brief about the industry

8/8/2019 Brief About the Industry

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Brief about the industry:

Products which have a quick turnover, and relatively low cost are known as Fast Moving ConsumerGoods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generallyinclude a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics,tooth cleaning products, shaving products and detergents, as well as other non-durables such asglassware, bulbs, batteries, paper products, and plastic goods. FMCG may also includepharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, andchocolate bars.

A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products

such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced

more frequently than other electronic products.The Indian FMCG sector is the fourth largest in the

economy and has a market size of US$13.1 billion.

Major players in market:

Indian FMCG Sector

THETOP 10 COMPANIES IN FMCG SECTOR

S.

NO.

Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestl India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health

Care

10. Marico Industries

Source: Naukrihub.com

Major activities performed:

Indian industries engaged in sectors such as FMCG, Chemical and IT/ITES have been mostactive in taking up corporate social responsibility during first quarter of 2010-11.It involveactivities that focus more towards the under-privileged community that lives around thevicinity of company plants, facilitating education and health care and supporting projectsthat lead to employment generation.


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Top 5 Major theme areas undertaken by India Inc. during Q1 2010-11

CSR theme areasTotal companies CSR initiatives

Share (in %)

Community Welfare 19.83

Education 15.65Environment 12.72

Health Care 9.05

Rural development 5.16

Source: Assocham Research Bureau

Structural Analysis Of FMCG Industry

Typically, a consumer buys these goods at least once a month. The sector covers a wide gamut of products such asdetergents, toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages, and

cigarettes. Typical characteristics of FMCG products are: -

1. The products often cater to 3 very distinct but usually wanted for aspects - necessity, comfort, luxury.2. Individual items are of small value (small SKU's)3. The consumer spends little time on the purchase decision.4. Limited inventory of these products5. Brand switching is often induced by heavy advertisement

By the turn of the 20th century, the face of the

Indian retailing industry had changed


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significantly. The retailing industry, which, untilthe early 1990s, was dominated by the

unorganized sector, witnessed a rapid growth inthe organized sector with the entry of corporate

groups such as Tata, RPG, ITC and Bennett

Coleman & Company into the retailing market.

With the liberalization and growth of the Indian

economy since the early 1990s, the Indiancustomer witnessed an increasing exposure to new

domestic and foreign products through differentmedia, such as television and the Internet.

Apart from this, social changes such as increase in the number of nuclear families and the growing number ofworking couples resulting in increased spending power also contributed to the increase in the Indian consumers'

personal consumption.

These changes had a positive impact, leading tothe rapid growth in the retailing industry. Foodretailing was a key area that saw some action at

the national level, with players like Foodworldand Subhiksha, establishing stores all over India.

While supermarket and departmental chainsreplaced traditional grocery and general store

formats, introduction of fast foods (McDonalds),packaged foods (MTR, Namma MTR), vending

machines and specialty beverage parlors(Nescafe, Tata Tea, Caf Coffee and Barista)

brought about significant changes in the eatinghabits of Indian consumers.

However, it was the non-food sector that saw tremendous action, with the introduction of new product segments.These segments mainly comprised lifestyle/apparel/ fashion/accessories (eg. Shoppers Stop, Westside, Lifestyle,

Pantaloons, Reebok), books/music (Landmark and Crosswords), drugs and pharmacy and beauty (Health & Glow,

CavinKare and Shahnaz Husain).

SWOT Analysis:

Strengths:

Well established distribution network Extending to the rural areas.

Low cost operations

Weakness:

Low export levels Small scale sector reservations limit ability to invest in technology and achieve economies of scale

Several me- too products


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Opportunities:

Large domestic market

Export potential

Increasing income level will result in faster revenue growth

Threats:

Import policies

Tax and regulatory structures

Slow down in rural demand

Growth of unorganized markets.

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