The FMCG industry consists of products that are easily replaceable and have a relatively low cost. Fast Moving Consumer Goods (FMCG) are frequently bought and encompass a variety of items like toiletries, soap, cosmetics, tooth cleaning products, shaving products, detergents, glassware, light bulbs, batteries, paper products, plastic goods,
pharmaceuticals,
consumer electronics,
packaged food
products,
soft drinks,
tissue paper,
and chocolate bars.
The Fast Moving Consumer Electronics (FMCG) category includes electronic products like mobile phones, MP3 players, digital cameras, GPS systems, and laptops that have a higher replacement rate compared to other electronic items. Within the FMCG sector, “white goods” refer to household electronics such as refrigerators, TVs, and music systems. According to a study conducted by AC Nielsen India in 2005, the FMCG segment in India was valued at Rs. 48,000 crores and experienced significant growth.
In a competitive environment, consumer product companies face challenges in establishing a strong brand identity and expanding into new product categories to grow their customer base. These firms aim to maximize profits and market share while dealing with demanding customers and risks associated with consolidation and global expansion.
The FMCG industry is also referred to as the Consumer Packaged Goods (CPG) industry because it primarily focuses on producing, distributing, and marketing consumer packaged goods.
Fast Moving Consumer Goods (FMCG) refer to consumables that consumers regularly use and encompass various activities such as selling, marketing, financing, and purchasing. This industry also involves operations, supply chain management, production, and general management. A prominent global FMCG company is Alfred Dunhill Ltd, known for its expertise in luxury leather goods, writing implements, lighters, timepieces, fragrances, and clothing.
Alfred Dunhill established the business when he inherited his father’s saddlery business located on London’s Euston Road. In response to the increasing demand for automobiles, Alfred Dunhill introduced a range of accessories called “Dunhill’s Motorities”. This initial collection consisted of car horns and lamps, leather overcoats, goggles, picnic sets, and timepieces. With the tagline “Everything But The Motor”, Alfred Dunhill promoted the company. In 1967, Carreras acquired a majority stake (51%) in the company. Currently, Richemont owns the company. Actor Jude Law serves as the brand ambassador for Alfred Dunhill international advertisements.
Alfred Dunhill has been representing the company in Asia since 2005. Additionally, they have occasionally supplied various accessories for James Bond in the cinematic series. This collaboration started in 1962 when the production team requested a gunmetal cigarette lighter for Sean Connery’s debut in Dr. No (source).
The Body Shop International plc, also known as The Body Shop, operates 2,400 stores across 61 countries and is the second largest cosmetic franchise globally. The top position is held by O Boticario, a Brazilian company.
The Body Shop, founded by the late Dame Anita Roddick, is based in Littlehampton, West Sussex, England. The company is now a part of the L’Oreal corporate group. Since its establishment in 1976, The Body Shop has achieved significant growth, expanding at a rate of 50 percent per year. In April 1984, the company’s stock was publicly traded on London’s Unlisted Securities Market, opening at a price of 95p. Later, after obtaining a full listing on the London Stock Exchange, the stock gained the nickname “The shares that defy gravity” due to its remarkable price increase of over 500%.
In March 2006, L’Oreal acquired The Body Shop for ? 652.3 million, leading to Anita and Gordon Roddick, the founders, gaining ? 130 million. Colgate-Palmolive Company is an American corporation that manufactures and distributes various household items, healthcare products, as well as personal care goods like soaps, detergents, toothpaste, and toothbrushes.
Hill’s, a veterinary product manufacturer, is famous for its “Hill’s” brand. Coty, Inc., the world’s largest fragrance company, also produces beauty products. Coty generates most of its revenue from fragrances (65%), color cosmetics (20%), toiletries (12%), and skin care (3%). One notable aspect of Coty is their collaboration with designers and celebrities to create fragrances by Beyonce Knowles, Petr Cech, Celine Dion, Shania Twain, Faith Hill, and Jennifer Lopez. Estee Lauder Companies, Inc., also known as Estee Lauder Cosmetics Ltd., is a leading producer and marketer of skin care products, cosmetics,
perfume,
and hair care items. Joseph Lauder and his wife Estee Lauder founded the company in New York City in 1946. Initially, they focused on manufacturing four products: Super-Rich All Purpose Creme,
Creme Pack,
Cleansing Oil,
and Skin Lotion.
In New York, two years later, Estee Lauder opened their first department store account with Saks Fifth Avenue. The company created history in 1976 when they launched Clinique brand’s “Skin Supplies for Men”, becoming the first women’s cosmetic company to introduce a separate line for men. Achieving another milestone in 1981, Estee Lauder made their products available in the Soviet Union. At present, Estee Lauder sells its products worldwide in department stores and runs a chain of standalone retail outlets.
Fujifilm Holdings Corporation, also known as Fujifilm, is a Japanese company that specializes in photographic film and cameras. It is the largest company worldwide in the photography and imaging industry. With a workforce of over 20,000 employees, it achieved sales exceeding $8 billion in 2008. In 2004, Fujifilm sold its jane business targeting teenagers and divested the Stila brand which was acquired in 1999. Operating through 223 subsidiary companies across Asia, Europe, and the United States, the company focuses on research, manufacturing, and product distribution. Additionally, Fujifilm produces computer media storage consumables such as CD-Rs, recordable DVDs, and floppy disks. They are also a significant supplier of motion picture film to Hollywood for filming purposes as well as distributing theatrical prints. Formerly named Fuji Photo Film Co., Ltd., Fujifilm’s camera film stands out with its distinct green packaging and sometimes undergoes rebranding using different names like President’s Choice.
Fuji is a rival of Eastman Kodak in the manufacturing of photographic films. They are famous for their unique standardized containers and distribute their goods worldwide in more than 200 nations. Since 1982, Fuji has been a major supporter of the FIFA World Cup and also contributed significantly to the development of Japan’s initial electronic computer, FUJIC, which was finalized in 1956. [Source: http://en.wikipedia.org/wiki/Fujifilm]
Gillette, which is owned by Procter & Gamble, offers a variety of personal hygiene products such as safety razors.
Gillette is a brand based in Boston, Massachusetts and it was owned by The Gillette Company, which was acquired by P&G in 2005. The Gillette Company was originally founded by King Camp Gillette in 1895 and it specialized in manufacturing safety razors. Procter & Gamble completed its purchase of The Gillette Company on October 1, 2005. After the merger, the Gillette Company ceased to exist and its last day of market trading on the New York Stock Exchange was September 30, 2005. Gillette’s slogan is “The Best a Man Can Get”.
The merger resulted in the creation of the largest company in personal care and household products in the world. The company includes brands such as Gillette, Braun, Duracell, and Oral-B, among others, all of which have been maintained by P. source 8. L’Oreal (UK) Limited.
The L’Oreal Group is headquartered in Clichy, Hauts-de-Seine, France and is the largest cosmetics and beauty company globally. L’Oreal focuses on cosmetics but has expanded its offerings to include hair color, skincare, sun protection, makeup, perfumes,
and hair care.
L’Oreal is engaged in the dermatological and pharmaceutical sectors, in addition to being the largest holder of nanotechnology patents in the US. Despite being a publicly traded corporation, L’Oreal is under the control of Liliane Bettencourt, the daughter of its founder, and Swiss food company Nestle. Together, they possess over 25% of both shares and voting rights.
Lego, also known as LEGO according to its official trademark, is a collection of construction toys produced by privately owned Lego Group located in Billund, Denmark.
Lego is a popular company that produces the main product of colorful interlocking plastic bricks, gears, minifigures, and various other parts. These components can be creatively assembled to build vehicles, buildings, and even functional robots. The constructed objects are easily disassembled for reuse in building other creations. Originally developed in Europe during the 1930s, Lego toys have gained worldwide recognition and support a thriving subculture with movies, games, competitions, and four amusement parks.
Lever Faberge is a cosmetics brand acquired by American oil billionaire Armand Hammer while conducting business in communist Russia during the 1920s. In 1937, Samuel Rubin decided to shut down his soap and olive oil import company due to the Spanish Civil War after receiving advice from Hammer. Following this suggestion, Rubin established Faberge Inc., a new enterprise focused on manufacturing perfumes and toiletries. However, it wasn’t until after World War II ended that the Faberge family discovered this development.
In 1951, an out-of-court settlement was reached due to the inability to afford lengthy legal proceedings. The settlement included a payment of US$25,000 and permission for the Faberge name to be associated with perfume. Following this, Rubin expanded the Faberge brand to include cosmetics and toiletries, which were primarily sold in high-end department stores. This expansion led Faberge to gain a prestigious reputation akin to Coty, Guerlain, and Elizabeth Arden.
However, in 1964, George Barrie and the cosmetics company Rayette purchased Faberge Inc. from Rubin for $26 million. In the same year, Rayette changed its name to Rayette-Faberge Inc., only to revert back to being called Faberge Inc. in 1971.
In January 2007, Unilever transferred the global trademarks, licenses, and associated rights for the Faberge brand to Faberge Limited in the Cayman Islands. This transaction was advised by Pallinghurst Resources LLP. As part of this agreement, Unilever had to cease using the Faberge name on its products and packaging before the end of 2007.
On December 25, 1870, Helena Rubinstein established the Polish cosmetics industry under her name. Sadly, she passed away on April 1, 1965.
Procter & Gamble Limited, also known as Procter & Gamble Co. (P, NYSE: PG), is a Fortune 500 American multinational corporation based in Downtown Cincinnati, Ohio, USA. P manufactures a wide range of consumer goods and is currently the 8th largest corporation in the world by market capitalization and the 14th largest US company by profit (as of 2008). It is also ranked 10th on Fortune’s Most Admired Companies list for 2007. P&G is renowned for its various business innovations, such as brand management and the soap opera.
The Nielsen Company reported that in 2007, P&G spent $2.62 billion on U.S. advertising, making them the top spender. This amount was nearly double the expenditure of General Motors, who ranked second on the Nielsen list. P&G was honored as the 2008 Advertiser of the Year by the Cannes International Advertising Festival. To learn more about P&G, you can visit their Wikipedia page: http://en.wikipedia.org/wiki/Procter_and_Gamble
Reckitt Benckiser plc (LSE: RB) is a British global consumer goods company specializing in manufacturing and marketing various home, health, and personal care products.
Reckitt Benckiser (RB) is a global company headquartered in Slough, near London, UK. It operates in over 60 countries and has 42 manufacturing facilities. RB also sells its products in almost 200 countries. In the 2008 European Business Week 50 ranking, RB was ranked 6th among the top-performing companies within the S European 350. RB’s strategic approach focuses on prioritizing its most profitable brands, which they refer to as powerbrands. These powerbrands accounted for 62% of RB’s net revenues in 2008. Some well-known powerbrands include Finish, Vanish, and Air Wick.
Reckitt Benckiser is a company that owns various brands such as Dettol, Cillit Bang, Veet, Clearasil, Mucinex, Nurofen, and Gaviscon. Approximately 35% of their net revenues come from recently launched products. The Economist awarded Reckitt Benckiser the Corporate Use of Innovation Award in 2009 for their commitment to innovation. (Source: http://en.wikipedia.org/wiki/Reckitt_Benckiser)
Revlon International Corporation, also known as Revlon (NYSE: REV), is an American cosmetics company established in 1932 during the Great Depression. It was founded by Charles Revson and his brother Joseph along with chemist Charles Lachman who contributed the “L” in the REVLON name.
The three founders of Revlon started with a single product, a new type of nail enamel. They combined their resources and developed a unique manufacturing process. Instead of using dyes, Revlon used pigments to create a variety of opaque nail enamel shades. In 1937, the polishes were sold in department stores and drug stores. Within six years, the company became a multimillion dollar organization. By 1940, Revlon expanded its product line to include an entire manicure collection and added lipstick to its offerings. During World War II, Revlon created makeup and related products for the U.S. Army, receiving the Army-Navy ‘E’ Award for Excellence in 1944.
The Clorox Company, based in Oakland, California, is known for its bleach product called Clorox. It is a manufacturer of various food and chemical products.
Unilever Plc is a multinational corporation with British and Dutch parentage. They own many consumer product brands in foods, beverages, cleaning agents, and personal care products. With 174,000 employees, Unilever had a worldwide revenue of €40.5 billion in 2008.
Nestle SA is a multinational packaged foods company founded and headquartered in Vevey, Switzerland. It is listed on the SWX Swiss Exchange with a market capitalization of over 87 billion Swiss francs.In 1905, the Anglo-Swiss Milk Company, founded by the Page Brothers in Cham, Switzerland in 1866, merged with the Farine Lactee Henri Nestle Company, established by Henri Nestle in 1866 to produce infant food products. The company experienced growth interruptions due to both world wars. During World War I, dried milk was in high demand, but in World War II, profits decreased by approximately 70%.
The US military played a significant role in increasing sales of Nescafe instant coffee. Following the wars, Nestle experienced growth through acquisitions that expanded its product range and added well-known brands like Maggi, Thomy, and Nescafe. Currently, Nestle is the largest food company globally, with Kraft Foods following closely behind. Hindustan Unilever Limited, originally known as Hindustan Lever Limited, is India’s largest consumer products company and was established as Lever Brothers India Limited in 1933.
Hindustan Unilever Limited, currently headquartered in Mumbai, India, is led by Harish Manwani, the non-executive chairman of the board. In late June 2007, the company changed its name to “Hindustan Unilever Limited” to strike a balance between preserving its heritage and leveraging the future advantages and synergies of aligning globally with the corporate name “Unilever”. This decision will be presented to the Shareholders for approval in the upcoming “Annual General Meeting.” http://www.tamilnow.com/Hindustan-Unilever-Limited-644.html
2. ITC Limited
ITC is a leading private sector company in India, valued at approximately US $15 billion and generating a turnover of over US $4.75 billion. It has been recognized as one of the top companies worldwide and in Asia by Forbes magazine and is highly respected in India by publications such as BusinessWorld and Business Today. ITC operates in various industries including Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Greeting Cards, Safety Matches, and other FMCG products.
ITC is a dominant player in various industries such as Cigarettes, Hotels, Paperboards, Packaging, and Agri-Exports. Despite its success in these traditional businesses, it is also expanding rapidly in emerging industries like Packaged Foods & Confectionery, Branded Apparel, and Greeting Cards. Nestle India Limited, a subsidiary of Nestle S.A. in Switzerland, is another significant player in the Indian market. By operating seven factories and partnering with multiple co-packers, Nestle India ensures that consumers in India receive high-quality products that meet global standards. The company remains dedicated to achieving sustainable growth and satisfying shareholders in the long run.
Nestle India produces internationally renowned products such as NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID, and NESTEA. The company has also introduced everyday products like NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh ‘n’ Natural Dahi, and NESTLE Jeera Raita. GCMMF (Amul) follows as the fifth largest FMCG Company in India with a focus on health care, personal care, and food products. Dabur India Limited holds the fourth position in the industry and offers brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Babool, Odomos & Real. Asian Paints and Cadbury India also contribute to the Indian FMCG market. Britannia Industries has plants in Kolkata, Delhi, Chennai, Mumbai, and Rudrapur producing 163,500 MT of biscuits and protein foodstuffs. Key brands include Tiger, Good Day, Milk Bikis, Treat, Marie, 50:50 Chutkule, Treat Fruit, Rollz, NutriChoice Digestive. In addition to that, they have renovated Milk Bikis, Chota Tiger, and Chocolate Cream in the Tiger range.
Today, after over a century since its humble beginnings, Britannia’s success story continues to thrive and is setting new standards. The small initial investment has significantly multiplied to crores of rupees in wealth for the company’s shareholders.
9. Procter & Gamble Hygiene and Health Care Limited (P Hygiene and Health Care) was formerly known as RHL. In October 1985, after becoming an affiliate of The Procter & Gamble Company, USA, RHL established a manufacturing facility in Hyderabad, Andhra Pradesh for producing the Vicks range of products.
P Hygiene and Health Care is a company that manufactures health care and hygiene products. Some of the well-known brands in the company’s health care segment include Vicks VapoRub, Vicks Inhaler, Vicks Formula 44, Vicks Cough Drops, and Vicks Action 500+. The company’s feminine hygiene segment is represented by the Whisper brand, which includes products like Whisper Maxi Regular, Whisper Maxi XL Wings, and Whisper Ultra with Wings. Additionally, Marico Limited and Colgate-Palmolive (India) Limited are also prominent players in the industry. Colgate-Palmolive (India) Ltd, established in 1937, is a subsidiary of Colgate-Palmolive Company based in the USA.
Colgate-Palmolive (Nepal) Pvt Ltd is a wholly-owned subsidiary of the company, engaged in manufacturing and marketing FMCG products. The main products offered by the company include toothpastes, toothbrushes, toothpowders, teeth-whitening products, shower gels, thermal spa products, liquid hand-washes, shave preps, and skin care. In India, Emami Limited is a leading player in the personal and healthcare consumer products industry within the Rs 2000 crore Emami Group. Emami Ltd boasts major brands such as Boroplus, Navratna, Sona Chandi, Himani, and Beauty Secrets by Madhuri.
The manufacturing facilities of the company are located in Kolkata, Guwahati, and Pondicherry. The companies under Emami Group include Emami Paper Mills Limited, Emami Chisel Art, South City Projects (Kolkata) Ltd, Advanced Medicare & Research Institute Ltd (AMRI), Frank Ross Limited, Emami Realty Limited, Emami Retail Pvt Limited (Starmark), Emami Biotech Limited, and Susruta Clinic & Research Institute for Advanced Medicine Pvt Ltd. GlaxoSmithKline Consumer Healthcare Limited, the Indian associate of UK-based GlaxoSmithKline Plc is also a part of the company.
GSK Consumer Healthcare, originally known as Hindustan Milk Food Manufacturers Pvt Ltd, was established in 1958 with the support of Horlicks Ltd. Its main purpose was to produce malted milk foods for the domestic market. In 2002, the company changed its name to GSK Consumer Healthcare. The company specializes in the production of health food drinks. Additionally, there are other notable companies in this field such as Godfrey Phillips India Limited, Godrej Consumer Products Limited, and Nirma Limited. Nirma is particularly renowned for being an indigenous brand that successfully competed against multinational corporations and revolutionized marketing strategies to gain consumer loyalty.
Nirma Ltd (Nirma) started operating in 1969 as a detergent company led by Karsanbhai Patel. In 2005, Nirma acquired the fluid business of Core Healthcare Ltd from ARCIL. Nirma Consumer Products include Soaps, Detergents, Edible Salt, Scouring Products. Nirma Industrial Products include LAB (Linear Alkyl Benzene), AOS (Alfa Olefin Sulfonate), Sulfuric Acid, Glycerin, Soda Ash, Pure salt, Vacuum Evaporated Iodized Salt, SSP (Single Super Phosphate), Sodium Silicate. Radico Khaitan Limited offers whiskey, rum, vodka, gin, and brandy.
Brands such as 8PM Whiskey, Contessa Rum, Old Admiral Brandy, and Magic Moments Vodka, among others, are included. 18. Tata Tea Limited 19. United Breweries Limited 20. United Spirits Limited 21. Weikfield Products Company India Private Limited http://info.shine.com/ListofCompany/FMCG/780.aspx FMCG industry economy The FMCG industry offers a wide variety of consumables, resulting in a high circulation of money for FMCG products. The competition among FMCG manufacturers is growing, leading to increased investment in the FMCG industry, particularly in India.
The FMCG sector in India is the fourth largest in the economy, with a market size of US$13.1 billion. It is projected to grow by 60% by 2010. In New Zealand, the FMCG industry is the largest sector, accounting for 5% of GDP. This sector is characterized by well-established distribution networks and intense competition between organized and unorganized segments. MNCs have a strong presence throughout the value chain in the Indian FMCG industry. The market is expected to reach US$33.4 billion in 2015, compared to US$11 billion in 2003. The middle class and rural populations are promising markets for FMCG products, presenting an opportunity for brand makers to convert them into consumers of branded products. Although categories such as jams, toothpaste, skin care, and shampoos have low per capita consumption and penetration levels in India, there is substantial potential for growth. The Indian economy is rapidly advancing due to urbanization, increased literacy levels, and rising per capita income. Both large firms and small companies are experiencing growth.
According to AC Nielsen’s study, MNCs own 62 out of the top 100 brands, while Indian companies own the remaining brands. Hindustan Lever owns 27 of the 62 brands. The ranking includes Pepsi at number three, followed by Thums Up. Britannia holds the fifth position, with Colgate taking the sixth spot. Nirma, Coca-Cola, and Parle are ranked seventh, eighth, and ninth respectively. These statistics are typically undisclosed by soft drink and cigarette companies. FMCG’s largest categories are personal care, cigarettes, and soft drinks, which together consist of 35 of the top 100 brands.
Exhibit I THE TOP 10 COMPANIES IN FMCG SECTOR S. NO. Companies 1. Hindustan Unilever Ltd. 2. ITC (Indian Tobacco Company) 3. Nestle 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
The companies mentioned in Exhibit I, are the leaders in their respective sectors. The personal care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs.,799 crore or 54% of the personal care category.
Cigarettes account for 17% of the top 100 FMCG sales, and just below the personal care category. ITC alone accounts for 60% volume market share and 70% by value of all filter cigarettes in India.
The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore.
Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury.
Compared to the stagnant personal care category, this category shows faster development. Amul, the largest foods company in India, has a strong presence in the food category with a range of products including ice-creams, curd, milk, butter, cheese, and more. Britannia, also listed among the top 100 FMCG brands, dominates the biscuits category and has recently introduced a series of products at different price points. In the household care category, Godrej and Reckitt are two major players. Godrej’s Goodknight brand is valued at over Rs 217 crore, followed by Reckitt’s Mortein at Rs 149 crore.
In the shampoo category, HLL’s Clinic and Sunsilk are both included in the top 100 brands. P&G’s Head and Shoulders and Pantene are also striving to achieve a top position. Clinic is almost twice as big as Sunsilk. Dabur, a herbal specialist, is one of the leading FMCG companies in India. Dabur had a turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006 and offers products like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints has a significant presence across various regions including the Indian sub-continent, Southeast Asia, Far East, Middle East, South Pacific, Caribbean, Africa and Europe.
Asian Paints is the biggest paint company in India, with a turnover of Rs. 22.6 billion (around USD 513 million). Forbes Global magazine, USA, ranked Asian Paints among the top 200 small companies in the world. Cadbury India dominates the chocolate confectionery market with a 70% market share and holds the second position in the total food drinks market. Popular brands of Cadbury India include Cadbury’s Dairy Milk, 5 Star, Eclairs, and Gems. Marico, with a turnover of Rs. 15.6 billion (USD 380 million), is a leading Indian group in consumer products and services in the Global Beauty and Wellness sector.
Common FMCG products encompass a variety of categories, such as food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, and drinks. Examples of specific FMCG products include coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, and soaps. The FMCG industry holds significant market potential due to the low per capita consumption of products in the country compared to the rest of the world.
Furthermore, if these companies can alter the consumer’s viewpoint and provide innovative products, the demand and potential could be further increased. Previously, Indian consumers were purchasing unbranded clothing; however, currently, various branded clothing options are accessible, and these very consumers are willing to invest more in high-quality branded garments. The factors that can propel numerous sectors are product quality, promotion, and innovation. Notable characteristics of the FMCG industry that have contributed to its potential include low operational expenses, robust distribution networks, and the existence of well-known FMCG companies.
The FMCG industry is successful due to population growth and creates a variety of job opportunities in areas such as sales, supply chain, finance, marketing, and more. According to a literature review, the FMCG sector experienced strong volume growth in 2006. Sales increased in both urban and rural areas due to rising income, demographics, and aspirational levels. Additionally, higher margin products saw increased demand. Consolidation activity also occurred as companies sought to expand globally. However, higher input costs and inflationary pressure affected profit margins. The budget measures prioritize the farm sector.
Agriculture investments are set to increase up to 2% of GDP. The duty on edible oil has been reduced. Additionally, the customs duty on food processing machinery and their parts is being decreased from 7.5% to 5%. Excise duty has also been fully exempted on biscuits with a retail sale price equivalent of Rs 50 or less. The excise duty on food mixes, including instant food mixes, has been reduced from 16% or 8% to Nil. Furthermore, free samples and displays are exempt from the purview of FBT (Fringe Benefit Tax). Venture capital investing in the dairy industry will receive a pass through status. Better rural infrastructure development will be a focus area. There is an increase in the dividend distribution tax from 12.5% to 15%. In addition, a 1% higher education cess is to be charged. The dividend distribution tax on dividends paid by money market mutual funds and liquid mutual funds has been increased to 25% for all investors. The budget impact includes the positive effect of duty reduction on edible oil for companies like Marico. The exemption of excise on biscuits is beneficial for Britannia, ITC, and Parle. Moreover, the reduction of excise on food mixes is advantageous for ITC as this segment is a new growth area. With a focus on agriculture, the rural income is projected to rise.
The FMCG companies will benefit from this because rural areas are a significant market for them. FMCG companies allocate substantial funds for advertising and brand development efforts.
