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FMCG – SECTORAL

REVIEW

By Manish Kothari
FMCG
 Fast moving consumer goods has gained importance with retailing
gaining prominence.

 The Indian FMCG sector is the fourth largest sector in the economy with
a total market size in excess of US$ 13.1 billion

 FMCG is characterised by strong presence of MNC and well established


distrubution network.

 The intense competition between the organised and unorganised


segments operating at low operational cost.

 Availability of key raw materials, cheaper labour costs and presence of


highly effective supply chain system gives competitive advantage.
Categories
 Coffee
 Dry cells
 Food and dairy products
 Greeting cards /Gifts
 Household Products
 Personal Care
 Photography printing
 Stationery
 Soaps & Detergents
 Tea
 Tobacco & Cigarettes
 Watches etc
 Alcohol
Major domestic players
Nirma HLL

Nestle Dabur

ITC Godrej

Britannia Coca-Cola

Pepsi Marico indutries

Cavin care Perfetti india ltd

Dhara foods Haldiram

Pepsico foods Parakh foods

MTR FOODS Himalayas

Paras Industries ltd.


Major international players
 FRITO LAYS

 UNILEVER

 NESTLE

 GSK

 JOHNSON AND JOHNSON

 OZONE AYURVEDICS

 PROCTER AND GAMBLE

 RECKITT BENCKISER

 COLGATE PALMOLIVE
Growth prospects
 The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$
33.4 billion in 2015.

 The FMCG sector will witness more than 50 per cent growth in rural and
semi-urban India by 2010, according to an analysis carried out by the
Associated Chambers of Commerce and Industry of India (Assocham).

 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. As there is untapped market
hence the market potential of growth is very high.

 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.
Contd….
 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.

 With the retail gaining momentum, the FMCG prospective growth can
be realized with increase in sales volumes.
Potential threats

 Due to cut throat competition there is severe pressure on margin for


the manufacturers of FMCG products.

 The rural and semi urban population is growing but the problem faced
by the FMCG manufacturers is the logistics.

 Some of the other problems associated with rural markets are acute
dependence on the vagaries of the monsoon, seasonal consumption
linked to harvests, festivals and special occasions, poor roads and
power problem.
Current events
 ITC in toilet soap business - Superia Brand
 Product liability insurance in FMCG
 Emami eyes ayurvedic products
 ITC e-Choupal wins the Stockholm Challenge Award 2006
 Consumer study - Hansa Research Group
 FMCG micro-branding (Sachets)
 ITC - Biscuit unit in Haridwar
 Cola wars shift to juice turf
 Tata Tea buys tea assets of Czech Co Jemca
 FMCG companies making it big
 Ozone Ayurvedics launches premium brand
 India first stop for mass food, merchant retail
 Raj Jain may head Wal-Mart Asia
 FMCG cos' FY06 profits rise on demand recovery
 Pick of the shelf: Dabur seen in talks to buy US FMCG co
 Decode the success formula of FMCG cos
Major Acquisitions
 Marico acquired skincare company Sundari LLC, two
aromatic soap brands in Bangladesh and Nihar coconut
oil from Hindustan Lever.

 Dabur’s acquisition of 7 brands from Balsara: Promise


(unique clove oil positioning), Babool (value segment)
and Meswak (premium segment), Odonil air freshener,
Odopic utensil cleaner, Sanifresh toilet cleaner and
Odomos insect repellent.

 P&G's acquisition has given it access to Gillette's


portfolio comprising shaving products, Oral-B
toothbrushes and Duracell batteries, among others.
This has helped P&G to upgrade from household
products like soaps, detergents and cleaners, to a
company that is into ’lifestyle’ products in the personal
care and grooming segment.
 Godrej bought Keyline’s Brands: Endocil, Inecto,
Skyhydra and Aapri. GCPL is no more just soap and
hair colour. Its products have now come to include
Erasmic shaving products, Cuticura talcum powder,
Adorn & Nulon.

 Wipro Ltd acquired the Chandrika soap brand with long-


term lease rights for marketing the product in India and
the SAARC region. Chandrika is second largest selling
brand in South India after Medimix.

 Tata Group's tea business acquired Good Earth.

 Recitt benkiser acquisitions of boots healthcare


international adding veet, strepsils and clearasil to its
brand portfolio.

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