FMCG SECTOR IN INDIA
By- MAYANK SAXENA IBS MUMBAI
INTRODUCTIONFast Moving Consumer Goods (FMCG) goods,
popularly named as consumer packaged goodsIts principal constituents are household care, personal
care, food & beveragescharacterized 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
INDUSTRY OVERVIEWIt 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
SWOT ANALYSISSTRENGHTS
• 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
POLITICAL FACTORS:
GST REGIME & FDI TRANSPORTATION & INFRASTRUCTURAL DEVELOPMENT IN RURAL AREAS HELPS IN DISTRIBUTION NETWORK RESTRICTIONS IN IMPORT POLICIESHELP 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)
TOP FIVE FMCG COMPANIES
HINDUSTAN UNILEVER LTD
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
ITC LTD
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. Cigarettes2. Foods3. Apparel4. Personal care5. Stationery6. Safety Matches and Agarbattis
NESTLE’ INDIA
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.
DABUR INDIA
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.)
CADBURY INDIA
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.
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
Investment in FMCG sectorThe sector is considered defensive, which means its
stocks are in high demand when the markets are fallingthe demand for consumer goods, daily necessities like
food and toothpastes, remains stableFMCG 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
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
GlaxoSmithKline Plc increased stake in its Indian arm, GlaxoSmithKline Consumer Healthcare, from 42.3% to 72.5%.