Nestle Demand in India

Topics: Fast moving consumer goods, Supply and demand, Good Pages: 5 (1670 words) Published: July 18, 2013
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 287 bn in 2010 to over Rs 4 trillion by 2026. Rural India, where 70% of the population resides but only 34% consume FMCG goods, presents the biggest market potential for the industry. Backed by low unit packs and aggressive distribution reach, rural market size has expanded four times to Rs 564 bn since 2002. Companies such as Nestle, Hindustan Unilever and Dabur which derive nearly half their sales from rural India have been increasing their reach. FMCG goods are retailed through two primary sales channels - General Trade and Modern Trade. General Trade, comprising of the ubiquitous kirana stores, is the largest sales channel forming 95% of overall retail sales. However, growth of consumer goods retailed through Modern Trade channel is outpacing the growth of FMCG products in General Trade. Factors such as a comfortable and modern store experience, access to a wide variety of categories and brands under a single roof and compelling value-for-money deals are attracting consumers to organized retail in a big way. Objectives

1. The main objective of this project is to understand the importance of the FMCG industry India because of it high market value. 2. This project also studies the market demand and supply and nature of elasticity of Nestle products in India. Methodology

A number of secondary sources of information were used. These are: 1. Industry statistics, problems facing the industry future outlook etc. 2. Internet websites that have been mentioned in the bibliography. 3. Extensive used of secondary information in the form of magazines, journals, newspapers clippings and books. Data

The source of the data used in this project is secondary.

Findings and Suggestions
Nestlé India manufactures products of truly international quality under internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such...
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