Fmcg
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FMCG
Wasim Ahmed Ansari 08PGDM060 IMI, New Delhi
Definition • Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover and relatively low cost.
• Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and so the cumulative profit on such products can be large.
FMCG – Evolution • 1950’s-80’s – Low Investment in the sector – Low purchasing power – Govt’s emphasis on small scale sector – HLL and other company’s urbane focus • Post liberalization – Entry of MNCs – Focus shifted to getting to rural consumer first – Others, like Nestle, remained with the urban population – Latest fad to hit the market is the ‘sachet’ bug. • Mushrooming of regional brands – Nirma enters and changes the focus to ‘Value for Money’ in the 70’s – Post liberalization, Jyothi Laboratories, ‘Ghari’ Detergent and ‘Anchor’ toothpaste giving the nationwide brands a run for their money.
Segments of FMCG • Personal care – Skin care – Hair care – Shampoos – Oral Care • Household care – Personal wash – Detergents • Branded and Packaged foods and beverages – Food segment – Tea – Coffee • Spirits and tobacco
Behavior of FMCG market • 3 very distinct characteristics like necessity, comfort and luxury. • Spends little time on the purchase decision. He seldom ever looks at the technical specifications. • Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. • Limited inventory of these products (many of which are perishable) are kept by consumer. • Brand switching is often induced by heavy advertisement , recommendation of the retailer or word of mouth.
Policies in FMCG sector • • • •
Lifting up of quantitative restrictions Reducing excise duties Automated FDI License abolishment from food processing industry • Easing prices of raw materials • 100% FDI for NRIs and PIOs in India • State government led interventions – Resurgent Rajasthan
• Subsidies in taxes & excises.
Key players under FMCG • 4th Largest sector in India.
Current issues • • • • • • • • •
Problematic distribution Managing the price increase Promotional pressure Price war Category leader Product introduction Concentration Local marketing Information lumber
Rays of hope • • • • • •
Buoyant rural spending Favorable Pricing Strategies Decrease in Raw Material Prices Better Product mix Export – Cost advantage Sectoral advantages – Dairy based – Packed goods – Oral care
Forecast 2010 • Rural and semi-urban – Population thrice the urban – Market size growth from 48k to 100k Crores (Growth of 50% at 10%CAGR) – Increase penetration from the current less than 1% – Problems in the rural sector • • • • •
Low per capita disposable incomes Large number of daily wage earners Acute dependence on vagaries of monsoon Seasonal consumption Poor infrastructure – roads and power supply
• Urban – Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR) – Intense competition – severe pressure on margins – Focus on newer products.
Some important links • http://www.economywatch.com/indianeconomy/ • http://www.mckinsey.com/mgi/publications/india_c onsumer_market/slideshow/main.asp • http://www.indiaonestop.com/consumermarkets.h tm
Questions???
Wasim Ahmed Ansari 08PGDM060 IMI, New Delhi
Definition • Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover and relatively low cost.
• Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and so the cumulative profit on such products can be large.
FMCG – Evolution • 1950’s-80’s – Low Investment in the sector – Low purchasing power – Govt’s emphasis on small scale sector – HLL and other company’s urbane focus • Post liberalization – Entry of MNCs – Focus shifted to getting to rural consumer first – Others, like Nestle, remained with the urban population – Latest fad to hit the market is the ‘sachet’ bug. • Mushrooming of regional brands – Nirma enters and changes the focus to ‘Value for Money’ in the 70’s – Post liberalization, Jyothi Laboratories, ‘Ghari’ Detergent and ‘Anchor’ toothpaste giving the nationwide brands a run for their money.
Segments of FMCG • Personal care – Skin care – Hair care – Shampoos – Oral Care • Household care – Personal wash – Detergents • Branded and Packaged foods and beverages – Food segment – Tea – Coffee • Spirits and tobacco
Behavior of FMCG market • 3 very distinct characteristics like necessity, comfort and luxury. • Spends little time on the purchase decision. He seldom ever looks at the technical specifications. • Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. • Limited inventory of these products (many of which are perishable) are kept by consumer. • Brand switching is often induced by heavy advertisement , recommendation of the retailer or word of mouth.
Policies in FMCG sector • • • •
Lifting up of quantitative restrictions Reducing excise duties Automated FDI License abolishment from food processing industry • Easing prices of raw materials • 100% FDI for NRIs and PIOs in India • State government led interventions – Resurgent Rajasthan
• Subsidies in taxes & excises.
Key players under FMCG • 4th Largest sector in India.
Current issues • • • • • • • • •
Problematic distribution Managing the price increase Promotional pressure Price war Category leader Product introduction Concentration Local marketing Information lumber
Rays of hope • • • • • •
Buoyant rural spending Favorable Pricing Strategies Decrease in Raw Material Prices Better Product mix Export – Cost advantage Sectoral advantages – Dairy based – Packed goods – Oral care
Forecast 2010 • Rural and semi-urban – Population thrice the urban – Market size growth from 48k to 100k Crores (Growth of 50% at 10%CAGR) – Increase penetration from the current less than 1% – Problems in the rural sector • • • • •
Low per capita disposable incomes Large number of daily wage earners Acute dependence on vagaries of monsoon Seasonal consumption Poor infrastructure – roads and power supply
• Urban – Market 16.5k to 35k Crores (Growth of 100% at 20%CAGR) – Intense competition – severe pressure on margins – Focus on newer products.
Some important links • http://www.economywatch.com/indianeconomy/ • http://www.mckinsey.com/mgi/publications/india_c onsumer_market/slideshow/main.asp • http://www.indiaonestop.com/consumermarkets.h tm
Questions???
