What is FMCG?
FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy from local supermarkets on daily basis, the things that are non-durable, sold quickly, at relatively low cost, have high turnover and are relatively cheaper. FMCG’s constitute a large part of consumers’ budget in all countries. The most common in thelist are baby foods, toilet soaps, detergents, shampoos, toothpaste, cosmetics, shaving products, shoe polish, refined cooking oil, packaged foodstuff, soft drinks, chocolate bar, tissue paper and other household accessories and extends to certain electronic goods and other non-durables such as glassware, bulbs, batteries, paper products and plastic goods, such as buckets etc. These items are meant for daily of frequent consumption and have a high return. FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot of thought, time and financial investment to purchase. The margin of profit on every individual FMCG product is less but as they sell in large quantities so the cumulative profit on such products are high. Hence profit in FMCG goods always translates to number of goods sold.
The main segments of FMCG sector are :
1) Personal care, Oral Care, Hair Care, Skin Care, Personal Wash (cosmetics and toiletries (soaps), deodorants, perfumes, male grooming, feminine hygiene, paper product); 2) Household care (fabric wash laundry soaps, synthetic detergents, household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish); 3) Packaged food and health beverages (flour, tea, coffee, sugar, staples, cereals, dairy products, chocolates, soft drinks, juices, bottled water, snack food, chocolates and cakes) 4) Tobacco.
India & the FMCG Market:
The Indian FMCG sector is an important contributor to the country's GDP. The Indian FMCG sector with a market size of US$14.8 billion is the fourth largest sector in the economy and is responsible for 5% of the total factory employment in India. The FMCG industry also creates employment for 3 million people in downstream activities, much of which is disbursed in small towns and rural India. This FMCG industry has witnessed strong growth in the past decade. This has been due to liberalization, urbanization, increase in the disposable incomes and altered lifestyle. Furthermore, the FMCG boom increased due to the reduction in excise duties, packaging innovations etc. and unlike the perception that the FMCG sector is a producer of luxury items targeted for the elite but in reality, the sector meets the every day needs of the masses. The lower-middle income group accounts for over 60% of the sector's sales. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. The growing incline of rural and semi-urban folks for FMCG products will be mainly responsible for the growth in this sector, as manufacturers will have to deepen their concentration for higher sales volumes. Many of the global FMCG majors have been present in the country for many decades. But in the last ten years, many of the smaller rung Indian FMCG companies have gained in scale. As a result, the unorganized and regional players have witnessed erosion in the market share. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to double from USD 14.7 billion in 2008-09 to USD 30 billion in 2012. FMCG sector will witness more than 60 per cent growth in rural and semi-urban India. The bottom line is that Indian market is changing rapidly and is showing unprecedented consumer business opportunity.
History of FMCG in India:
In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have been a...