FMCG stands for Fast-moving consumer goods. It is also known as consumer packaged goods.These are products that are sold quickly and at a relatively low cost.
Though the profit margin made on FMCG products is relatively small (more so for retailers than the producers/suppliers), they are generally sold in large quantities; thus, the cumulative profit on such products can be substantial.
FMCG is probably the most classic case of low margin and high volume business. Examples include non-durable goods such as soft drinks, toiletries, over the counter drugs, toys, processed foods and many other consumables. The FMCG industry is poised to grow 10 to 12 percent annually.
The organised retail has created new channels for FMCG players through diverse retail such as departmental stores , hypermarkets etc. The Fast Moving Consumer Goods (FMCG) sector, is one of the prominent contributors to India's Gross Domestic Product (GDP) annually. The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. It accounts for over 10 percent of the country's Gross Domestic Product (GDP) and around 8 per cent of the employment. India is the world's fifth-largest global destination in the retail space.
India's retail market is expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income growth, urbanization and attitudinal shifts. The overall retail market is expected to grow at 12 percent per annum. Modern & Organized trade would expand twice as fast as 20 percent per annum and traditional trade at 10 percent.
There is a tremendous scope for growth in semi-urban & rural markets with consumption expected to grow in these areas as penetration of brands increases. Also demand for durables like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years in the rural markets as the government plans to invest significantly in rural electrification.
The FMCG sector has grown at an annual average rate of about 11 percent over the last decade. The overall FMCG market is expected to increase at (CAGR) of 14.7 percent to touch US$ 110.4 billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7 percent to reach US$ 100 billion during 2012-2025.
Unlike the developed markets, which are prominently dominated by few large players, India’s FMCG market is highly fragmented and a considerable part of the market comprises of unorganized players selling unbranded and unpackaged products. There are approximately 12-13 million retail stores in India, out of which 9 million are FMCG General Grocery Stores.
Penetration level and per-capita consumption in many product categories is very low compared to world average standards representing the unexploited market potential. Growing Indian population, particularly the middle class and the rural segments, encourages the huge untapped opportunity to FMCG players. Growth is also likely to come from consumer 'upgrading' in the matured product categories like processed and packaged food etc. A distinct feature of the FMCG industry is the presence of international players through their subsidiaries (HLL, P&G, Nestle),which ensures innovative product launches in the market from their parent's portfolio.
Our country has a varied agro-climatic condition which enables to offer extended raw material base suitable for many FMCG sub sections like food processing industries etc. India is the one of the major producer of livestock, milk, sugarcane, coconut, spices and cashew. India is the second largest producer of rice, wheat, fruits & vegetables.
Similarly, India has an abundant supply of caustic soda and soda ash, the chief raw materials required in the production of soaps and detergents, which enables the household section of the industry to excel and grow. The accessibility of these raw materials gives India the location advantage.
The India's retail market is expected to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015.. Only 8% retail is organized. Retails of multiple brands can operate through a franchise or a cash and carry wholesale model.
The Indian Industry expanding itself most aggressively, as a result a great demand for real estate is being created. Indian retailers preferred means of expansion is to expand other region and to increase the number of their outlets in the city.
- Increase in the income of middle and lower class Indian family indicates the enhancement in the purchasing power.
- The infrastructural growth is quite advantageous and fruitful for the market.
- Indian economy is becoming more liberal.
Retail in India is superior to those its contenders. Retail sector is a rising industry and the prospects of growth are tremendous. There are many factors that have stimulated the rise of the shopping centres.
- 1. Rise in purchasing power of Indians:
Rise in the income in the last few years has been magnificent. This has led to generation of insatiable wants of the upper and middle class. The demand of new durables has risen throughout the country thus providing the incentives for taking up retailing.
- 2. Comfortable Atmosphere:
A visit to a retail store appears to be more soothing for the generation. People and kids prefer to shop in air conditioned. The retail industry is the second largest employer in India.
REGULATORY FRAMEWORK :
The industry has seen a lot of openness from the food processing industry.The critical points of discussions for industry leaders included food laws, food safety, having better working relationships with the regulatory authorities, one common market in terms of tax, initiatives to grow talent, and a focus on newer distribution channels.
The companies will need to focus on tier-2 and tier-3 cities and rural regions as their contribution will be an important source of demand for the sector as their will be more migrants of consumers from non-branded to the branded segment.
Meanwhile, with the growing number of digitally influenced FMCG buyers, companies are expected to shift more and more marketing dollars to the digital media as share of sale from the e-commerce channel grows.
Evolution of the Indian FMCG Sector :
The Urban Market Accounts for a Major Chunk of Revenues:
THE TOP INDIAN COMPANIES IN FMCG SECTOR
|1. Hindustan Unilever Ltd.||9. Cadbury India.|
|2. ITC (Indian Tobacco Company)||10. Britannia Industries.|
|3. Nestlé India.||11. Procter & Gamble Hygiene and Health Care.|
|4. GCMMF (AMUL).||12. Marico Industries.|
|5. Dabur India.||13. Asian Paints (India).|
|6. REI Agro Limited.||14. Amar Remedies.|
|7. KRBL Limited.||15. Kohinoor Foods.|
|8. Himalaya Intl.||16. Vadilal Ind.|