Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods.
These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. 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 treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. If you are thinking, how the FMCG Sector can grow in such a volatile economy, think about this. "Right from the moment you wake up to the time you go to bed, you use some or the other FMCG product. Toothpaste, Mouthwash, Soap, Shampoo, Deodorant, Mosquito Repellent etc." The list is endless. With growing populations in India as well as around the globe, do you really think the demand for FMCG products will come down??
India is one of the world‘s largest producer for a FMCG products but its FMCG exports are languishing at around 1,000 crore only. There is noteworthy potential for increasing exports but there are certain factors inhibiting this, Small-scale sector reservations bound ability to invest in expertise and quality up gradation to achieve economies of scale. Moreover lower volume of higher value added products reduce scope for export to developing countries.
Products belonging to FMCG sector generally have following characteristics: They are generally used once in a month.
They are used directly by end users.
They are non durable.
They are sold in packaged form.
They are branded.
Oral care; Skin care; Personal wash (Soaps); Cosmetics and Toiletries; Deodorants; Perfumes; Paper products (Tissues, diapers and sanitary); Shoe care. Major companies active in this segment are Hindustan unilever, Godrej soaps, ColgatePalmolive, Marico, Dabur, Proctor and gamble.
Personal Care (Indian view)
Personal care category in India is valued at Rs 54.6 billion. An average Indian spends 8% of his income on personal care products. Personal care mainly consists of Hair Care, Skin Care,Orally Care, Personal Wash (Soaps), Cosmetic and Toiletries, Feminine Hygiene. Till 2002-2003, Personal care products, except those in oral care category, were regarded as luxury items, and attracted a high excise duty of 120%. But the taxation reforms in India after 1991 have lowered the excise duty rates that make these products more affordable. It is divided into two segments:
The premium segment
The popular segment
The premium segment caters mainly to urban high class and upper middle class, and is more brands conscious and less price sensitive. The popular segment caters to mass segments in urban and rural markets; prices here are around 40% of the premium segment prices.
With the increase in rural income and improvement in distribution network (i.e. road development projects), the penetration levels are set to increase. Since the consumption level in urban areas is already high in most of the categories, the growth can come only from deeper penetration and higher consumption in rural areas. In the year 2005-06, the sector witnessed growth because of the increase in consumer demand from urban and rural areas.
In addition to demand, prices also went up. Also, with the increase in disposable...
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