Fmcg Strategy

Topics: Fast moving consumer goods, Marketing, Board of directors Pages: 36 (6196 words) Published: August 26, 2013
The Indian FMCG Industry

Dinodia Capital Advisors September 2012

Index
I. II. Executive Summary Market Overview
– – – – Industry Overview Evolution of the Indian FMCG Sector Porter’s Five Forces Model SWOT Analysis Key Challenges Trends in the Industry Growth Drivers Government Policies Major Segments

III.

Industry Analysis
– – – – –

IV. Investments in the Sector
– Recent M&A Deals – Recent Private Equity Deals

V.

Major Players
– Major Players – Common Stock Comparison
1

Index
VI. Profiles of the Major Players
– – – – – – – – – ITC HUL Nestle Dabur Godrej Consumer Colgate-Palmolive Marico GSK Consumer Britannia

VII. Corporate Profile (Dinodia Capital Advisors)

2

Executive Summary (1/2)
The Fast Moving Consumer Goods (FMCG) sector in India has been growing at a healthy CAGR of 11% over the last decade Riding on the back of increasing demand and changing consumer preferences, thanks to higher disposable incomes and the retail revolution, the sector has been posting double-digit growth over the past couple of years The industry is volume driven and is characterized by low margins. The products are branded and backed by skilled marketing, heavy advertising, slick packaging and strong distribution networks. Also, raw material prices play an important role in determining the pricing of the final product Modern retail formats too have contributed in a major way in pushing the growth in the FMCG sector. With rising income levels and the spread of modern retail, the FMCG industry’s future prospects look bright which is expected to further boost sales

Growth in the sector is led by higher urban and rural demand. Going forward , the government’s growing support to agriculture will drive long-term growth in consumption from the rural sector In our view, amongst all the FMCG segments, the food segment will outperform over the coming years

3

Executive Summary (2/2)
The Indian food industry is a significant part of the Indian economy,(food constitutes about 36% of the consumer wallet) The Indian food industry is poised to grow by a whopping 63.5% from Rs 788,100crs now to Rs.1,288,900crs in next 5 years and by 137.8% to Rs. 1,874,100crs in next 10 years, throwing up huge opportunities for investments across the entire value chain1 India faces contrasting problems of having one of the highest malnutrition cases and also being the diabetes capital of the World.In our view, both of these are an opportunities for Food companies. The Health foods segment is likely to see one of the highest growth in the Food segment To exploit this trend many companies have launched health based products viz. Britannia launched Nutrichoice biscuits, Danone launching probiotic yogurt, Dabur introduced a juice with fiber and HUL introduced Soya and multigrain atta, iodized salt, energy drinks We believe that the demand for these products is going to outpace the overall Food Category growth for the years to come

Source:

1

India Food Guide, Edelweiss Feb’12

4

Market Overview

MARKET OVERVIEW
    Industry Overview Evolution of Indian FMCG Sector Porter’s Five Forces Model SWOT Analysis

5

Industry Overview
Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged goods, play a vital role as a necessity and as an inelastic product

The Indian FMCG sector is the fourth largest sector the economy with a total market size of Rs. 167,100crs1 The market is estimated to grow to US$ 100 billion by 2025, according to market research firm Nielsen In the last decade the FMCG sector has grown at an average of 11% a year; in the last five years, annual growth accelerated to 17% The FMCG Industry is characterized by a well established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments FMCGs are slowly and gradually positioning and deeply penetrating in the...
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