Indian FMCG Industry Presentation Introduction & Market overview Features of FMCG industry Policies and Regulatory Framework Market Drivers Market Strategies Market Challenges Major FMCG companies in India Major trends

1. FMCG INDUSTRY
Prepared by Joydeep Singh Lalit Mohan
Pooja Arvind Sharma
DEPARTMENT OF MANAGEMENT STUDIES,
CENTRAL UNIVERSITY OF HARYANA
PRESENTATION
ON

2. WHAT IS FMCG
• The products that are sold quickly and at a
relatively low cost.
• These are mainly non-durable consumer goods
which are required frequently by a consumer.
FAST
MOVING
CONSUME
R
GOODS

3. CHARACTERISTICS OF FMCG PRODUCTS
From the consumer perspective
 Frequent purchases
 Low engagement
 Low prices
 Short shelf life
 Rapid consumption
From the marketer perspective
 High volumes
 Low contribution margins
 Extensive distribution
 High inventory turnover

4. INTRODUCTION
 The growth of FMCG industry was not significant between
1950’s to the 80’s due to low purchasing power and the
government’s favoring of the small-scale sector.
 FMCG’s growth increased after the deregulation of Indian
economy in early 1990s. Many global players entered in Indian
market also new brands emerged domestically.
 In the mid-90s, the growth was very fast where as it declined
rapidly at the end of the decade. The initial growth was due to
increase in product penetration and consumption levels.

5. MARKET OVERVIEW
• India is becoming one of the most attractive markets for foreign
FMCG players due to easy availability of imported raw materials
and cheaper labor costs.
• India's labor cost is amongst the lowest in the world, after China &
Indonesia, giving it a competitive advantage over other countries.
• India’s consumer spending is expected to increase to US$ 3.6
trillion by 2020.
• India’s contribution to global consumption is expected to more than
double to 5.8 per cent by 2020.

6. MARKET OVERVIEW
• FMCG sector in India generated US$52.75 billion in 2018 and
forecasted to report revenue growth of around 11-12% in FY19.
• In FY18 Rural consumption rose by 9.7% and is expected to
grow to USD 220 billion by 2025 from US 23.63 billion in FY18.
• The number of online users in India is likely to cross 850 million
by 2025
• Retail market in India is estimated to reach US 1.1 trillion by
2020 with modern trade expected to grow at 20-25% per
annum, which is likely to boost revenues of FMCG companies.

7. SEGMENT DISTRIBUTION
50%
31%
19%
FOOD PRODUCTS
HOUSEHOLD &
PERSONAL CARE
- Hair care
- Skin care
- Soaps & detergents
- Cosmetics
- Feminine hygiene
- Oral care
- household cleaners
HEALTH CARE
- Health supplements
- Digestives
- Balms or rubs
- Skin treatment
- antiseptic
creams/liquids
- Dairy products
- Tea/coffee
- Vegetable oils
- Bakery products
- Confectionery
- Processed foods
- Branded flour, etc

8. FEATURES OF FMCG INDUSTRY
• Require low investment in plant & machinery.
• Bulk sales are from cash.
Low Capital Intensity
• Require large investment in R&D, product development.
• Require investment in product awareness, promotions
High Initial Launch cost
• Manufacturing technology is basic and simple.
• Rare changes in basic manufacturing process.
Technology
• Different companies compete for same market coupled
with similarity of products and low margins.
High competition
• Factors such as lifestyle, income, trends play role in
purchase decision.
Market Research

9. POLICIES AND REGULATORY FRAMEWORK
TAXATION REGULATORS
POLICIES

10. TAXATION
 GST for products of mass consumption such as
Aata, edible oils, cereals, milk, etc. was pegged at
5%.
 Shampoos, deodorants, detergents, cosmetic
products, chocolates were placed in the 28%
bracket.
 GST, some products became cheap (soaps,
toothpastes etc.).
 And some products became more expensive
(beverages, shampoos etc.)
 To address this Govt. reduced the GST rates for
175+ products from 28% to 18%.

11. POLICIES
Relaxation of license rules
 Industrial license is not required for almost all food and Agro processing industries.
 Only certain items such as alcohol, cane sugar and hydrogenated animal fats and oils
need license and some items are reserved for exclusive manufacture in the small scale
sector.
Food Security Bill (FSB)
 FSB would reduce prices of food grains for Below Poverty Line ( households, allowing
them to spend resources on other goods and services, including FMCG products.
 This is expected to trigger higher consumption spends, particularly in rural India, which is
an important market for most FMCG companies

12. POLICIES
E-WAY Bill
 GST compliances is the requirement to generate E- Way bill to accompany movement of
goods.
 A consignment not supported by a valid E – Way Bill could be confiscated and this could
potentially lead to business disruptions.
FDI
 The government approved 51 per cent FDI in multi brand retail in 2006 which will boost
the nascent organized retail market in the country.
 It also allowed 100 per cent FDI in the cash and carry segment and in single brand retail

13. POLICIES
Consumer Protection Bill, 2019
 Central Consumer Protection Authority have been established which can intervene
whenever it feels necessary to protect consumers from unfair trade practices.
 The manufacturer, producer and even the seller will be liable for any personal injury,
death or damage resulting from defects in manufacture, construction, design, formula,
preparation, assembly, testing, service, warning, instruction, marketing, packaging, or
labelling of any product.
Legal Metrology Act, 2009
 The Legal Metrology Act, 2009 prescribes norms for enforcement of uniform standards
of weights and regulate trade in weights and other goods sold or distributed by weight,
measure or number.

14. REGULATORY AGENCIES
Food Standards and Safety Authority of India (FSSAI)
 FSSAI is the supreme authority which is responsible for regulating and supervising the food
safety. It is mandatory for all the Food Business Operators (FBOs).
 It also regulates the manufacture, storage, distribution, sale and the import of Packaged
food, Nutrition and Healthcare Products
National Anti-Profiteering Authority (NAA)
 NAA has been constituted to shield consumers against any sudden spike in prices after
GST was rolled out and to ensure that companies passed on savings from lower taxes to
buyers.
 The NAA imposed fine against Hindustan Unilever (Rs 535 crore), P&G (Rs 250 crore) for
profiteering.

15. MARKET DRIVERS
CHANGING
DEMOGRAPHIC
PROFILE
RURAL
MARKET
CHANGING
LIFESTYLE
E-COMMERCE
GROWTH
EXPANDING
ORGANISED
MARKET
EMERGENCE
OF AYURVEDA

16. CHANGING DEMOGRAPHIC PROFILE
93 108 115
130
120 109
41 31
20
17 13
11
26
15
10
0
50
100
150
200
250
300
350
2025 2020 2015
Number
of
household
Struggler (<1.5 lakh) Strivers (1.5-5 lakh)
Aspirers (5-10 lakh) Affulent (10-20 lakh)
Elite (20> lakh)
 around 47% of the population is below the age of 25
years and the median age is around 27 years.
 Growing workforce is also a major component which
drives the FMCG sector.
 By 2025, 25 million household will be added to “elite”
and “affluent” class i.e (household income more than 10
lakh p.a)
 Currently, 115 million (43%) household fall into
strugglers class which will fall to 93 million (28%).

17. RURAL MARKET
Revenue 2018 HUL rural sales
share
Dabur Rural
sales share
45%
Rural population
70% 45% 40%
40%
Revenue 2015
• Urbanization and industrialization of rural areas have led to increasing level of
consumption.
• Total rural income, which is currently at around US 572 billion, is projected to reach US
1.8 trillion by year 2021.
• India’s rural per capita disposable income is estimated to increase at a CAGR of 4.4
percent to USD 631 by 2020.

18. E-COMMERCE GROWTH
 Increasing internet penetration along with developing infrastructure has helped boost
online transactions.
 Currently, 55 million people are digitally influenced and around 12 million purchase
digitally.
 Emergence of online grocery stores like Grofers, Big Basket, Amazon Pantry have led to
expansion of FMCG market.
 E-commerce share in India's FMCG retail sales tripled in last 2 years.
 As the e-commerce market rises from 20 billion USD to 45 billion USD by 2020, the share
of FMCG products will account for 30-35% of total e-commerce purchases.
 digital commerce has started contributing 6-7% of many FMCG companies in India.

19. EXPANDING ORGANISED MARKET
Growth in FMCG sales in
Retail sector
22%
Growth in
Hypermarkets
15%
25%
Growth in
Supermarkets
• Retail market in India is estimated to reach USD 1.1 trillion by 2020.
• FMCG sales at modern retail stores in India stood at ₹41,416 crore as of 31 August 2018.
• Small and large organized stores in cities with a population of 100,000 to 500,000 grew
three times compared with those in metros.

20. CHANGING LIFESTYLE
 Growing health and environmental
consciousness are now important determinants
of the consumers choice.
 Increasing Brand consciousness have led to
premiumisation of products.
 Growing Nuclearization and individualistic
approach in purchase.
 Growing awareness and easier access have
been the key growth drivers for the sector.

21. EMERGENCE OF AYURVEDA
 By 2022, India expects the market for Ayurvedic products to rise threefold
to US$8 billion.
 Ayurvedic ingredients are being integrated into a number of products,
ranging from personal care items to packaged juices, and nutritional
supplements.
 These products find massive appeal among older consumers already
familiar with the traditional herbal ingredients.
 Several FMCG companies have started marketing products as ayurvedic,
herbals, naturals and organic. About 60% of all new launches in 2018 were
in the natural space.
 Similarly, Dabur is rebuilding its image as India’s first Ayurvedic company.

22. MARKET STRATEGIES
Promotions &
Offers
Product
Innovation
Product/Category
Expansion
Cost reduction Customisation Joint Venture

23. GROWTH OPPORTUNITIES
• India can be hub for cost competitive product
development and manufacturing to cater to
international markets
EXPORT HUB
• Indian consumers are highly adaptable to new and
innovative products.
INNOVATIVE
PRODUCTS
• urban areas have shifted their purchase trend from
essentials to premium products
PREMIUM PRODUCTS
• Low penetration levels offer room for growth across
consumption categories
MARKET PENETRATION

24. MARKET CHALLENGES
MULTIPLE MICRO
MARKETS
SUPPLY CHAIN
INFRASTRUCTURE
COUNTERFEITING
GEOGRAPHICAL
CHALLANGES

25. MAJOR COMPANIES

26. 18000 35 19
Laundry Soap,
Hair care, Skin Care,
Homecare
Revenue 37660
Profit 6036
Growth (sales) 12%

27. 200+
40
18000+
Branded Flour,
Cream Biscuits,
Notebooks
Revenue 12535
Profit 688
Growth (sales) 6.6%

28. 8
8
7200+
Instant Noodles
Revenue 11216 cr
Profit 1606 cr
Growth (sales) 10.7%

29. 13
30
4480
Revenue 10482 cr
Profit 1122 cr
Growth (sales) 6.2%
Biscuits, Bakery
Products

30. 20
40
7458
Revenue 8533 cr
Profit 1442 cr
Growth (sales) 11%
Fruit Juice,

31. TRENDS
• Rural growth rate have stumbled down to 5%.
• HUL and GSK to merge.
• ITC to invest 700 crore in food parks.
• Haldiram to acquire Kwality.
• Future Group and Fonterra starts joint venture in FMCG.
• Wipro and Bigbasket is going to invest in FMCG sector startups.

32. THANK YOU!