, shampoos, creams, conditioners hair dyes, etc. The Coconut Oil Market account for 72 per cent of the hair oil market. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. HLL is also extending its Sunsilk brand to hair oils. The market for branded coconut oil valued at approximately Rs. 8 bn has grown by 10 %. The market has been witnessing a shift in usage patterns in both urban and rural markets.
Feminine hygiene market: The feminine hygiene market is estimated to be worth Rs. 2 bn market. The market has reversed from a negative growth in previous years and flat growth in the last year has recorded a growth of 2 per cent. This has got a boost from the withdrawal of excise duties.
Deodorants market: The deodorant market is estimated to be worth Rs 0.8 bn and has been growing at 40 per cent annually. The organized segment is dominated by HLL with its Rexona, Axe, Denim and Impulse brands in different categories targeting different segments of the market.
Dish wash market:
The total size of the dish wash market, estimated at Rs 4.4 bn has recorded a negative growth of 3 per cent . Over 60 per cent of the market is dominated by bars, while dish wash powders accounts for 32 per cent. The penetration levels are, however, still very low.
Cleaners / Repellents Market: The cleaner market covering products like floor cleaners, air, phenyl and toilet cleaners, and is estimated to be growing at 20 per cent per annum. The key players are HLL, Reckitt & Colman India (RCI), Henkel Spic, Bayer India and Balsara Hygiene. The market for insecticides and repellents is estimated to be around Rs 8 bn has grown by 20 per cent. Godrej Sara Lee is the world's largest manufacturer of mosquito mats, with an all-India market share of about 66 per cent. The organized sector is trying to increase penetration levels by higher brand visibility.
RECOMMENDATIONS FOR FMCG MARKET
This research report outlines some measures for raising productivity, efficiency and making FMCG competitive as follows: Level of abatement for soaps and detergents should be revised to 45 per cent in consideration of hike in the prices of various inputs. • Excise duty of about 50
• • •
per cent without CEN VAT credit facilities on alcohol based toiletries is very high and should be on par with non-alcoholic toiletries. Higher and different sales tax rates in different states. VAT applicable for these products should fall in the proposed 4 per cent slab. Companies need to have a distribution system of its own or rely on other companies and for product awareness and demand creation try new products with already established popular product lines. The companies should introducing product variants that account for distinctive regional tastes as well as a wide range of package sizes and prices to suit to purchasing preferences of India’s varied consumer segments.
The survey confirms that the FMCG sector is poised for further growth because of the emerging opportunities and strong fundamentals developing in the economy. This report highlights the need for pro-active government action for helping the industry to achieve lower cost, improved quality and better performance in the competitive environment. The survey foresees that future growth will come from newer segments such as the youth and through increased rural and small town penetration. The Internet and e-commerce will change the dynamics of this industry helping companies improve their procurement, distribution and selling efficiencies. This will, in turn, help them reduce prices and still remain profitable. A package of fiscal incentives provided by various State governments like Himachal Pradesh, Uttranchal, have encouraged companies to set up manufacturing facilities in these regions. Some companies setting up units in backward areas are: • Britannia Industries • Colgate Industries • Dabur Industries • Godrej Consumer Products • Hindustan Lever • Marico Industries FMCG market remains highly fragmented with almost half of the market representing unbranded, unpackaged home made products. This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products. In the past decade, the personal care industry has witnessed a consumer boom. This has been possible due to liberalization, growing urbanization and an increase in the disposable incomes due to rise in Gross Domestic Product. The changing lifestyles, higher level of awareness among the rural community as a result of the onslaught of satellite television has fuelled demand.
The boom has also been fuelled by the reduction of excise duties, de reservation from the small-scale sector and the concerted efforts of personal care companies to tap the potentials of the segment of the middle class through product and packaging innovations.
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