THE GIST OF FMCG SECTOR IN INDIA - By - MAYANK SAXENA

1. FMCG SECTOR IN INDIA
By- MAYANK SAXENA
IBS MUMBAI

2. INTRODUCTION
 Fast Moving Consumer Goods (FMCG)
goods, popularly named as consumer packaged goods
 Its principal constituents are household care, personal
care, food & beverages
 characterized by a well established distribution
network, low operating cost ,lower per capita
consumption
 have intense competition between the organized and
unorganized segments with quick turnover & low cost

3. INDUSTRY OVERVIEW
 It is the fourth largest sector the economy with a total
market size of US $13.1 billion 7 constitutues 2.15 %
of GDP
 FMCG sector has grown at an average of 11% a year;
in the last five years, annual growth accelerated to
17%
 It is highly related with population and expected to
maintain a robust growth rate in india
 Rural India accounts for more than 700 Million
consumers or 70% of the Indian population and
accounts for 40% of the total FMCG market

4. SWOT ANALYSIS
STRENGHTS
• Moderate operating costs
• Presence of established distribution networks in both urban
and rural areas
• Presence of well-known brands in FMCG sector
• Favorable government policies
WEAKNESSES
• Lower scope of investing in technology and achieving
economies of scale, especially in small sectors
• Low exports levels
• Counterfeit Products
OPPORTUNITIES
• Untapped rural market
• Rising income levels, i.e. increase in purchasing power of
consumers
• Large domestic market- a population of over one billion
• Export potential
• High consumer goods spending
THREATS
•Removal of import restrictions resulting in replacement of
domestic brands
• Slowdown in rural demand
• Tax and regulatory structure

5. POLITICAL FACTORS:
 GST REGIME & FDI
 TRANSPORTATION &
INFRASTRUCTURAL DEVELOPMENT
IN RURAL AREAS HELPS IN
DISTRIBUTION NETWORK
 RESTRICTIONS IN IMPORT
POLICIES
HELP FOR AGRICULTURAL SECTOR
ECONOMICAL FACTORS
 GDP RATES INCRESES ALONGWITH
 INCREASE IN DISPOSABLE INCOME
 INDIAN FMCG HAS RECORDED 16%
SALES GROWTH IN LAST FISCAL
 IT IS 4TH LARGEST SE CTOR OF INDIA
SOCIAL FACTORS
 RURAL EMPLOYMENT
 VOLUME DRIVEN GROWTH IN
RURAL MARKET
 MAJOR YOUNG POPULATION CAN
INCREASE REVENUE
 INDIAN CULTURE ,SOCIAL & LIFE
STYLES ARE CHANGING DRASTICALLY
TECHNOLOGICAL FACTORS
 TECHNOLOGY HAS BEEN SIMPLIFIED
& AVAILABLE IN FMCG INDUSTRY
 FOREIGN PLAYERS HELP IN HIGH
TECHNOLOGICAL DEVELOPEMENT
PEST ANALYSIS
(FMCG)

7. TOP FIVE FMCG COMPANIES

8. HINDUSTAN UNILEVER LTD

9.  It is India's largest consumer goods company based
in Mumbai, Maharashtra.
 It is owned by the British-Dutch company Unilever which
controls 52% majority stake in HUL.
 HUL was formed in 1933.
 Its products include foods, beverages, cleaning
agents and personal care products.
 Revenue22,116 crore (US$4.03 billion)(2011-2012)
 Net income2,691 crore (US$489.76 million)(2011-2012)
 Employees-16,500 (2011)
 Hindustan Unilever's distribution covers over 2 million
retail outlets across India directly and its products are
available in over 6.4 million outlets in the country

10. ITC LTD

11.  It was formed in 1970 by Henry Overton Wills and
Yogesh Chander Deveshwar, (Chairman).
 Headquarters in Kolkata, West Bengal, India.
 In FMCG, ITC has a strong presence in :
1. Cigarettes
2. Foods
3. Apparel
4. Personal care
5. Stationery
6. Safety Matches and Agarbattis

12. NESTLE’ INDIA

13.  It is a multinational nutritional and health-related consumer goods company
headquartered in Vevey, Switzerland. It is the largest food company in the
world measured by revenues.
 Nestlé was listed No. 1 in the Fortune Global 500 as the world's most
profitable corporation.
 Nestlé's products include baby food, bottled water, breakfast
cereals, coffee, confectionery, dairy products, ice cream, pet foods and
snacks.
 Nestlé's india’s first production facility was set up in 1961 at moga (punjab)
 The Nestlé india head office is located at Gurgaon along with other branch
offices in Delhi,Mumbai,Chennai and kolkata.
 It has 2,50,000 employees,500 factories and 8000 range of products across
the globe.

14. DABUR INDIA

15.  Dabur India Limited is the fourth largest FMCG Company in India with interests in Health
Care, Personal Care and Food Products.
 It is public company listed in NSE and BSE.
 it has 17 ultra-modern manufacturing units spread around the globe and its products marketed
in over 60 countries.
 Products-Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola & Real.
 It is most famous for Dabur Chyawanprash and Hajmola.
 Founded in 1884 and the Founder is Dr. S K Burman,in kolkata (west bangal) and The
company headquarters are in Ghaziabad,Uttar Pradesh, India.
 Net income(INR) 1475 Crore (2008-09).Total assets(INR) 1559 crore (2008-
09).Employees3000 (Approx.)

16. CADBURY INDIA

17.  Cadbury India began its operations in India in 1948 by importing
chocolates.
 Its Headquarters in Mumbai, India.
 It now has manufacturing facilities in Thane, Induri (Pune) and Malanpur
(Gwalior), Bangalore and Baddi (Himachal Pradesh) and sales offices in Ne
Delhi, Mumbai, Kolkata and Chennai.
 Products Cadbury Dairy Milk, 5-star, Perk, Gems, Eclairs, Oreo and
Bournvita.
 It is the market leader in the chocolate confectionery business with a market
share of over 70%.
 The Brand Trust Report, India Study, 2011 published by Trust Research
Advisory ranked Cadbury in the top 100 most trusted brands list.
 Cadbury has worked with the Kerala Agricultural University to undertake
cocoa research.
 Current employees are 2000.

18. GOVERNMENT POLICIES
 Investment Approval: Automatic investment approval up to 100 per cent
foreign equity for NRI and overseas corporate bodies. These investments are allowed in food
processing segments such as coffee and tea
 FDI in organized retail: India currently allows 100 per cent FDI in Cash &
Carry segment and 51% in single-brand retail, which is expected to be further
increased to 100%. India is also expected to allow 51% FDI in multi-brand
retail, which will boost the nascent organized retail market in the country
 Priority Sector: The Government of India recognizes food processing and agro industries as
priority sectors
 Relaxation of license rules: Industrial licenses are not required for almost alk food and agro-
processing industries, barring certain items such as beer, potable alcohol and wines, cane sugar, and
hydrogenated animal fats and oils as well as items reserved for exclusive manufacturing in the small-
scale sector

19. Investment in FMCG sector
 The sector is considered defensive, which means its stocks
are in high demand when the markets are falling
 the demand for consumer goods, daily necessities like
food and toothpastes, remains stable
 FMCG stock indices have been performing quite well
with CNX FMCG index on the National Stock Exchange
returning 28.94% and the Bombay Stock Exchange
FMCG index rising 27.26% in the one year to 26 April
2013

20. Contd…
 in the January-March quarter, FMCG companies did
well due to lower input costs. "Most FMCG companies
that we track performed reasonably well in the last
quarter despite the slowdown due to fall in input costs

"Government policies that have been positive for
demand and strong economic activity until last year
helped earnings of FMCG companies
 Hindustan Unilver's (HUL's) parent Unilever Plc wants
to buy a 22.52% stake in the Indian unit at Rs 600 per
share. The market price of the stock was Rs 595 on 13
June 2013. After the open offer, Unilever will hold 75%
in the company

21.  GlaxoSmithKline Plc increased stake in its Indian
arm, GlaxoSmithKline Consumer Healthcare, from
42.3% to 72.5%.