INTRODUCTION

FMCG Means Fast Moving Consumer 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. A major portion of
the monthly budget of each household is reserved for FMCG products. The volume of money circulated in
the economy against FMCG products is very high, as the Number of products the consumer use is very
high. Competition in the FMCG sector is very high resulting in high pressure on margins. FMCG
companies maintain intense distribution network. Companies spend a large portion of their budget
on maintaining distribution networks. New entrants who wish to bring their products in the national
level need to invest huge sums of money on promoting brands. Manufacturing can be outsourced. A
recent phenomenon in the sector was entry of multinationals and cheaper imports. Also the market is
more pressurized with presence of local players in rural areas and state brands.

Fast-moving consumer goods (FMCG) sector is India‟s fourth largest sector with household and personal
care accounting for 50% of FMCG sales in India. Growing awareness, easier access and changing lifestyles
have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around
55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in
the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India.
Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50% of the
total rural spending.

Market size and projected growth rate

In the last 10 years, the revenue in FMCG industry in India has been growing at the rate of 21.4%. There
was a drastic change in revenues in FMCG sector growing from US$ 31.6 billion to US$ 52.8 from 2011 to
2017-2018 respectively. FMCG industry in India is expected to grow at the rate of 27.9% CAGR
(Compounded Annual Growth Rate) to sum to US$103.7 billion by 2020.]Additionally, the rural FMCG
market is projected to grow at a CAGR of 14.6% to reach US$100 billion by 2020 and US$220 billion by
2025. The rural setting accounts for 45% revenue share while the urban setting dominates with 55%
revenue share of the total revenue of the FMCG industry. More than 65% of people in India stay in rural
places and those people spend around 50% of their total expenditure on FMCG products. The number of
people buying consumer goods online in India is projected to reach 850 million by 2025.
Driving factors leading to growth rate:

 Increased population of working women

 Increased disposable income and growing per capita expenditure
 Increased purchasing power of the customers
 Increased awareness of online shopping
 Higher brand recognition and consciousness
 Constant change in consumer preference
 Banking policies and government's regulations
 Growing interest for foreign investors

Characteristics
1. Technology - Since the emergence of the internet, people have adopted the research online,
purchase offline (ROPO) method. As a result, FMCG companies have installed advantaged
manufacturing machines for better quality purpose and have decreased their profit margin to match
with their competitors.
2. Marketing drive and research - Indian customers prioritise getting the best deals possible and as a
result are less likely to stay loyal to a brand. Thus, FMCG companies are constantly trying to
influence customers with their promotional deals and many firms offer combo deals to attract
customers to buy their product.
3. Low capital intensity - Most of the companies operating in FMCG require relatively less capital for
investments in manufacturing plants, machinery, equipment and other fixed assets. The turnover is
typically about five to eight times the invested capital at a fully upgraded manufacturing plant.
Companies have low capital intensity as transactions in businesses are still carried out on credit and
cash basis.
4. High initial launch cost - Unlike FMCG industry in the US which is dominated by few big
companies, India's industry is highly fragmented. Increasing the market share for companies is
getting more challenging due to increase in number of competitors. Promotions and advertisements,
cost of product development, testing market compatibility, market research and mainly, the launch
of the product to create awareness requires high initial costs.
Evolution
Between 1950 and 1980, there was limited investment in the FMCG sector. Local people had lower
purchasing power, which meant that people opted for necessity products rather than premium products.
Indian government was inclined towards favouring the local shops and retailers. Between 1980 and 1990,
people wanted more variety of products which encouraged FMCG companies to increase the availability of
products. FMCG Industry started getting traction and other companies started entering the industry. Media
industry in India also boomed during the same time which gave new companies even more incentive to
make their business profitable. Prior to 1991, when globalisation and liberalisation occurred in India,
western apparels and foreign food products were not available to local customers. Common people weren‟t
very aware of brand recognition. After 1991, FMCG industry was inspired by the international companies
which also allowed government intervention to incentivise foreign FMCG companies to operate in India.

Big Bazaar store in Ahmedabad, Gujarat

The Indian FMCG industry generates massive employment opportunities and currently employs more than 3
million people. Departmental stores, grocery stores, and supermarkets are the places where consumers buy
the necessary products for daily consumption. In the 21st century, people don‟t want to move across
different stores to acquire the common household goods. Hence, the introduction of supermarkets, where
customers have a variety of choices for different household products, into localities are proving to be
extremely convenient to the customers. Some of the most common stores in India are: Reliance Retail, Big
Bazaar, D-Mart, Easy day, MORE, Spencer‟s, Spar, HyperCity, and Star Bazaar. Although the operations of
supermarkets are profitable, local grocery stores are suffering due to lack of variety of products. Unlike
other emerging FMCG industry around the world, FMCG sector in India is still quite conventional. Despite
street markets are still one of the most visited places for shopping in urban and rural settings, online
platforms are leading the way to buy FMCG products.
What are FMCGs?

We regularly talk about things like butter, potato chips, toothpastes, razors, household care products,
packaged food and beverages, etc. But do we know under which category these things come? They are
called FMCGs. FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy
from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper.

Weak areas of FMCG sector:

 Lower scope of investing in technology and achieving economies of scale, especially in small sectors
 Rising income levels and higher disposable income, resulting in increase in purchasing power
of consumers
 Large domestic market with more population of age group between 20 and 30
 Low exports levels.

Threats:

 Liberal import policies resulting in replacing of domestic brands.

 Government Taxation policies and regulatory structure
 Rural demand is seasonal and depends upon monsoon. Fast moving consumer goods (FMCG) – or
Consumer Packaged Goods (CPG) – are products that are consumed quickly over a shorter period of
time. Examples include non-durable goods such as grocery items, soft drinks, dairy products and

toiletries. Conditionally, the absolute margins on goods are very low and profit made on FMCG is
comparatively low, the products are sold large quantities so the substantial profits are
generated. The term FMCG refers to those consumer goods that are sold quickly and at lesser
prices. The life of the FMCG is very short and the products are used up over a short period of
days, weeks, or months, and within one year. FMCGs have a short period of life, either due to
high consumer demand or because the product deteriorates rapidly. Some FMCGs – such as dairy
products, fruits and vegetables, meat, etc. are highly perishable in nature and should be used at
earliest. Other goods such as soft drinks, alcohol, cleaning products, toiletries and pre-packaged
foods, have higher sales volume and high turnover rates.
FMCG Category and Products
In context of the world, the top 10 FMCG companies 2021 are as follows:

1. Hindustan Unilever Limited

HUL is a subsidiary of Unilever, one of the world‟s leading suppliers of food, homecare, and personal
hygiene products with offices in 190 countries. Hindustan Unilever is one of the best FMCGs that there
is, serving more than 2 billion happy consumers for 85 years.

HUL has over 35 brands across 20 categories such as soaps, detergent, skincare, cosmetics, tea,
toothpaste and some famous names include Surf Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel,
Sunsilk, Knorr etc. Here is the Annual Report of 2017-2018, Which Shows that the Company has 18,000
employees and has sales of INR 34619 crores.

Corporate Office: Mumbai, Maharashtra

Turnover: 4 Billion Dollars

2. Colgate-Palmolive

Colgate-Palmolive grew from a small toothpaste and candle manufacturing unit in the 19th century
New York and more than 200 years later, a global leader in personal healthcare products.

The popular brands include the Colgate Toothpaste, Colgate Plax Active Salt Mouthwash, Halo Shampoo,
Palmolive Naturals and Protex Soap. Colgate-Palmolive‟s core values of caring, global teamwork and
constant improvement makes them a prestigious name not only in the Indian Fast Moving Consumer
Goods industry but globally. According to the Annual Report of 2017-2018, the Company has roughly
38000 employees and has sales of INR 12045 crores.

Corporate Office: New York, USA

Turnover: 17.08 Billion Dollar

3. ITC Limited

From its humble beginnings in 1910 Calcutta, ITC Limited has flourished into a premium brand which with
a multi-business portfolio that includes FMCG, hospitality, paperboards and speciality papers, agri-
business and information technology.

The Fast Moving Consumer Goods supplied by ITC Limited includes soaps, incense sticks,
apparel, cigarettes and cigars, safety matches and food. ITC Limited has a deep understanding of
the Indian consumer psyche.

Their products boast of high quality in manufacture and packaging. Some of their labels include old Flake,
Classic, Navy Cut, Bingo, Sunfeast, Aashirvaad, Fiama, Vivel, Wills Lifestyle, Paperkraft and
Classmate. Annual report of 2017-2018 states that the company‟s growth is about Rs. 10500 crores within a
Financial year.

Corporate Office: Kolkata, West Bengal

Turnover: 7.0 Billion Dollars

4. Nestle
Nestlé is a transnational food and beverage company, headquartered in Switzerland. Nestle India is
a subsidiary of NESTLE S.A. of Switzerland.

Nestle India dates back to 1912 when it began operating as the Nestle Anglo-Swiss Condensed Milk
Company. Post-independence, Nestle has worked closely with indigenous manufacturing and today has
eight manufacturing facilities in the country for their products. The India offices are in Kolkata, Mumbai,
Chennai, and Delhi.

They cater to the nutritional and wellness requirements of Indian consumers and the popular labels
include Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, Nestlé Milk, Nestlé Slim Milk,
Nestle Dahi and Nestle Jeera Raita. Nestle has truly emerged as the largest manufacturer of food items
globally. The Nestle Annual Report 2017-2018 shows that the company has 328000 workers and has sales
of INR 12045 crores.

Corporate Office: Vevey, Switzerland

Turnover: 87.0 Billion Dollar

5. Parle Agro

Parle Agro has been in the food and beverage industry since 1985. It is India‟s largest beverage
company and valued at Rs. 3000 crores According to the Annual Report of 2017-2018. Parle Agro
employs about 5000 people and successfully operates 76 highly developed manufacturing units.

The most well-known labels include Frooti, Frooti Fizz, Appy Fizz, Appy, Bailey, Bailey Soda,
Dhishoom, and Frio. Parle Agro has a strong presence in 50 countries and multiple business verticals like
beverages, packaged drinking water, and PET Preforms.

One of the best FMCG, Parle Agro beverages have achieved a landmark stature in the industry and they
are on their way to becoming India‟s first global giant in the food and beverages sector.

Corporate Office: Mumbai, Maharashtra

Turnover: 1 Billion dollar (Approx)

6. Britannia Industries Limited

Britannia Industries is one of the oldest food producing companies in the country with a heritage spanning
more than a hundred years and According to the Annual report of 2017-2018, the annual revenues
exceeding Rs. 9000 crores.

Their products are available in more than five million retail outlets and more than 50% of Indian homes
are proud users of their range of food items.

The Britannia Industries Limited ethic has been encapsulated in their slogan, “Eat Healthy. Think
Better”. Britannia has successfully removed 8500 tons of Trans Fats from their products and is India‟s
first Zero Trans Fat Company. Over 50% of the company‟s products are enriched with nutrients that are
important to the body.

The labels include Good Day, Tiger, Milk Bikis, Marie Gold, Cake, Cheese, Milk, and Yoghurt. The
company is the largest brand in the organized bread market. Britannia‟s commitment to health and
taste makes it one of the best FMCGs in the country.

Corporate Office: Kolkata, WB

Turnover: 730 Million Dollar

7. Marico Limited

Marico is currently operating in 25 countries, in the emerging markets of Asia and Africa. Determined to
make a difference to FMCG (in line with their slogan, Make a Difference), Marico has multiple brands
in men‟s grooming, fabric care, edible oils, skin care, hair care and health foods.
Marico‟s household brands include Parachute, Parachute Advanced, Saffola, Hair & Care, Nihar, Nihar
Naturals, Livon, Set Wet, Mediker and the global business offers brands such as Parachute, HairCode,
Fiancée, Caivil, Hercules, Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat. Marico products
are used by 1 out of 3 Indians which makes it one of the best FMCGs in the business. Their annual
turnover was INR 63 billion as shown in the Annual report of 2017-2018.

Corporate Office: Bandra, Maharastra

Turnover: 61 Billion Dolla

8. Proctor & Gamble

Procter and Gamble are one of the most reputed and flourishing consumer goods companies in the
country. P&G operates under three entities in India – Procter & Gamble Hygiene and Health Care Limited,
Gillette India Limited and as one 100% subsidiary of the parent company in the U.S. called „Procter &
Gamble Home Products‟ One of the best FMCGs, Procter and Gamble India serve 650 million consumers.

The products are of grooming, personal hygiene, child care, health and wellbeing and household use. Vicks,
Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head & Shoulders, Wella and
Duracell are famous Procter and Gamble labels. The company has five plants and over nine contractual
manufacturing sites. The Company has the Sales of INR 58590 and 125000 workers according to the
Annual Report of 2017-2018.

Corporate Office: Cincinnati, USA

Turnover: 83 Billion Dollar

9. The Godrej Group

Started in 1897, the Godrej Group has business dealings in consumer goods, real estate, appliances and
agriculture. The Annual Report 2017-2018 of the company has generated revenues of over 4.1 billion
dollars and enjoys the support of 1.1 billion consumers on a global scale.
Godrej has a substantial standing in Indian, Indonesian, Sub Saharan, and Latin American markets
where their goods especially household items, personal wash, and hair care products are in high demand.

Some of their biggest brands are Good Night, Godrej Expert, Cinthol, B-Blunt, Hit, Protekt, Godrej Aer,
Frika, Soft and Gentle, Ilicit Colour, Cuticura, and Ezee. Godrej is also a leading player in the United
Kingdom as on one the prime manufacturers of hand sanitizers and female deodorants. The Godrej Group
has cemented its position as one of the best FMCGs in the Indian market, with a legacy dating back to
120 years now.

Corporate Office: Mumbai, Maharashtra

Turnover: 4 Billion Dollar

10. Amul

Amul is an integral part of India‟s economic heritage. Amul traces its journey to 1946 as a response to
the exploitation suffered by the villagers due to the involvement of the middlemen. To combat the
disruptive presence of the cartels, villagers of Gujarat formed the Kaira District Co-operative Milk
Producers Union Ltd under the guidance of Vallabhai Patel, Morarji Desai, and Tribhuvandas Patel.

Popular Amul products include milk (Deshi A2 Cow Milk, Amul Gold), bread spreads (butter, buttery
chocolate, Amul Lite), cheese (processed cheese, Amul Gouda, Emmental Cheese, Mozzarella), beverage
(Amul Kool, Amul Kool Café) paneer, curd, milk powder (Amulya, Amul Spray), chocolates, lactose
free milk etc, and also Annual Report 2016-2017 states that the company has sales of INR 15177.

Amul is an extremely trustworthy brand in the dairy and consumer products industry and it is the trust
factor that makes it one of the best FMCGs.

Corporate Office: Anand, Gujarat

Turnover: 2.15 Billion Dollar

Advantages in India