Skip to main content




Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks,tioletries,processed foods and many other consumerable.In contrast, durables or major appliances such as kitchen appliances are generally replaced over a period of several years.
FMCG have a short shelf life either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCGs, such as meat, fruits and vegetables, dairy products, and baked goods, are highly perishable. Other goods, such as alcohol, toiletries, pre-packaged foods, soft drinks, chocolate, candies, and cleaning products, have high turnover rates. The sales are sometimes influenced by some holidays and season.
Though the profit margin made on FMCG products is relatively small (more so for retailers than the producers/suppliers), they are generally sold in large quantities; thus, the cumulative profit on such products can be substantial. FMCG is a classic case of low margin and high volume business

Predicting Sales Of Fast-Moving Consumer Goods In India
  • Nielsen predicts that India’s FMCG industry will grow from $37 billion in 2013 to $49 billion in 2016.
  • Indian FMCG industry expected to grow 7% in 2014, 10% in 2015 and about 12% in 2016, taking the sales in 2016 to $49 billion.
  • Distribution growth, innovations around sachet offerings, employment rates and index of industrial production (IIP) are key influencers of FMCG sales in India.
India’s FMCG industry is massive. In 2013, 8.4 million outlets served 1.26 billion people and accounted for US$37 billion in sales.
The last three years have been challenging for India’s FMCG industry. Sales have been affected by a weak economy and high inflation. Consumer confidence which we found has a strong correlation with FMCG sales, has also dipped in this period. In more recent months, however, confidence is rebounding and the sector appears to be one with perceptible signs of a sustained recovery.

The FMCG Industry

To understand the declining FMCG growth trend and predict how the future looks like, we must first understand the sales environment. There are several forces at play that affect the FMCG industry in India.
Through multivariate regression modelling and custom forecasting, Nielsen arrived at drivers-based FMCG forecasts incorporating a range of influencing variables. This helps in understanding market dynamics, gain foresight into current and emerging trends and to plan better.
Nielsen used a three step approach to forecast FMCG sales value.
  1. Identify the drivers impacting sales through regression modelling
  2. Quantify the impact of each of the drivers
  3. Finally, forecast FMCG sales for the next three years using the identified drivers and their future value
All the above variables were modelled against FMCG sales to attain sales drivers. Using these drivers and their impact on FMCG, we were able to forecast sales for 2014 - 2016. 
Drivers Of FMCG Sales
Overall 8 factors have emerged which play a direct role in influencing FMCG sales. We have classified these drivers of sales into two categories: those that marketers can control and those they cannot. The good news is marketers can directly influence more than half of the drivers of sales.
Given the Indian FMCG consumer’s preference for traditional trade outlets and the challenge for marketers in actually reaching the consumer, it’s understandable that availability is the biggest driver of FMCG sales. This is followed by employment rates, which generates income, and then proliferation of sachets (low volume packs), which have a low outlay and are easy on the wallet. Sachet packs also play a strong role in recruiting new buyers and in inducing trials.
Using Sales Drivers To Explain Growth On Decline
FMCG growth has been slowing for some time now, sliding by 8.1% from 2010 to 2013. In a clear indication that sales drivers have played a part in this decline, a slowdown was seen in the rate of distribution expansion and the rate of sachet launches during the same period. Admittedly, weakening macroeconomic variables also contributed to the overall FMCG slowdown.
Here is a closer look at how some of the drivers affect FMCG sales:
Availability: The slowdown in distribution expansion has held up growth. The distribution expansion in 2013 has slowed down to 1.1% from a healthy 2.3% in 2010.
Awareness: While the extent of the impact is smaller, yet, the effect of lower television gross rating points (GRP) has affected sales.
Macro factors: Declining FMCG growth seems to be reflective of the Indian economy as a whole. The key macroeconomic indicators have weakened; GDP slowed from 7.9% in 2009 to 5.7% as of Nov. 12, 2013. The Index of Industrial Production (IIP) has also plunged from 5.8% in 2009 to 1.7% in November 2013. This has affected the economy and the consumers’ purchasing power.
Sachet (Low volume packs): New product launches through sachets have fuelled growth over the years. The growth in the number of low-volume packs hit 31.1% from 2009 to 2010. The rate then dropped to 10.5% from 2012 to 2013. This drop in sachet innovations has impacted FMCG growth.
The primary factors expected to drive a spurt in sales are a stronger GDP and rise in employment. An increase in the rate of availability through distribution expansion is also expected to support sales growth.
Nielsen expects the Indian FMCG sector to touch US$49 billion by 2016. The early signs of revival include a recovering GDP, a strengthening economy and higher consumer sentiment about their employment opportunities.

Popular posts from this blog

Overview of Social Media Marketing

Social media marketing refers to the process of gaining traffic or attention through social media sites. Social media itself is a catch-all term for sites that may provide radically different social actions.

Use social media marketing to listen, analyze, publish, and engage across networks. Align your marketing, customer service, and sales efforts on social — strengthening customer relationships.

Listen and analyze. Hear conversations from over 650 million different sources with social listening tools. Discover what consumers are saying about your brand, your products, and your competitors. Discover trending topics and influential conversations — then use that information to inform your marketing decisions.
Plan and publish. Plan, execute, and track social media marketing campaigns. Customize and craft your content from multiple sources, while protecting your brand with configurable approval rules and a full audit trail. Manage social strategy, tailor campaigns, and drive social awareness…

Why Digital Marketing and Web 2.0 Important To Business?


Digital marketing technology helps you understand and reach your audience most effectively so you can generate the most revenue.  For advertising campaigns, ad serving technology makes it possible to serve the right ad at the right time to right person.  That means your advertising is being as productive as possible. When technology is working for you, you’ll understand your audience at a whole new level, and it will show up on your bottom-line.

NEED FOR THE STUDY The pace of change in today’s business environment is faster than ever. New markets, technologies, and opportunities are arising on a daily basis. Current ways of doing business need to be adapted or they will become outdated. Organizations and enterprises have to become agents of evolution to be successful; as victims of evolution they risk failure. With so many dynamics operating in the global economy, Digital Marketing is now more than ever an effective tool to make a company stand out from the pack.

The pe…

Rural and Urban Marketing Linkage

Some general principles need to be clarified to provide a basis for understanding food-marketing systems within a development context. In order to make any effective interventions in a marketing system it is necessary to define the types of marketing channels, their linkages and functions.
The term “market linkages” is often referred to in the literature on rural development. what precisely does it mean? The term linkage obviously implies a physical connection between the producer and the ultimate consumer. Linkages also involve financial transactions - the selling and buying of goods - and can be broadly defined in four different ways:
by the form of financial transactions or type of intermediaries who undertake the transactions;by the channels through which transactions occur and the type of facilities used for transactions;by how they are linked together by transport and communications networks;by the spatial distribution of transactions - where they occur and whethe…