FMCG SECTOR OF INDIA

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              Fast Moving Consumer Goods (FMCG) sector is the 4th largest sector in the Indian economy. Growing awareness about the products among the consumers, easier access and changing lifestyle among the Indians have been the key drivers for this sector. The FMCG Industry is characterized by a well-established distribution network, low penetration levels, low operating cost, lower per capita consumption and intense competition between the organized and unorganized segments.



HISTORY-  

                The FMCG sector had a relatively modest growth from 1950’s to 1980’s. The growth in the FMCG sector started in the 1990’s when India opened its economic door to the rest of the world. With the entry of the global players in the country, this sector has increased at a large rate making it the 4th largest sector in the country.

                         GROWTH -                        

                The FMCG sector has grown around 16% from 2006-2013. The industry has tripled in size in the last decade. In the last decade it has grown around 12% per annum. It is expected to grow at 14 -15 % per annum in the next decade with a market value of around $220 – 240 Billion. 

                     MARKET SIZE -                  

                   It is the 4th largest sector in the Indian economy. Its market is expected to be around USD $ 185 Billion.  Revenues of FMCG sector reached US$ 49 Billion in the year 2016 and are estimated to reach US$ 103.7 billion in 2020.

               TARGET MARKET -     
  
                   The FMCG sector caters to both the urban and the rural market. In the financial year 2018, rural India accounted for 45 percent of the total FMCG market revenue. Rural FMCG market size is expected to touch US$ 220 Billion by 2025 from US$ 29.4 Billion in 2016. Urban market is growing at a rapid pace and accounted to a revenue share of 55 percent of the total revenue of the FMCG sector in India.  According to CRISIL report FMCG urban segment will have a steady revenue growth of 8% in the financial year 2019.

                             SEGMENTS –                 


 The FMCG sector consist of 3 segments namely Food and Beverages, Healthcare and Household and Personal Care.
                                       

 
The segment food and beverages consists of cereals, bakery products, snacks, tea, coffee, soft drinks, fruits, vegetables, dairy products, chocolates etc. the healthcare sector consists of OTC products and ethicals. The household and personal care sector consists of oral care, skin care, cosmetics, house cleaners, paper products etc.

                    IMPACT  ON THE INDIAN ECONOMY -  

The FMCG sector is playing a huge role in the Indian economy be it employment generation or development of the society on a whole. Approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. Thus the sector is responsible for the livelihood of almost 13 million people. Taxes collected from the FMCG products be it direct tax or indirect tax amounts to approximately  US $25 Billion, out of which it contributes to the exchequer around US $ 6.5 Billion. The FMCG companies like Hindusthan Unilever and ITC are playing a key role in the CSR activities. ITC through its programme ITC Echoupal And Choupal Sagars is selling both agricultural inputs and daily needs products. ITC’s rural e-network enables farmer connectivity and provides an easy way for farmers to get better profitability and control through access to timely information. Similarly HUL through its programmes like HUL’s Shakti Amma Network is pioneering a rural entrepreneurship model amongst women who became HUL distributors.
                                                                   
  MARKET PLAYERS-
The FMCG sector consists of various companies like ITC, HUL, P&G, Dabur, Marico etc who all are market leaders in their respective product segments.




MAJOR INVESTMENTS IN THIS SECTOR-   

 v  Dabur to invest Rs 250 – 300 crore in the Financial year 2019, for capacity expansion and acquisations in the Indian market.
v  As of January 2018, Carlsberg India Pvt Ltd has started a new beverage factory in Karnataka that will manufacture the company’s existing brand with annual capacity of 80 million litres.
v  Amazon India is planning to invest significantly over the coming months for expanding its grocery and food business, by launching more products and categories and forming new partnerships with huge grocery and supermarket chains.
v  In January 2018, Eveready Industries India had entered into a joint venture with Wings Group, a large conglomerate and one of the major FMCG companies in Indonesia called, Universal Wellbeing. Through this JV with Universal Wellbeing, Eveready has planned marketing and distribution of a large basket of FMCG products in India.
v  Patanjali is looking to consolidate its marketshare and is planning to invest it different parts of India to make its presence felt strongly in this sector.




    REASONS FOR SUCH GROWTH IN THIS SECTOR -

v  India’s GDP per capita at current prices is expected to increase from US$ 1,481.56 in 2012 to US$ 3,273.85 in 2023. As a result of which people’s purchasing power will increase. It will result in the increase of the consumption expenditure of the people, which will lead to the increase in demand for the FMCG goods. This will lead to the growth of the Industry.
v  Uniform rate of GST across the country has lead to the uniform rate of taxation on the products throughout the country. As a result it has lead to the decrease in the cascading effect of taxation leading to the fall in the artificial hike in the price of the commodities.
v  With the rise in disposable incomes, mid and high-income consumers in urban areas have shifted their purchase trend from essential to premium products
v  The relaxation of the government rules on licensing, opening up of the Indian economy for the foreign investors and providing relaxation in the budget has lead to the growth of the Indian economy.
v  Increase in the number of the users in the number of internet users. As out of every 3 FMCG customers 1 visit online o purchase their products before visiting the store to purchase their product.
v  On the policy front, the government gave Investment approval of up to 100% foreign equity in single brand retail and 51% in multi-brand retail.

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