1. INDIAN FMCG INDUSTRY
ABSTRACT
India’s fourth largest sector is poised for
huge growth, increasing its contribution to
world trade every year. FMCG is India’s
high growth and high profit sector.
Swaroop Pandao
swarooppandao@gmail.com

2. Indian FMCG Sector Date: 21/09/2015
Swaroop Pandao
Indian Fast Moving Consumer Goods Industry
FMCG sector is one of the most important sectors for each and every Economy. In their own
seasons, products heads higher and higher in sales but equally it is a 12-month sector
welcoming all seasons. It plays a vital role being a necessity and inelastic product which
touches life in number of aspects.
In the Economy, India’s FMCG is fourth largest. FMCG is growing at a CAGR of 16.2%.
FMCG is classified in Household Care, Personal Care and Food & Beverages. The overall
FMCG market is INR 182293 Cr. Current growth rate of FMCG is in double digit. Digging
more dipper, the sector is characterized by a well-established distribution network, low
penetration levels, low operating cost, low per capita consumption and intense completion
between the organized and unorganized segments
Top players contributing to FMCG
The top ten India FMCG
brands are:
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco
Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene
and Health Care
10. Marico Industries
15.7 17.8
21.3
24.2
30.2
34.8
41.1
44.9 47.1
0
10
20
30
40
50
2006 2007 2008 2009 2010 2011 2012 2013 2014
FMCG Sector Revenue in $ billion
Revenue

3. Indian FMCG Sector Date: 21/09/2015
Swaroop Pandao
Segments of FMCG Industry
Food and Beverages
 Food and Beverages are accounting for 52% of Indian FMCG sector. Food and
Beverages is the undisputed leader of FMCG sector in India. Segment is growing at
the rate of around 8-15%. Leading FMCG players of Food and Beverages segment are
Nestle India, Amul, Dabur India, Britannia Industries, etc.
Personal Care
 Personal care products contributes for 20% of the overall FMCG sector in India,
growing at rate around 10% Market leaders of personal care products are Hindustan
Unilever Limited, P & G Hygiene catering the products like surf excel, pepsodent,
close up, vaseline, and many more.
Tobacco
 Tobacco products are counting for 15% of the FMCG sector. 2015 is not good so far
for the segment due to few Government policies against tobacoo. The undisputed
leader for tobacco in India products is ITC.
Household Care
 Household Care contributes for 10% in the Indian FMCG sector. The growth for the
segment is steady at CAGR of 9%.
Others
 Other products accounting for 3% of overall FMCG sector, growing at 8-9% annually.
Food and
Beverages, 52
Personal Care, 20
Tobacco, 15
Household Care, 10
Others, 3
% SHARE

4. Indian FMCG Sector Date: 21/09/2015
Swaroop Pandao
SWOT Analysis
Strengths
 Low operational cost
 Established distribution network in both urban and rural areas
 Presence of well-known brands
 Favourable Government policies, reduction in CST and excise duty
Weaknesses
 Lower scope of investing in technology and achieving economies of scale, especially
in small sectors
 Low export levels
Opportunities
 Untapped rural market
 Increasing purchasing power
 Large domestic market
 Export potential
 High consumer goods spending
Threats
 Removal of import restrictions resulting in replacing of domestic brands
 Slowdown in rural demand
 Tax and regulatory structure
Key Growth Engines
 Rising per Capita Disposal Income
 Increasing Discretionary Expenditure
 Growing Rural Market
 Growing Popularity of Modern Trade
 FDI Support
 Large Market with Wide Distribution Network
 Changing Profile and Mind Set of Customers
 Advertising and Media Coverage
 Innovation in Core Products

5. Indian FMCG Sector Date: 21/09/2015
Swaroop Pandao
Key Growth Inhibitors
 Inadequate Distribution Network
 High Competition between large and small players
 Taylor made products with attractive packaging
 Collaboration and partnership do work
 Reach and role of distribution
 Attending consumers demand of low price with high quality
 Competent front end sales force
 Ineffective use of Technology
Recent Developments
 Finance Minister, Mr. P. Chidambaram declared several tax sops for the FMCG sector
in India along with putting due emphasis on the infrastructure developments in the
same.
 Government has reduced CST and Excise duty.
 The usual growth drivers such as penetration, per capita consumption, population, and
household income were quite strong in the past years and also the consumption of the
FMCG products has been increased outstandingly.
 Biscuits worth ` 50 per kilogram are fully exempted from excise duty, customs duty
on food processing machineries were reduced from 7.5% to 5%, excise duties on food
mixes were reduced from 16% to 8%, and taxes were reduced on edible oils. ITC,
Dabur, HUL and Marico were directly benefited.
Rural – set to rise
 Rural areas expected to be the major driver for FMCG, as growth continues to be high
in these regions. Rural areas saw a 16 per cent, as against 12 per cent rise in urban
areas. Most companies rushed to capitalise on this, as they quickly went about
increasing direct distribution and providing better infrastructure. Companies are also
working towards creating specific products specially targeted for the rural market.
 The Government of India has also been supporting the rural population with higher
minimum support prices (MSPs), loan waivers, and disbursements through the
National Rural Employment Guarantee Act (NREGA) programme. These measures
have helped in reducing poverty in rural India and given a boost to rural purchasing
power.
 Hence rural demand is set to rise with rising incomes and greater awareness of brands.
Urban trends
 With rise in disposable incomes, mid- and high-income consumers in urban areas
have shifted their purchasing trend from essential to premium products. In response,
firms have started enhancing their premium products portfolio. Indian and
multinational FMCG players are leveraging India as a strategic sourcing hub for cost-
competitive product development and manufacturing to cater to international markets.

6. Indian FMCG Sector Date: 21/09/2015
Swaroop Pandao
Thank You