FMCG SECTOR IN INDIA • Its principle constituents are household care, personal care , food & beverages. • The Indian FMCG sector, with a market size of $ 25 billion (2007–08 retail sales), constitutes 2.15 per

cent of India’s GDP. • The industry is poised to grow at CAGR between 10 to 12 per cent annually. • Annual profit of FMCG sector is $14.74 billion. • Market growth rate – Rural -40%, Urban -25% • Average Indian spending on groceries and personal care is 48% (Groceries 40% & personal care 8%). • Implementation of the proposed GST and opening of FDI are expected to fuel growth of industry’s

size to $47 billion (Rs 225,000 crore) by 2013 and $95 billion (Rs 456,000 crore) by 2018, according to a new Ficci-Technopak report.

Products which have a quick turnover, and relatively low cost are known

as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced

within a year. Examples of FMCG generally include a wide range of frequently

purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning

products, shaving products and detergents, as well as other non-durables such as

glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include

pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue

paper, and chocolate bars.

Indiaʹs FMCG sector is the fourth largest sector in the economy and creates

employment for more than three million people in downstream activities. Its

principal constituents are Household Care, Personal Care and Food & Beverages.

The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at

double digit growth rate and is expected to maintain a high growth rate. FMCG

Industry is characterized by a well established distribution network, low

penetration levels, low operating cost, lower per capita consumption and intense

competition between the organized and unorganized segments.

As it is meeting the every-day demands of consumers, it will continue to grow…

Growth Prospect Large Market

India has a population of more than 1.150 Billions which is just behind China.

According to the estimates, by 2030 India population will be around 1.450 Billion

and will surpass China to become the World largest in terms of population.

FMCG Industry which is directly related to the population is expected to maintain

a robust growth rate.

The structure 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 per cent 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.

Critical operating rules in Indian FMCG sector

• 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