Abstract
The major aim of this project is to understand the nature of demand and supply of Fast Moving Consumer Goods (FMCG) in India. The point of focus is on Nestle India and its market demand and nature of elasticity is studied in detail.
Compounded annual growth rate of sales and net profits of Nestle India was 20 per cent and 22 per cent over the past three years. However, sales and net profit growth for Nestle has been slowing down for well over a year now. Sales expanded by 13 per cent in the March 2012 quarter when compared to the year-ago period. That's well below the 22 per cent year-on-year growth seen in the March 2011 quarter. Similarly, net profits expanded just 9 per cent in the March 2012 quarter; growth in the March 2011 quarter stood at 27 per cent.
Introduction
The consumer products industry has been growing at a brisk pace in the past few years backed by robust economic growth and rising rural income. Growth drivers such as premiumization, rapid urbanization, evolving consumer lifestyles and emergence of modern trade have shielded the industry from the slowdown.
The consumer products or the Fast Moving Consumer goods (FMCG) sector is valued at Rs 1.6 trillion. The industry is urban-centric with 66% share of the goods being consumed by urban India. Metropolitan cities & small towns have been driving the FMCG consumption in urban India since 2002. In fact middle India, comprising of the small towns and consuming 20% of overall FMCG sales, has been growing the fastest across rural and urban segments. As per Nielsen, the FMCG market size of middle India is set to expand from Rs