Introduction Defining FMCG Industry Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include 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 as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate 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. White goods in FMCG refer to household electronic items such as Refrigerators, T. Vs, Music Systems, etc. In 2005, the Rs. 48,000-crore FMCG segment was one of the fast growing industries in India. According to the AC Nielsen India study, the industry grew 5.
3% in value between 2004 and 2005. http://www. chillibreeze. com/articles_various/fmcg-in-india. sp Creating a strong brand identity, leveraging new product categories and growing the customer base are core concerns for consumer product companies. Firms are looking to maximize profits and market share in a highly competitive environment that includes such challenges and risks as demanding customers, consolidation and global expansion. http://www. deloitte. com/view/en_AU/au/industries/consumerbusiness/fmcg/index. htm FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods.
The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management. Leading FMCG companies all over the world 1. Alfred Dunhill Ltd Alfred Dunhill, Ltd. is a British-based company, specializing in men’s luxury leather goods, writing implements, lighters, timepieces, fragrances and clothing.
The business was developed by Alfred Dunhill after he inherited his father’s saddlery business on London’s Euston Road. Alfred Dunhill, responding to the growing demand for automobiles, developed a line of accessories called “Dunhill’s Motorities”. This first collection included car horns and lamps, leather overcoats, goggles, picnic sets and timepieces. Alfred Dunhill pitched the company under the slogan “Everything But The Motor”. In 1967 Carreras acquired a 51% stake in the company. The company is currently owned by Richemont. English actor Jude Law is the apparel ambassador for Alfred Dunhill international adverts.
He has represented the company in Asia since 2005. Dunhill has also occasionally provided various accessories for the cinematic James Bond throughout the series. The association first in 1962 began when the production team requested a gunmetal cigarette lighter for Sean Connery’s introduction in Dr. No. http://en. wikipedia. org/wiki/Alfred_Dunhill 2. Body Shop International Plc The Body Shop International plc, known as The Body Shop, has 2,400 stores in 61 countries, and is the second largest cosmetic franchise in the world, following O Boticario, a Brazilian company.
The Body Shop is headquartered in Littlehampton, West Sussex, England, was founded by the late Dame Anita Roddick and is now part of the L’Oreal corporate group. From its first launch in 1976 The Body Shop experienced rapid growth, expanding at a rate of 50 percent annually. Its stock was floated on London’s Unlisted Securities Market in April 1984, opening at 95p. After it obtained a full listing on the London Stock Exchange, the stock was given the nickname “The shares that defy gravity,” as its price increased by more than 500%.
In March 2006, The Body Shop agreed to a ? 652. 3 million takeover by L’Oreal. It was reported that Anita and Gordon Roddick, who set up The Body Shop 30 years previously, made ? 130 million from the sale. http://en. wikipedia. org/wiki/Body_Shop_International_plc 3. Colgate-Palmolive Colgate-Palmolive Company (NYSE: CL) is an American diversified multinational corporation focused on the production, distribution and provision of household, health care and personal products, such as soaps, detergents, and oral hygiene products (including toothpaste and toothbrushes).
Under its “Hill’s” brand, it is also a manufacturer of veterinary products. The company’s corporate offices are on Park Avenue in New York City. 4. Coty, Inc Coty, Inc. is the world’s largest fragrance company. It is also a beauty products manufacturer whose main businesses are fragrances (65% of revenue), followed by color cosmetics (20%), toiletries (12%) and skin care (3%). It is known for its cooperation with designers and celebrities for the creation of fragrances; prominent among them are Beyonce Knowles, Chelsea goalkeeper Petr Cech, Celine Dion, Shania Twain, Faith Hill, and Jennifer Lopez. ttp://en. wikipedia. org/w/index. php? title=Special%3ASearch=Estee+Lauder+Cosmetics+Ltd=Go 5. Estee Lauder Cosmetics Ltd Estee Lauder Companies, Inc. is one of the world’s leading manufacturers and marketers of skin care, cosmetics, perfume and hair care products. The company began in 1946, when Joseph Lauder and wife Estee Lauder began producing cosmetics in New York City, New York. At first, they only had four products: Super-Rich All Purpose Creme, Creme Pack, Cleansing Oil and Skin Lotion.
Two years later, they established their first department store account with Saks Fifth Avenue in New York. Estee Lauder’s Clinique brand became the first women’s cosmetic company to introduce a second line for men when, in 1976, they began a separate line called “Skin Supplies for Men”. In 1981, the company achieved another breakthrough when their products became available in the Soviet Union. Estee Lauder now sells its products in department stores across the world, as well as having a chain of freestanding retail outlets.
It employs over 20,000 people, and in 2008, its sales topped $8 billion. In February 2004, the company’s teen-oriented jane business was sold; in April 2006, the professional-quality Stila brand, which Estee Lauder purchased in 1999, was sold. 6. Fujifilm Fujifilm Holdings Corporation or Fujifilm (?????????? Fujifuirumu Kabushiki-kaisha? ) is a Japanese company known for its photographic film and cameras. Fujifilm is the world’s largest photographic and imaging company. Fuji operates 223 subsidiary companies for research, manufacture nd distribution of products, with manufacturing facilities in Asia, Europe, and the United States of America. They also produce computer media storage consumables, such as CD-Rs, recordable DVDs and Floppy disks. The company is also a substantial provider of Motion Picture Film to Hollywood for both capture and distribution of theatrical (in projector) film prints. The company was formerly known as Fuji Photo Film Co. , Ltd. Fuji’s camera film comes in distinctive green boxes and is sometimes rebranded as own-label film, such as President’s Choice.
Fuji products are distinct in their uniform containers. Fuji photographic films are considered along with, and often compete against, those produced by Eastman Kodak. Their products are sold in over 200 countries internationally. Since 1982, Fuji, is one of the main sponsors of the FIFA World Cup. The company was the driving force behind the creation of Japan’s first electronic computer, called FUJIC, completed in 1956. http://en. wikipedia. org/wiki/Fujifilm 7. Gillette Gillette is a brand of Procter & Gamble currently used for safety razors, among other personal hygiene products.
Based in Boston, Massachusetts, it is one of several brands originally owned by The Gillette Company, a leading global supplier of products under various brands, which was acquired by P&G in 2005. Their slogan is, “The Best a Man Can Get”. The original Gillette Company was founded by King Camp Gillette in 1895 as a safety razor manufacturer. On October 1, 2005, Procter & Gamble finalized its purchase of The Gillette Company. As a result of this merger, the Gillette Company no longer exists. Its last day of market trading – symbol G on the New York Stock Exchange – was September 30, 2005.
The merger created the world’s largest personal care and household products company. In addition to Gillette, the company marketed under Braun, Duracell and Oral-B, among others, which have also been maintained by P. http://en. wikipedia. org/wiki/Gillette_(brand) 8. L’Oreal (UK) Limited The L’Oreal Group is the world’s largest cosmetics and beauty company and is headquartered in the Paris suburb of Clichy, Hauts-de-Seine, France. L’Oreal has developed activities in the field of cosmetics, concentrating on hair colour, skin care, sun protection, make-up, perfumes and hair care.
L’Oreal is active in the dermatological and pharmaceutical fields. L’Oreal is also the top nanotechnology patent-holder in the United States. L’Oreal is a listed company, but the founder’s daughter Liliane Bettencourt and the Swiss food company Nestle each control over a quarter of the shares and voting rights. http://en. wikipedia. org/wiki/L%27oreal 9. Lego Lego (trademarked in capitals as LEGO) is a line of construction toys manufactured by the Lego Group, a privately held company based in Billund, Denmark.
The company’s flagship product, Lego consists of colorful interlocking plastic bricks and an accompanying array of gears, minifigures and various other parts. Lego bricks can be assembled and connected in many ways, to construct such objects as vehicles, buildings, and even working robots. Anything constructed can then be taken apart again, and the pieces used to make other objects. The toys were originally designed in the 1930s in Europe and have achieved an international appeal, with an extensive subculture that supports Lego movies, games, competitions, and four Lego-themed amusement parks. 0. Lever Faberge Lever Faberge is a brand of cosmetics. The American oil billionaire Armand Hammer collected many Faberge pieces during his business ventures in communist Russia in the 1920s. In 1937, Armand Hammer’s friend Samuel Rubin, owner of the Spanish Trading Corporation which imported soap and olive oil, closed down his company because of the Spanish Civil War and established a new enterprise to manufacture perfumes and toiletries. He registered it, at Hammer’s suggestion, as Faberge, Inc. The Faberge family did not learn about this until after World War II ended.
Unable to afford protracted and expensive litigation, they settled out of court for US$25,000 in 1951 for the Faberge name to be used in connection with perfume. Soon, Rubin added cosmetics and toiletries under the Faberge banner, usually sold in upscale department stores. Faberge had a high, prestige status, similar to rivals Coty, Guerlain and Elizabeth Arden. However, by 1964, Rubin sold Faberge Inc. for $26 million to George Barrie and the cosmetics company Rayette. In 1964, Rayette changed its name to Rayette-Faberge Inc. , and, in 1971, the company name was changed back to Faberge Inc.
However, in January 2007 Unilever sold its entire global portfolio of trademarks, licences and associated rights relating to the Faberge brand. The new owner is Cayman Islands-based Faberge Limited, which is advised by Pallinghurst Resources LLP, an investment advisory firm based in London. Unilever was to remove the Faberge name from all its products and packaging by the end of 2007. http://en. wikipedia. org/wiki/Faberg%C3%A9_(cosmetics) 11. Helena Rubinstein A Polish cosmetics industry founded by Helena Rubinstein (December 25, 1870– April 1, 1965).
This company made her one of the world’s richest women. 12. Procter & Gamble Limited Procter & Gamble Co. (P, NYSE: PG) is a Fortune 500, American multinational corporation headquartered in Downtown Cincinnati, Ohio, USA that manufactures a wide range of consumer goods. As of 2008, P is the 8th largest corporation in the world by market capitalization and 14th largest US company by profit. It is 10th in Fortune’s Most Admired Companies list (as of 2007). P&G is credited with many business innovations including brand management and the soap opera.
According to the Nielsen Company, in 2007 P&G spent more on U. S. advertising than any other company; the $2. 62 billion spent by P&G is almost twice as much as that spent by General Motors, the next company on the Nielsen list. P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival. http://en. wikipedia. org/wiki/Procter_and_Gamble 13. Reckitt Benckiser Reckitt Benckiser plc (LSE: RB) is a British global consumer goods company, making and marketing home, health and personal care products.
Headquartered in Slough, near London, UK, it has operations in over 60 countries, including 42 manufacturing facilities, and sales in nearly 200 countries. RB is ranked 6th in the 2008 European Business Week 50, the magazine’s annual ranking of the best performing companies within the S European 350. The company’s strategy is to have a highly focused portfolio concentrating on its 17 most profitable brands, which were responsible for 62% of net revenues in 2008.  These brands, which Reckitt Benckiser refers to as powerbrands, include household names such as Finish, Vanish, Air Wick,
Dettol, Cillit Bang, Veet, Clearasil, Mucinex, Nurofen and Gaviscon. 35% of net revenues come from products launched in the past three years, this focus on innovation was recognised by The Economist Corporate Use of Innovation Award in 2009.  http://en. wikipedia. org/wiki/Reckitt_Benckiser 14. Revlon International Corporation Revlon (NYSE: REV) is an American cosmetics company. Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson and his brother Joseph, along with a chemist, Charles Lachman, who contributed the “L” in the REVLON name.
Starting with a single product — a new type of nail enamel — the three founders pooled their resources and developed a unique manufacturing process. Using pigments instead of dyes, Revlon developed a variety of new shades of opaque nail enamel. In 1937, Revlon started selling the polishes in department stores and drug stores. In six years the company became a multimillion dollar organization. By 1940, Revlon offered an entire manicure line, and added lipstick to the collection. During World War II Revlon created makeup and related products for the U. S. Army, which was honored in 1944 with the Army-Navy ‘E’ Award for Excellence. 5. The Clorox Company The Clorox Company (NYSE: CLX) is a manufacturer of various food and chemical products based in Oakland, California, which is best known for its bleach product, Clorox. http://en. wikipedia. org/wiki/Clorox 16. Unilever Plc Unilever is a multinational corporation, formed of British and Dutch parentage, that owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employed 174,000 people and had a worldwide revenue of €40. 5 billion in 2008. http://en. wikipedia. org/wiki/Unilever 17. Nestle SA Nestle S. A. French pronunciation: [n? s’le]) is a multinational packaged foods company founded and headquartered in Vevey, Switzerland, and listed on the SWX Swiss Exchange with a market capitalization of over 87 billion Swiss francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lactee Henri Nestle Company set up in 1866 by Henri Nestle to provide an infant food product. The two world wars both affected growth: during the first, dried milk was widely used but the second war caused profits to drop by around 70%.
However, sales of the instant coffee Nescafe were boosted by the US military. After the wars, growth was stimulated by acquisitions that expanded the company’s product range and brought a number of globally recognized brands into its fold, including Maggi, Thomy and Nescafe. Nestle is the world’s largest foods company, followed by Kraft Foods. Leading FMCG companies in India 1. Hindustan Unilever Limited Hindustan Unilever Limited (abbreviated to HUL), formerly Hindustan Lever Limited , is India’s largest consumer products company and was formed in 1933 as Lever Brothers India Limited.
It is currently headquartered in Mumbai, India and its 41,000 employees are headed by Harish Manwani, the non-executive chairman of the board. The company was renamed in late June 2007 to “Hindustan Unilever Limited” to provide the optimum balance between maintaining the heritage of the Company and the future benefits and synergies of global alignment with the corporate name of “Unilever”. This decision will be put to the Shareholdrs for approval in next “Annual General Meeting”. http://www. tamilnow. com/Hindustan-Unilever-Limited-644. html 2. ITC Limited
ITC is one of India’s foremost private sector companies with a market capitalisation of nearly US $ 15 billion and a turnover of over US $ 4. 75 billion. ITC is rated among the World’s Best Big Companies, Asia’s ‘Fab 50’ and the World’s Most Reputable Companies by Forbes magazine, among India’s Most Respected Companies by BusinessWorld and among India’s Most Valuable Companies by Business Today. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products.
While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards. 3. Nestle India Limited Nestle India is a subsidiary of Nestle S. A. of Switzerland. With seven factories and a large number of co-packers, Nestle India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction.
Nestle India manufactures products of truly international quality under internationally famous brand names such as NESCAFE, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh ‘n’ Natural Dahi and NESTLE Jeera Raita. 4. GCMMF (Amul) 5. Dabur India Limited Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care, Personal care and Food products. Building on a legacy of quality and experience for over 100 years, today Dabur has a turnover of Rs. 396 crore with powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Babool, Odomos & Real. 6. Asian Paints, India 7. Cadbury India 8. Britannia Industries Britannia manufactures diary products from its plants located in Kolkata, Delhi, Chennai, Mumbai, and Rudrapur. The company has a total installed capacity of 163,500 MT of biscuits and protein foodstuffs. Key brands include Tiger, Good Day, Milk Bikis, Treat, and Marie. In FY07 the company launched new brands; 50:50 Chutkule, Treat Fruit, Rollz, NutriChoice Digestive, and renovated Milk Bikis, Chota Tiger, and Chocolate Cream in the Tiger range.
Today, more than a century after those tentative first steps, Britannia’s fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia’s shareholders. 9. Procter & Gamble Hygiene and Health Care Limited Procter & Gamble Hygiene and Health Care Ltd (P Hygiene and Health Care) was initially known as RHL. In Oct 1985, after RHL became an affiliate of The Procter & Gamble Company, USA, it set up a manufacturing facility at Hyderabad, AP for Vicks range of products.
P Hygiene and Health Care is involved in manufacturing of health care and hygiene products. Some of the popular brands in the company’s health care segment include Vicks VapoRub, Vicks Inhaler, Vicks Formula 44, Vicks Cough Drops and Vicks Action 500+. Whisper is its prominent brand in the feminine hygiene segment and its brand portfolio includes Whisper Maxi Regular, Whisper Maxi XL Wings and Whisper Ultra with Wings among others. 10. Marico Limiited 11. Colgate-Palmolive (India) Limited Colgate-Palmolive (India) Ltd (Colgate-Palmolive), was incorporated in 1937. Colgate-Palmolive Company, USA is its holding company.
It is engaged in manufacturing and marketing FMCG products. Main products include toothpastes, toothbrushes, toothpowders, teeth-whitening products, shower gels, thermal spa products, liquid hand-washes, shave preps, and skin care. Colgate-Palmolive (Nepal) Pvt Ltd is a wholly-owned subsidiary of the company. 12. Emami Limited Emami Ltd, the flagship company of the Rs 2000 crore Emami Group, is a leading player in the personal and healthcare consumer products industry in India. Some of its major brands include Boroplus, Navratna, Sona Chandi, Himani and Beauty Secrets by Madhuri.
The company manufacturing facilities are located in Kolkata, Guwahati and Pondicherry. Companies under Emami Group are:- ; 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 ; Susruta Clinic & Research Institute for Advanced Medicine Pvt Ltd 13. GlaxoSmithKline Consumer Healthcare Limited GlaxoSmithKline Consumer Healthcare Ltd (GSK Consumer Healthcare) is the Indian associate of UK-based GlaxoSmithKline Plc.
GSK Consumer Healthcare was formed in 1958 by the name of Hindustan Milk Food Manufacturers Pvt Ltd and promoted by Horlicks Ltd to provide malted milk foods in the domestic market. The company acquired its present name in 2002. The company specialises in manufacturing health food drinks. 14. Godfrey Phillips India Limited 15. Godrej Consumer Products Limited 16. Nirma Limited Nirma is one of the few names – which is instantly recognized as a true Indian brand, which took on mighty multinationals and rewrote the marketing rules to win the heart of princess, i. e. the consumer.
Nirma Ltd (Nirma) commenced operations in 1969 as a detergent company under the aegis of Karsanbhai Patel. In 2005, Nirma acquired the fluid business of Core Healthcare Ltd from ARCIL. Nirma Consumer Products: Soaps, Detergents, Edible Salt, Scouring Products Nirma Industrial Products: 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. 17. Radico Khaitan Limited Radico Khaitan’s product range comprises whiskey, rum, vodka, gin, and brandy.
Brands include 8PM Whiskey, Contessa Rum, Old Admiral Brandy, and Magic Moments Vodka, amongst others. 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 FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing, specifically in India.
The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13. 1 billion. FMCG Sector in India is estimated to grow 60% by 2010. FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product (GDP). Well-established distribution networks, as well as intense competition between the organised and unorganised segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33. 4 billion in 2015 from US $ billion 11. in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid urbanization, increased literacy levels, and rising per capita income. The big firms are growing bigger and small-time companies are catching up as well.
According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft drink and cigarette companies have always shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they account for 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.
This category seems to have faster development than the stagnating personal care category. Amul, India’s largest foods company, has a good presence in the food category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a series of products at various prices. In the household care category (like mosquito repellents), Godrej and Reckitt are two players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt’s Mortein at Rs 149 crore.
In the shampoo category, HLL’s Clinic and Sunsilk make it to the top 100, although P&G’s Head and Shoulders and Pantene are also trying hard to be positioned on top. Clinic is nearly double the size of Sunsilk. Dabur is among the top five FMCG companies in India and is a herbal specialist. With a turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East, South Pacific, Caribbean, Africa and Europe.
Asian Paints is India’s largest paint company, with a turnover of Rs. 22. 6 billion (around USD 513 million). Forbes Global magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the World Cadbury India is the market leader in the chocolate confectionery market with a 70% market share and is ranked number two in the total food drinks market. Its popular brands include Cadbury’s Dairy Milk, 5 Star, Eclairs, and Gems. The Rs. 15. 6 billion (USD 380 Million) Marico is a leading Indian group in consumer products and services in the Global Beauty and Wellness space.
Common FMCG products Some common FMCG product categories include food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. and some of the examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc. Outlook – Market potentiality of FMCG industry There is a huge growth potential for all the FMCG companies as the per capita consumption of almost all products in the country is amongst the lowest in the world.
Again the demand or prospect could be increased further if these companies can change the consumer’s mindset and offer new generation products. Earlier, Indian consumers were using non-branded apparel, but today, clothes of different brands are available and the same consumers are willing to pay more for branded quality clothes. It’s the quality, promotion and innovation of products, which can drive many sectors. Some of the merits of FMCG industry, which made this industry as a potential one are low operational cost, strong distribution networks, presence of renowned FMCG companies.
Population growth is another factor which is responsible behind the success of this industry. Job opportunities in FMCG industry FMCG industry creates a wide range of job opportunities. This industry is a stable, diverse, challenging and high profile industry providing a wide range of job categories like sales, supply chain, finance, marketing, operations, purchasing, human resources, product development and general management. http://www. economywatch. com/world-industries/fmcg. html Literature Review Great news for FMCG companies March 01, 2007 10:31 IST http://www. rediff. om/money/2007/mar/01bud12. htm The strong volume growth in the FMCG sector continued throughout 2006. Rising income, demographics and rising aspirational levels led to rise in sales both in urban and rural area. Value added and higher margin products too witnessed an increase in demand. The year was also witness to heightened consolidation activity in the sector, as companies acquired to spread their reach across the globe. However, on the margins front, they faced pressure due to higher input costs and inflationary pressure. Budget Measures ? Farm sector has been given the top priority.
Agriculture investments to go upto 2% of GDP. ? Duty on edible oil has been reduced. ? Customs duty on food processing machinery and their parts is being reduced from 7. 5% to 5% ? Excise duty has been fully exempted on biscuits of per kilogram retail sale price equivalent of Rs 50 or less. ? Excise duty on food mixes, including instant food mixes, has been reduced from 16% or 8% to Nil. ? Free samples and displays are exempt form the purview of FBT. ? Venture capital investing in dairy industry will get a pass through status. ? Better rural infrastructure development to be an area of focus. Increase in dividend distribution tax from 12. 5% to 15%. ? 1% higher education cess to charged. ? The dividend distribution tax on dividends paid by money market mutual funds and liquid mutual funds increased to 25 % for all investors. Budget Impact ? Duty reduction on edible is a positive for companies like Marico. ? Exemption of excise on biscuits is positive for Britannia [ Get Quote ], ITC and Parle. ? Reduction of excise on food mixes is beneficial to ITC, as this segment is a new growth area. ? With increase on focus on agriculture, the rural income is likely to go up.
This will be beneficial to the FMCG companies, as rural areas are a big market for them. ? FMCG companies spend a lot of money on advertising and brand building. Exclusion of samples and displays from FBT will help them in promoting their products ? Better infrastructure will help better access and more distribution network to the FMCG companies. It will help them improve the supply chain. ? Companies have huge investments in the liquid funds, the higher tax on dividend distribution will reduce their other income. ? The impact of higher tax (cess) on the industry is likely to lower net margins, albeit marginally.
Sector Outlook ? With 12. 2% of the world population living in the villages of India [ Images ], the Indian rural FMCG market is something no one can overlook. More focus on farm sector will boost the rural income thus providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. Also, with rising income and growing consumerism, FMCG sectors are likely to benefit. Growth potential for all the FMCG companies is huge as the per capita consumption of almost all products in the country is amongst the lowest in the world.
Further, if these companies can change consumer’s mindset and offer new generation products, they would be able to generate higher growth in the future. Company impact ? Britannia and ITC are l likely to benefit due to reduction in excise on biscuits. ? ITC will also benefit from the reduction of excise duty on instant mixes. ? HLL [ Get Quote ], Marico, Dabur [ Get Quote ], ITC amongst another FMCG companies will benefit from the free sample removal from FBT purview as they can now increase their advertising.
Also all the FMCG companies will benefit from the infrastructure development and boost to rural income. Industry Wish List ? Give infrastructure status to agri processing industry. Give tax breaks and incentives to the food processing industry. Consider a uniform VAT of 4% on all basic processed foods, nil or low excise duty on food grains, condiments and spices, fruits and vegetables along with strong fiscal support for research and development (R&D) in the food-processing sector. Measures to boost farm & rural incomes through employment generation measures and increase in infrastructure spending ? Exemption of sales promotion expenses and free samples from the purview of FBT (fringe benefit tax) ? Reduction in import duty on Palm Oil to curb inflation ? Quality check on imported FMCG products and effective enforcement of copyright laws. This would go a long way in filtering out import of sub-quality and discarded products, benefiting both the manufacturers and the consumers. Also, there should be a comprehensive policy to hit out at contraband imports. More focus towards networking the food supply chain, which will enable free flow of food related products across the country to the benefit of both manufacturers and consumers. For the government, it will mean effective utilisation of food stocks. ? As per CII, excise duty difference between ‘branded’ and ‘unbranded’ food products existing at present should be removed to encourage consumers to move from unhygienic unbranded foods to hygienically packaged processed foods Budget over the years Budget 2004-05 Budget 2005-06 Budget 2006-07 Excise on biscuits reduced to 8% from 16%.
Excise on soft drinks and sugar boiled confectionery also reduced All states to switch to VAT in FY04 (deadline now has been extended till end FY05) Loans to agriculture and to small- Increase in customs duty of refined palm oil to 75% Excise duty on dairy machinery hived off from 16%. Implementation of VAT across all states Excise duty on Condensed milk abolished (16% earlier). Excise duty on Pectines and Pectates, used as a gelling agent in Jams and Jellies abolished (16% earlier).
Excise duty on unbranded edible preparations of oil increased from scale sector will now be available at maximum 2% above prime lending rate (PLR) Development plans for roads, ports, railways and airports Customs duty on alcoholic beverages reduced Concessional rate of 5% custom duty on tea and coffee machinery Excise duty on preparations of meat, poultry and fish halved to 8% Excise duty on food grade hexane (used in the edible oil industry) halved to 16% nil to 8%. Excise on biscuits manufactured without aid of power will now attract a duty of 8% (nil earlier).
Excise duty on Pasta reduced from 16% to nil. Excise duty on ice-creams exempted Excise on ready to eat packaged food reduced from 16% to 8% Excise on instant food mixes exempted Excise on soaps manufactured without power will now attract 16% duty Excise duty on processed meat, fish and poultry products reduced from 8% to nil. Excise duty on yeast exempted ] Key Positives ? Growth potential: Rural penetration levels are still low. Also, according to estimates, only about 7% to 8% of the total food production (US$ 75 bn) is consumed in processed form.
This speaks for itself, highlighting the scope for growth. The planned development of roads, ports, railways and airports, will increase FMCG penetration in the long term. ? Increasing focus: Companies are increasingly focusing on key products and brands, cost efficiencies and rural markets to grow. This is a sign of market sophistication, both from the manufacturer’s point of view as well as the consumer’s point of view. ? The India advantage: Owing to India’s cost advantage, many MNC companies have started using their Indian operations as their manufacturing base.
Alternatively, some Indian companies have tested foreign shores like Bangladesh, Sri Lanka [ Images ], the Middle East and Pakistan among others. ? Favourable tax structure: The introduction of VAT at the start of FY06 is a long term positive for the FMCG sector. This had been a long pending demand of the FMCG sector. Post this, the tax ambiguity will get reduced, benefiting the sector. Key Negatives ? Increasing competition: New entrants in the sector have heightened competition in key segments like soaps and detergents, putting pressure on profitability. Infrastructure: The infrastructure for free transport of goods is not adequate in the country. Also, the fall in agricultural output continues to cast on FMCG sector’s prospects in the short term. ? Unorganised threat: A large part of the branded market continues to be threatened by spurious goods and illegal foreign imports, which remain a challenge for large companies, particularly during times of cyclical downturns. ? Modern trade growth robust: Modern retailing stores are the future and are growing at exponential rates.
With the modernisation of the retail sector, rapid growth in sales of supermarkets, department stores and hypermarkets is inevitable due to the growing preference of the affluent and upper middle classes for shopping at these types of retail stores. Since FMCG companies have tied up with these retailers, growth for FMCG companies will also be faster. FMCG companies go for cost-cutting Namrata Singh, TNN 27 April 2009, 12:02am IST http://timesofindia. indiatimes. com/biz/india-business/FMCG-companies-go-for-cost-cutting/articleshow/4452217. ms MUMBAI: Consumer product companies have declared a war on costs. In a bid to ease the pressure on margins, companies are resorting to some tough cost-cutting measures, especially in packaging. While some of these steps are accompanied with price increases, in other cases it is seen as a move to avoid hiking rates to bolster volumes. Hindustan Unilever (HUL), for instance, has changed the packaging of its premium tea brand, Lipton Darjeeling, to reduce costs. The tea brand, which used to earlier come in a hard-board box with a plastic cover top, has moved to a standard soft-board pack.
The price of the brand has also been raised to make up for the unabated rise in tea leaf costs, which have gone up by nearly 40%. For a company like HUL, packaging costs form nearly 8% of its turnover. Take another example of cost-cutting. The smallest pack size of Cadbury’s Gems, priced at Re 1, which earlier contained four pieces, now comes with three pieces. It is learnt that Cadbury India had to reduce the number of Gems to three, in an attempt to maintain the price point at Re 1.
This decision was taken because hiking the price by a few paise to make up for the rising costs would not have been feasible. Recently, Gujarat Co-operative Milk Marketing Federation (GCMMF) launched Amul ice-creams in 2 litre packs priced at Rs 99. Traditionally, the ice-cream came in one litre packs priced at Rs 70. GCMMF went into a major cost-cutting drive and rationalised dealer margins along with bringing down transportation costs to be able to sell double the volume costing merely Rs 29 more. We managed the feat by cutting costs at supplier level, dealer level and distributor levels to pass on the benefits to consumers,” said R S Sodhi, chief general manager, GCMMF. Companies are thus trying to cut costs wherever possible, especially after witnessing a year of high volatility in commodity price movement. Prices of products had gone up in the first three quarters of 2008 to account for the steep increase in oil prices. When this impacted volumes, companies like HUL dropped prices at the cost of margins.
According to a Motilal Oswal report, FMCG companies have come full circle from a phase of rising volume growth and strong input and product prices. “Volume growth is coming off, more so in products which have witnessed sharp price increases. Price reductions and freebies have made a strong comeback, as companies are trying to boost volume growth. In addition, companies are realising the importance of last mile access in pushing product sales by increasing retail margins in select categories,” the report said.
HUL, Asian Paints and Marico reported lower volume growth in the December quarter due to the combined effect of steep price increases (10-30%) and low consumer upgradation. Whereas, companies like Colgate, Dabur, and GSK Consumer are maintaining double-digit volume growth due to moderate price increases in an inflationary environment. “Discounts and freebies have made a strong comeback in most FMCG products. Freebies appear to be an attempt to push higher volumes without reducing the MRP and also promote specific brands and products,” the report added.
Freebies are seen on brands like Rin Advanced, Colgate, Sunsilk, Dove and Dettol. Poor rains not a worry for FMCG companies Namrata Singh, TNN 14 August 2009, 12:34am IST http://timesofindia. indiatimes. com/biz/india-business/Poor-rains-not-a-worry-for-FMCG-cos/articleshow/4891877. cms MUMBAI: The June-September outlook for the monsoon has deteriorated, leading to concerns about rural growth getting impacted. But, fast-moving consumer goods (FMCG) firms are not perturbed just yet. The reasons being, a fall in weightage of agriculture in the GDP and growing urban consumption.
In a report, Goldman Sachs India V-P and chief economist, Tushar Poddar, stated: “We think rural demand will be negatively impacted, and this is a significant negative shock for the equity market, with sectors catering to rural demand such as FMCG particularly affected. ” According to Goldman Sachs’ estimation, agricultural growth could reduce to -2% year-on-year, down from its earlier estimate of +1. 4%. A bad monsoon can lead to inflation in food prices, which in turn could result in a fall in the share of wallet for sectors like FMCGs, durables, etc.
Given that rural markets have a significant contribution to revenues of FMCG companies, a bad monsoon could have an impact on the financials. For a large company like Hindustan Unilever, rural contribution is as high as 45%. However, according to Dalip Sehgal, MD, Godrej Consumer Products (GCPL), the mood in some agriculture-driven markets like Punjab, which witnessed heavy rains in the past 10 days, is quite optimistic. “Agriculture is now only 17 odd % of GDP and has a reduced impact on GDP growth and even overall rural incomes.
Hence, the impact of a relatively poorer monsoon will be far less today than it was, say, in 2002 when agriculture accounted for 25% of GDP,” said Sehgal. According to Saugata Gupta, CEO (consumer products), Marico, which draws 25% of its turnover from rural markets, “a clearer picture will emerge in the third-quarter (September quarter)”. Research Methodology This project is an applied secondary data based project. Whatever analysis of this FMCG industry is to be done will be based on secondary data collected from different sources.
The nature of secondary sources of information Secondary data is data which has been collected by individuals or agencies for purposes other than those of our particular research study. For example, if a government department has conducted a survey of, say, family food expenditures, then a food manufacturer might use this data in the organisation’s evaluations of the total potential market for a new product. Similarly, statistics prepared by a ministry on agricultural production will prove useful to a whole host of people and organisations, including those marketing agricultural supplies.
No marketing research study should be undertaken without a prior search of secondary sources (also termed desk research). There are several grounds for making such a bold statement. · Secondary data may be available which is entirely appropriate and wholly adequate to draw conclusions and answer the question or solve the problem. Sometimes primary data collection simply is not necessary. · It is far cheaper to collect secondary data than to obtain primary data. For the same level of research budget a thorough examination of secondary sources can yield a great deal more information than can be had through a primary data collection exercise. The time involved in searching secondary sources is much less than that needed to complete primary data collection. · Secondary sources of information can yield more accurate data than that obtained through primary research. This is not always true but where a government or international agency has undertaken a large scale survey, or even a census, this is likely to yield far more accurate results than custom designed and executed surveys when these are based on relatively small sample sizes. It should not be forgotten that secondary data can play a substantial role in the exploratory phase of the research when the task at hand is to define the research problem and to generate hypotheses. The assembly and analysis of secondary data almost invariably improves the researcher’s understanding of the marketing problem, the various lines of inquiry that could or should be followed and the alternative courses of action which might be pursued. · Secondary sources help define the population.
Secondary data can be extremely useful both in defining the population and in structuring the sample to be taken. For instance, government statistics on a country’s agriculture will help decide how to stratify a sample and, once sample estimates have been calculated, these can be used to project those estimates to the population. The problems of secondary sources Whilst the benefits of secondary sources are considerable, their shortcomings have to be acknowledged. There is a need to evaluate the quality of both the source of the data and the data itself.
The main problems may be categorised as follows: Definitions The researcher has to be careful, when making use of secondary data, of the definitions used by those responsible for its preparation. Suppose, for example, researchers are interested in rural communities and their average family size. If published statistics are consulted then a check must be done on how terms such as “family size” have been defined. They may refer only to the nucleus family or include the extended family. Even apparently simple terms such as ‘farm size’ need careful handling. Such
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