Nestle India – Good Food, Good Life
FMCG sector, Manufacturing.
The Indian Fast Moving Consumer Goods sector is the fourth largest and fastest developing sectors in the economy with a total market size in excess of US$ 44.9 billion in 2013 with a growth rate of about 16.2% since 2006. Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. The growth if the industry, however, depends on factors such as low rural penetration, dependence on monsoon, the price sensitivity of the consumers and increased level of competition could result in decreasing profit margins in the industry. Food products are the largest FMCG segment contributing to about 47% of the revenue followed by personal care products which account to about 22%. (Fig 1)
Fig 1: FMCG Revenues – by segment
India is the world's second largest producer of food next to China. The most promising sub-sectors includes -Soft-drink bottling, Confectionery manufacture, dairy products, Ready-to-eat breakfast cereals, Food additives, flavors etc. Healthy food and supplements is another rapidly rising segment of this industry which is gaining vast popularity amongst the health conscious.
The Indian FMCG Market is a perfect example of monopolistic competition. It is a highly crowded market with a large number of national and global players competing on margins
The main features of FMCG in light of monopolistic competition can be viewed as follows:
Large Number of Sellers
In a monopolistic competitive market, there is abundance of sellers producing differentiated products. The major players across the globe are: ITC Limited, Procter & Gamble and Hindustan Unilever Limited.
Freedom of Entry and Exit
There are low...
Please join StudyMode to read the full document