FMCG SECTOR INDIA OUTLOOK
The burgeoning middle class Indian population, as well as the rural sector, present a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025. This sector is characterized by strong MNC presence and a well established distribution network. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. There is also intense competition between the organised and unorganised segments and the fight to keep operational costs low.
CHALLENGES TO FMCG SECTOR
* Increasing rate of inflation, which is likely to lead to higher cost of raw materials. * The standardization of packaging norms that is likely to be implemented by the Government by Jan 2013 is expected to increase cost of beverages, cereals, edible oil, detergent, flour, salt, aerated drinks and mineral water. * Steadily rising fuel costs, leading to increased distribution costs. * The present slow-down in the economy may lower demand of FMCG products, particularly in the premium sector, leading to reduced volumes. * The declining value of rupee against other currencies may reduce margins of many companies, as Marico, Godrej Consumer Products, Colgate, Dabur, etc who import raw materials.
HIGH GROWTH DRIVING FACTOR
* Increasing rate of urbanization, expected to see major growth in coming years. * Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration. * Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment. * Increase in rural non-agricultural income and benefits from government welfare programmes. * Investment in stock markets of FMCG companies, which are expected to grow constantly.
This sector will continue to see growth as it depends on an ever-increasing internal market for consumption, and demand for these goods remains more or less constant, irrespective of recession or inflation. Hence this sector will grow, though it may not be a smooth growth path, due to the present world-wide economic slowdown, rising inflation and fall of the rupee. This sector will see good growth in the long run and hiring will continue to remain robust
DEMAND FOR FMCG SECTOR
Confidence of consumer product makers is waning as a delayed monsoon and lingering weakness in the economy threaten to subdue revenue growth for the sector in the next two quarters. Several marketers, including Dabur, Marico, Godrej Consumer Products Ltd (GCPL), ITC and Emami, fear pressure on premium products and rural demand - two important growth drivers - in the coming months as sustained high inflation and a hold-up in monsoon could prompt buyers to tighten purse strings. "While the high-end, super-premium segment does not get impacted by inflation, demand in the mass premium segment could contract if overall economic sentiment does not improve," said Sunil Duggal, CEO ofDabur India, the maker of Real juices and Vatika shampoo.
HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products. Seventeen of HUL’s brands featured in the ACNielsen Brand Equity list of 100 Most Trusted Brands Annual Survey (2011). The company also happens to have the highest number of brands in this list, with six brands featuring in the top 15 list. The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands. Its brands include
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