Fast Moving Consumer Goods

Fast Moving Consumer

Goods
Supply Abundant supply in metros. Distribution networks are being
beefed up to penetrate the rural areas.

Demand HLL expects the FMCG market to triple in market size by FY10,
which highlights the potential.
Huge investments in promoting brands, setting up distribution
Barriers to Entry networks and intense competition, but the sector is not
capital intensive.
Bargaining Power Some of the companies are integrated backwards, which reduces
of Suppliers the supplier's clout. Manufacturing is largely outsourced.
In case of branded products, there is little that the consumer can
Bargaining Power influence, but intense competition within the FMCG
of Customers companies results in value for money deals for consumers
(e.g. buy one, get one free concept).

Competition is faced from both domestic, MNCs and also from

Competition cheaper imports, which are increasingly visible in urban
markets. Price wars are a common phenomenon.
FMCG – Evolution
 1950’s-80’s – Low Investment in the sector
 Low purchasing power
 Govt’s emphasis on small scale sector
 HLL and other company’s urbane focus
 Post liberalization
 Entry of MNCs
 Focus shifted to getting to rural consumer first
 Others, like Nestle, remained with the urban population
 Latest fad to hit the market is the ‘sachet’ bug.
 Mushrooming of regional brands
 Nirma enters and changes the focus to ‘Value for Money’ in the
70’s
 Post liberalization, Jyothi Laboratories, ‘Ghari’ Detergent and
‘Anchor’ toothpaste giving the nation-wide brands a run for
their money.
 TOP FMCG COMPANIES IN
INDIA

1.HINDUSTAN UNILEVER LTD.

2. ITC(Indian tobacco company)
3. NESTLE INDIA
4.GCMMF(AMUL)
5.DABUR
6.ASIAN PAINTS
7. CADBURY INDIA
8. BRITANIA INDUSTRIES
PRODUCTS OF FMCG
COMPANY
 SOAP
 COSMETICS

 PHARMACEUTICALS PRODUCTS

 CONSUMER ELECTRONICS

 PACKAGED FOODS & DRINKS

 GLASSWARE

 PAPER PRODUCTS

 PLASTIC GOODS
PROFIT STRUCTUCTURE

 Market size of fmcg in India is us$13.1

billion

 Fourth largest in economy sector in India

 Rapid growth in per capita income of

people & company

 Controls maximum market in world

WHY FMCG PRODUCTS ARE
PRODUCED
 DURABLE

 SOLID QUICKLY

 LOW COST

 LESS STRESS ON PRODUCTION

 CUMULATIVE PROFIT
Why INDIA ?
 Large Domestic market

Population

Economics

Purchasing power
GROWTH FACTOR

Indian rural FMCG market

Availability of raw
materials

Labour cost & value chain

Recent Development in FMCG
sector

Reduction of custom &

excise duty

Coming projects

Exemption from the

FBT
Problems in FMCG
 Design & Manufacturing
- Low capital intensity
- Low or no use of technology
- Third – party manufacturing

 Marketing & distribution

- Very high initial cost
- limited mass media operations
- Huge distribution network
Contd.
 Competition
- Significant presence of unorganized sector
- Basic technology is not available easily.
- Poor transport, infrastructure and connectivity
facilities.
- Low brand awareness creates lot of problems
for producers
- Logistics are nightmare for new players in the
market.
Overview
 A general assessment of this would lead to the
conclusion that FMCG is not a Structurally
Attractive Industry to enter
Proven areas
 FMCG registered gains of 33% on BSE index last year.

 Changes in demographic composition of population and

thus the market would also continue to impact FMCG.

 47% of India's billion people i.e. 160 million were teenagers

and their families spent INR 18500 cr. On them every year;
2015, Indians under 20 are estimated upto 55%

 India's Rs 460 billion FMCG market remains highly

fragmented with roughly half the market going to
unbranded, unpackaged home made products.
Financial Analysis – Key
Players
Forecast