Second appointment with the LUISS MBA Part-Time students, to talk about Fast Moving Consumer Goods Industry, one of the most dynamic and biggest in the world: an enormous global market made up of very famous brands that we use every day, distribute everywhere in the world. A safety bet, even in recession times, such these last years, because the demand for this kind of brands doesn’t fall...! A world where also career is fast: where you immediately start to think bigger and better, to manage a big amount of money, to cover heavy responsibility and work on big project. that can influence the consumer’s habits and choice. At the end of the lessons some important top managers of FMCG, joint us in a very impactful and insight roundtable to share their experiences and to answer to student’s questions and curiosities.

1. FAST MOVING
CONSUMER GOODS
INDUSTRY
Rome, Jan 27th 2017
Part-Time MBA
II Edition
Rachele Soliera

2. TOPICS
1. MARKET HIGHLIGHTS
• Definition / Features / Characteristics
• Product categories
• Top FMCG Players (Suppliers – Retailers)
• FMCG Store Formats
2. SUPPLIER & RETAIL RELATIONSHIPS
• The Evolution
• Italian Case History
• The Digital Revolution
• Suppliers & Retailers in the Digital Era
3. A CAREER IN THE FMCG INDUSTRY

3. FMCG Market Highlights
• Fast-moving consumer goods (FMCG) or consumer
packaged goods (CPG) are products that are sold
quickly and at relatively low cost
• They have a short shelf life, either as a result of
high consumer demand or because the
product deteriorates rapidly
• A multi-million dollar sector made up of a huge range
of famous brand names, that we use every single day,
distributed everywhere in the world.
• The profit margin is relatively small but the
volume made on FMCG products is huge
thus, the cumulative profit on such products
can be substantial.

4. FMCG Product Categories
HOUSEHOLD CARE PERSONAL CARE
HEALTH CARE/OTC
FOOD & BEVERAGE
PET CARE
SMALL ELECTRONICS

5. FMCG Market Highlights
• FMCG companies are behind the biggest brands in the world
• FMCG is all about names, the products
which everyone recognizes from trips to
the supermarket or from ads on television
• Things move quickly…. also the brands:
40% of them on the top 100 list twenty
years ago, have already been replaced
with something new today
• The FMCG industry changes fast and
is constantly evolving: there is never
a dull moment in FMCG 
• FMCG firms thrive on employee and
customer retention: Customer loyalty
can make or break a brand.

6. FMCG Market Highlights
• FMCG companies can beat the recession….
…. Consumers always need to buy products created by
FMCG companies.

7. FMCG Market Highlights
The FMCG industry thinks bigger – and better
• This is an industry that offers things on a whole
new scale. Where else could you find yourself
handling $150 million accounts?
• Working in FMCG gives you the
chance to be part of global success
stories and it influences the way
consumers shop for products.
• FMCG firms always think of the next great discovery or innovation to meet
consumers’ evolving needs.

8. FMCG Main Characteristics
• From the consumers' perspective:
– Frequent purchase
– Low involvement (little or no effort to
choose the item)
– Low price
– Short shelf life
– Daily consumption
• From the marketers' angle:
– High volumes
– Low contribution margins x single product
– Extensive distribution networks
– High stock turnover
– High total profit

9. FMCG Top Players
Suppliers Retailers

10. FMCG Top Players: The Suppliers
The top FMCG companies are characterised by their ability to develop
the strongest loyalty and trust towards brands that generate a huge
demand by consumers

11. FMCG Top Players: The Manufacturers
The top 16 global FMCG brands are chosen by more
than one billion consumers a year

12. FMCG Top Players:
The number one beverages brand in
terms of reach (over 200 countries)
and sales with more than 500
products on offer
150.000 employees all
over the world
Coca Cola is the most recognized
word in the world after OKAY
$ 50 billion of revenue and
€9 billion of Profit
On average, more than 10,000 soft
drinks from Coca-Cola are consumed
every second of every day

13. FMCG Top Players:
• One of the oldest and most stable consumer
products Company
• One of the most Innovative, visionary and
open-minded Company of this Industry
300 brands, available in
180 countries in the
world
24 brands with an
annual sales more than
1 million dollars
An average American consumer
spends $110 per year on P&G
products
65,3 Bilion dollar of Net Sales;
13,4 Bilion of operating income (+22% vs py)
125.000 employees all over the world

14. FMCG Top Players:
72 Bilion dollar of global sales
16,5 Billion dollar of net Income
20-year of total Shareholder
Return of 10.6%
Johnson & Johnson is one of the World’s Most Admired Companies
The United Nations awarded
Johnson & Johnson
the 2011 Humanitarian of the
Year Award for the
leading role in its Healthy
Mother, Healthy Child initiative.
3 main segments:
- MD&D 35%
- Pharmaceutical 47%
- Consumer 18%
250 operating companies and
128.000 employees around the
globe, in more than 60 countries

15. FMCG Top Players:
400 brands; sales in 190 countries
13 brands have sales of more than €1 bil. year
2 bil. people use everyday a Unilever product
Broad brands’ portfolio with a very diversified
product range from Food, Beverage and
Refreshments to Home and Personal Care
53 Billion Euro of annual revenue with
an operating profit of 8 Billion Euro.
The logo is designed to include 25 icons, each of
them represents something important to Unilever
(from an ice cream to a hand, or a fish)
168,000 people work for Unilever
45% of the managers are women

16. FMCG Top Players:
3,5 Billion Euro of net sales revenue
and a gross profit of 430 Million Euro .
Barilla leads the global pasta business, the pasta sauces
business in continental Europe, the bakery products
business in Italy
• 13 Brands exported to more than 100 countries.
• 1.7 million tons of goods produced in 30 different sites
• More than 8,000 employees
• €141 Million invested in Research & Development– 50 new
products launched every year
The first international center dedicated to awareness,
promotion, and development of Italian gastronomic
culture in the world.
,

17. FMCG Top Players: The Retailers

18. Top 15 Grocery Retail Markets to 2015
1. US and Europe lost
supremacy, leaving
Asia to drive the growth.
In 2011 China eclipsed
the US as the leading
global grocery market
and will be worth over
€1,000bn this year.
2. In the last year 83% of
the 3.6 billion additional
purchases made by
households around the
world were from Asia
3. The BRIC market (China,
India, Russia and Brasil)
are the biggest
contributors of global
growth

19. FMCG: Top 12 Retailers Worldwide
Source Mediobanca 2015 Global report
The largest Top 12 retailers in the world are in Europe and North America,
even they need New Markets to support their growth.
Top 12 key figures
• 1.040 Billion Euro total revenues (+8,3% vs py)
• 4% total operating profit (+9% vs py)
• 211,7 billion s.m. of commercial surface
• 5,5 million employees

20. FMCG Top Players: The Retailers
• The Top 250 Global Retailers generate revenues approaching $4.5
trillion, with an average size of more than $18 Billion per company
• Only 20 companies exceeded $50 billion in retail revenues, while one
quarter of the 250 was less than $5 billion
Globalization is a must also for retailers
The top 10 Retailers operate in almost 17 countries and nearly one-third of
their sales depends on foreign markets
Sources: Deloitte Touche Tohmatsu Limited (DTTL) 18th
annual Global Powers of Retailing report

21. FMCG: Top Retailers
• $ 482 BLN in sales revenue
• Over 11,530 stores (discount, supermarket,
department stores, warehouse) in 28
countries, under a total of 65 banners
• 2.3 million employees: The biggest private
employer in the world
The largest retail company in the world
The acceleration of Walmart’s
e-commerce capabilities and
its use of social media data is
likely to be more advanced
than many of its suppliers
“Ecommerce is the next growth engine for Walmart. We want
to know what every product in the world is, who every
person in the world is, and then connect them.”
(Neil Ashe, Walmart’s Global Ecommerce Division CEO)

22. FMCG: Top Retailers
The second largest retail company in the world
• It is a Warehouse Club Chain with
71.2 million wealthy and loyal
members and 672 warehouses.
$100 billion of Sales, with $1.7 billion
net profit.
The first company to grow
from zero to $3 billion in sales
in under six years
• Despite being a low cost retailer it
is the largest seller of fine wines in
the US
President Barack Obama
visiting Costco employees
• The 174,000 employees are very loyal
and well treated by the Company

23. FMCG: Top Retailers
The third largest retail company in the world
• 104 billion Sales
• Over 380,000 employees worldwide
A multi-local, multi-format, and multi-channel
Retailer, with 12,296 stores in 35 countries,
Carrefour Market becomes “Gourmet”
an experience all Italian
To offer a unique shopping
experience that mixes taste and
convenience to satisfy the new
“food-lovers” consumer target.
Carrefour pursues a global revival by focusing on price and cost cuts, and
expansion into smaller convenience stores, in the meanwhile it renovates its
core traditional hypermarket network,

24. FMCG: Top Retailers
The forth largest retail company in the world
• € 98.3 billion in sales
• Over 10,000 stores, in 28 countries in Europe
• Expected to open stores in USA by 2018
Lidl has a no-frills approach of displaying most
of its products in their original delivery cartons.
Staffing is minimal, so profits can be also made
even if prices are low.
Lidl takes pride in providing top quality products at the
lowest possible prices to its customers across Europe.
It is more branded products on offer than the other
discount chains (eg: ALDI)

25. FMCG: Top Retailers
An international best
practice
• € 7.3 billion in sales (+4,3% vs py)
• €431 milion operating profit
• 157 stores only in north – center Italy
• 22.000 employees
• The first supermarket chain in Italy Founded in 1957 by
Bernardo Caprotti and his brothers and N.Rockefeller.
• The first to introduce on-line shopping and self
produced organic products
The best worldwide performance in
terms of productivity: € 15.732
turnover per square meter. The
double compared the avg top
global retailers
20 days in terms of stock turnover rate

26. FMCG: The store formats
Convenience & Discount Store
• 2000-3000 sku’s
• 200-3000 sq mt
• Limited service
Super market
• 20.000-40.000 sku’s
• 20.000-30.000 sq mt
Hypermarket
• 100.000-150.000 sku’s
• 150.000-200.000 sq mt
• A combination of Supermarket & Dept store
Specialty store
• Avg 30.000 sku’s
• 500 - 10.000 sq mt
• Specialize in a specific range of merchandising
Cash & Carry / Warehouse club
• 20.000-30.000 sku’s
• 100.000-150.000 sq mt

27. FMCG: The Store Format
1. Big Box (Hype+Super) continues to be the key format for modern retail penetration
2. Supermarkets are squeezed by convenience stores on one hand, and discounters on the other
hand, and have to step out of the middle ground
3. Discounters and Convenience are set to remain the fastest-growing bricks and mortar channel
4. Drugstores mission is to offer the grocery fill-in and the health and wellness one-stop shop
5. Opportunities for cash & carries and wholesale clubs still exist in emerging regions such as Africa
and APAC where they can exploit the growing traditional sectors
Note: f – forecast
Source: Planet Retail

28. But all players cannot fail to take the e-commerce’s threats and
opportunities into account…!
Q. When shopping for the products you say you currently buy, which of
the following do you use? Base 22,006 (Feb-Apr, 2015)
The physical store remains the dominant
channel globally when shopping for groceries

29. The E-commerce Channel
• Online development is
accelerating and
becoming a more
integral component of
key retailer’s strategies.
• Key retailers, such as
Walmart, are developing
greater specialism as they
boost their online focus,
and m-commerce is an
emerging global trend.
• Achieving profitability in
online food retail will
remain the biggest
challenge

30. The Dominance of the Marketplaces is
Growing
*GMV – total sales value of Merchandise sold through a marketplace. GMV (Gross Merchandise Volume
sales are based on Planet Retail estimates. Source: Planet Retail
…A new route to market for FMCGs, cheaper and more convenient for
consumers.

31. KEY TAKEWAYS
For Retailers
• Domestic growth is getting harder to obtain, even for the largest global
retailers. But domestic success sustains international expansion. Thus, cost
efficiency and format innovation will remain key drivers in mature western
European markets
• The attractiveness of emerging markets is rising. But it has to be careful in
considering “new opportunities "and focused to build scale presence in key
markets.
• Alliances and Mergers increase buying power and allow retailers to have a
stronger negotiating position with suppliers – buying at a greater combined
volume, but for a lower unit price
• E-commerce is becoming a must to address the new shopper needs, to offer
new services and to create added value. Retailers that don’t adopt digital
technology are out of the game
• Achieving profitability in online will remain the biggest challenge for Western
Europe grocery retailers, and they have to find a “smart” solution to pass on
some of the ‘additional’ costs to consumers.

32. KEY TAKEWAYS
For Suppliers
• The biggest opportunities come from BRIC markets: Building regional
expertise, understanding the dynamics of their growth, identifying strategies
developed in that markets, are all opportunities for suppliers to improve
retailer relationships
• But Growth will not just be about BRIC markets; Retailers are looking for
suppliers able to support them globally, in both domestic and international
fronts. With a better tailoring ranges to meet local shoppers needs
• The pace of technological development is leading towards changes in
consumer behaviour (eg: the role of e-commerce or m-commerce). This
could, in turn, create technologically advanced solutions with global
relevance
• Suppliers need to become priority partners with leading online players in
order to access the wealth of data these operators have
• They have to create a dedicated “online channel insight team” to share
knowledge and improve skills to operate and take decisions in this very
dynamic channel

33. SUPPLIER & RETAIL RELATIONSHIP
…..a love-hate Story ..!

34. 1920’s – ’50s
Local Corner Stores
The Merchant is a small
entrepreneur, owner of only 1
– 2 shops.
He buys and sells his goods
without any intermediates
He is the only one that can
influence shopper purchases
The Commercial Evolution

35. The Industry organization chart is flat.
Companies are hierarchically organized with a
substantial equilibrium among the different
functions
General Management
Production Marketing Sales HR Finance
It’s the “Pre-Marketing” Era
The Commercial Evolution

36. 1950’s – ’80s
Branded Products explosion!
Suppliers dominate the market
Advertising is completely in the
hands of Suppliers and
influence shopping behaviour
It’s the Brand Loyalty time!
The Commercial Evolution
1920’s – ’50s
Local Corner Stores
The Merchant is a small
entrepreneur, owner of only 1
– 2 shops.
He buys and sells his goods
without any intermediates
He is the only one that can
influence shopper purchases

37. • It’s a Marketing Centric organization.
•All the other functions are in a subordinate position
General Management
Fnance
Sales
HR
Production
Marketing
It is the “Marketing boom”
The Commercial Evolution

38. It’s Store Loyalty time!
1990’s – ’00s
Retailers discover their
big power
Retailers decide on:
Assortment, Lay-out, Space
allocation, Promotions.
They start to produce goods
and to sell advertising to
Suppliers
The Shelf Space
The Commercial Evolution
1920’s – ’50s
Local Corner Stores
The Merchant is a small
entrepreneur, owner of
only 1 – 2 shops.
He buys and sells his
goods without any
intermediates
He is the only one that
can influence shopper
purchases
1940’s – ’80s
Branded Products explosion!
Suppliers dominate the market
Advertising is completely
in the hands of Suppliers
and influence shopping
behaviour
It’s the Brand Loyalty time!

39. Suppliers move from a Marketing-Oriented organization
to a Customer–Centric organization
The Commercial Evolution
MARKETING
ORIENTED
ORGANIZATION
GENERAL MANAGEMENT
Finance
Customer
Service
Global
Marketing
Trade
Marketing
SALES
HR
Local
Marketing
Production
FROM TO

40. Retailer/Supplier Relationship Evolution
The Italian Case History

41. Italian Case History
Decades 60 - 80: the age of the supplier power
Consumer
Supplier
Consumer
research
Product
flow
Product flow
Retailer
Context:
-Economic BOOM !
-Salaries and consumption
growth
-Wealth continuous
improvement
-Mass production
-Focus on network expansion
-Low concentration/alliances
-Inconscious of the
importance of its role
Supplier Retailer
The power is in the
Supplier hands, but
there are high margins
and profits both for
suppliers and retailers

42. Italian Case History
Italian retailers’ structure
LEVELS
STORE EXECUTE SUPPLIERS
STRATEGIES
ACTIVITIES
Negotiation is very easy
• Few decision levels.
• Headquarter take
decisions
• Stores implement

43. Italian Case History
Consumer
Supplier
Consumer
research
Product
flow
Product flow
Retailer
Context:
-Slow-down of the economic
growth
-Moderate inflation rate
-Pressure on margins
-Higher consciousness of their
importance
-Competencies’ growth
-Development of managing skills
-Buying groups set-up
-Reinforcement of Procurement
Function
-Private label development
Retail marketing
Supplier Retailer
The power start to be
unbalanced in favor of
Retailers, but both
players begin to lose
margins
Decades 90-00: the age of the balanced power

44. Italian Case History
100
64
62
37
34
0 50 100 150
Italy
Germany
Spain
France
UK
Nr point of sales (000) • More than double # of PoS
• The lowest H+S potential
• The highest correlation
between PoS and thousands
of citizens
2,5
1,57
0,78
0,64 0,57
Italy Spain Germany France UK
59
69
80
87 88
Italy Spain Germany France UK
Pos FMCG
x 1,000 inhabitants ‘01
H+S Potential
IRI : Year 2001

45. Italian Case History
Physical limitations for a full development of
brands, especially for followers

46. Italian Case History
ITALIA DISTRIBUZIONE
• 30 decisional points
• All channels
(Modern Distrib. –
Organiz. Trade –
Wholesalers) and
formats/stores (H-S)
covered
• Almost 2000 PoS to
serve
The first «Centrale d’acquisto» o
SUPERCENTRALE are born
Italian retailers’ structure becomes more complex
and negotiation harder and stronger

47. Decisional levels are multiplied: «Who decides what»
Global contract,
List price
Contract, Assortment,
Listing, Special Project,
National Promotional Plan
Contract, Assortment,
Listing, Special Project,
Local Promo Plan, Orders
Contract, Listing, Special
Project, Local Promotions,
Orders, Merchandising
Italian Case History

48. • The power is completely in the Retail hands
RetailerSupplier
• Strong Concentration but
• fake alliances
• Negotiations are inefficient,
• very expensive and unproductive
• Trade investments explode
Over 70% of A&P Budget
106,8
117,8
127,4
125,3
136,9
145,8
90
100
110
120
130
140
150
1998 1999 2000 2001 2002 2003
A lot of economic and human
resources are dispersed
Italian Case History
87% mkt share

49. Italian Case History
but the world is going fast … even in Italy
• Economic crisis and new technologies are
changing consumer paradigms
• Supplier and retailers lost sight of consumer that in
meantime is finding his own way
…it’s time of the new “2.0 Shopper” !
• Brand Loyalty and Store Loyalty are behind us

50. Retailer/Supplier Relationship in the
DIGITAL ERA

51. The Digital Revolution
It’s the age of Consumer Made & Social Marketing
• Shopper is more sophisticated, wants
to interact and to be co-lead of his
purchases
• He belongs to a community,
exchanges views, asks and gives
advices
• He is engaged in the production
process, giving suggestions or by
answering to a survey
• He is looking for a Customer Solution
Provider that can satisfy his
needs/desires
• He has at his disposal a wider choice of
products and channels both off & on
line
“2.0 Shopper”

52. The Digital Revolution
• E-commerce will account for
$48 billion of global FMCG sales
(estimate to triple by 2025)
• 4,4% of global FMCG sales
Top Product categories in the business of selling on line
**Source: Walker Sand’s future of retail Study 2015
BUT

53. The Digital Revolution
Price and value continue to top the list but there are other factors, such as
shopping trips are much more purposeful and goal-oriented

54. The Digital Revolution
What encourage you to choose a retailer?
base: 21,788
Top influencers of spending online, global grocery shoppers…
• Retailers have to provide
consumers with the range of
products and brands they desire
• More personalized online
experiences will be necessary to
ensure a quick and easy path-to-
purchase.
• Fulfilment remains a key influencer
of spending for grocery shoppers
• The “2.0 Shopper” is OMNI-
CHANNEL. He wants to shop
anywhere and receive goods in
the most convenient way possible

55. Click & Collect: one answer to «Omnichannel’s» needs
• A comfortable way to do shopping on line
and collect the goods personally, avoiding
delay and additional delivery costs
• In UK click & collect is used by 35% of on-line
consumers, and the forecast is to increase
this percentage up to 76% in the next 2 years.
In Milan, shopping can also
be ordered in the metro
200 meter long visual space
The first example of the virtual
store has just arrived in Italy with
over 1,000 products of the best
mass distribution brands, which
can be ordered simply by
scanning the products with your
own mobile phone.
In London, ASDA on line shoppers can go to
underground stations to collect their goods.
The Digital Revolution

56. The Digital Revolution
Leading Chinese Retailer Alibaba
announced the development of a
new online payment option: simply
snap a selfie. Using facial recognition,
the aim is to make payment faster,
easier and more secure.
Walmart’s Healthy
Shopping Cart
highlights in-store
activity
These tech-enabled
trolleys introduced in
Costa Rica count the
calories shoppers burnt
while they travel round
the store, and highlight
nearby healthy
products.
This Swedish retailer has
collaborated with the WWF
and others to create an
app that provides users
with feedback on how their
lifestyle affects the climate,
in areas like food and
transport.
Alibaba developing smile to pay function
ICA launches Climate Right app
A wave of new technologies are making their way to the mass market

57. KEY TAKEWAYS
• Conflictual time has gone! Digital tools and technologies have
changed the balance of power in retailing, shifting it to
shoppers’ hands. … Retailers and Suppliers must start to walk
seriously on the same track to succeed
• Shopper adoption of digital technologies is fragmenting his
relationship with Retailers and Brands. His expectations often
exceed retailer capabilities, and the shopper is becoming more
selective
• Retailers and Suppliers must develop a robust understanding of
their targeted shoppers across all touchpoints, to drive distinctive
offers and accurate shopper experiences
• “Omni Shopper,” interacts with Retailers and Brands that are
able to ensure him a quick and easy path-to-purchase, allowing
him to buy what he wants, anywhere and to receive goods in
the most convenient way possible

58. DEVELOP A CAREER IN
THE FMCG INDUSTRY

59. Develop a Career in the FMCG Industry
Every FMCG business is different, but there are certain functions
that are crucial to ensure the Company’s success

60. Develop a Career in the FMCG Industry
Think fast and outside the norms of conventional
thinking. Be constantly curious, up-to-speed with
what’s going on in your profession and with a thirst for
finding out more.
Be competitive- You’ll strive to achieve the best results, but not at
the expense of teamwork. Your competitive attitude should be
focused on pulling together to drive the business.
FMCG is a fast moving industry and offers a challenging and rewarding
career environment
Seek out responsibility- Speak out and take
ownership of your ideas – as well as your career. Hit
the ground running and you’ll have the freedom to
progress your career and to push your ideas.
Adapt to change – FMCG market changes so quickly, you’ll have
to be ready to adapt to change too, helping your Company
transformation with speed and accuracy.