Fast Moving Consumer Goods (FMCG)

December 6, 2019 India INC

Fast Moving Consumer Goods (FMCG)

There is no marketing force, which can defy the principle of growth. And when it comes to Fast Moving Consumer Goods, the latent potential of the segment is fast proving its mettle in the Indian market. From changing consumer’s mindset to offering new generation products, the FMCG companies are redefining their ever-expansive role to meet consumers’ demands. It’s no surprise that with an estimated market size of around Rs 450 bn, the FMCG segment has become the fourth largest sector in the Indian economy. As part of marketing strategy, Indian companies are fast making inroads into country’s hinder land to reap rich harvest. With 70% of Indian population living in 627,000 villages and per capita consumption of FMCG product being lowest in the world, the segment holds a vast potential to break fresh ground in rural India. In fact, companies like HLL and ITC have already started projects like Shakti and E-choupal respectively to tap the rural market. In fact, FMCG firms have been registering a steady growth during the past few decades. Not to mention the giants like Hindustan Lever and Nestle India, the growth has also been robust at Britannia (70 per cent growth), Godrej Consumer (25 per cent), and Colgate Palmolive India (23 per cent). Colgate and Godrej Consumer, for whom toothpastes and soaps are the key revenue drivers, reported sales growth of 7 per cent and 15 per cent respectively in the recent quarter. To make itself affordable, MNCs such as P&G and Gillette, which earlier stuck to the premium end of the market, have turned price warriors. In certain mature categories such as toothpastes, soaps – even tea, players are trying to broaden their market base with price tags of Rs 5, 10 and 20. And it was not too long back when HLL began a price war in shampoos with its ‘buy-one-get-one-free offer,’ As a result; the Rs 1,000-crore shampoo industry grew between 10-15 per cent largely due to price cuts and small packs. Meanwhile, the FMCG sector also received a boost by government led initiatives such as the setting up of excise free zones in various parts of the country that saw companies moving away from outsourcing to manufacturing by investing in the zones. In fact, Colgate-Palmolive India, Godrej Consumer, Marico Industries, Dabur and Britannia, as also HLL, are looking to source a substantial portion of their output from tax-free zones. And when it comes to predicting FMCG’s future, here is an indicator: An ASSOCHAM’s study says the FMCG industry will achieve a growth of 3-4 per cent in 2005-06 – a good growth, especially seeing the tough completion and the price war.