29 March 2014

FMCG sector overview

A report on FMCG sector
The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The market size of FMCG in India is expected to grow from US$ 30 billion in 2011 to US$ 74 billion in 2018.
The FMCG sector in India generated revenues worth US$ 34.8 billion in 2011, a growth of 15.2 per cent as compared to the previous year. Over 2006-11, the sector's revenues posted a compound annual growth rate (CAGR) of 17.3 per cent. Food products are the leading segment, accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12 per cent) are the other leading segments.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. Rural demand is set to rise with rising incomes and greater awareness of brands.
The Government of India has been supporting the rural population with higher minimum support prices (MSPs), loan waivers, and disbursements through the National Rural Employment Guarantee Act (NREGA) programme. These measures have helped in reducing poverty in rural India and have thus propped up rural purchasing power.
With rise in disposable incomes, mid- and high-income consumers in urban areas have shifted their purchasing trend from essential to premium products. In response, firms have started enhancing their premium products portfolio. Indian and multinational FMCG players are leveraging India as a strategic sourcing hub for cost-competitive product development and manufacturing to cater to international markets.
1. ITC
Market Capitalization – 256,769 crores
ITC Ltd has diversified businesses and it dominates the fast moving consumer goods segment in India. It is the market leader in the Tobacco business. It also has products in the personal Healthcare, Lifestyle Retailing and Food segments.
Market Capitalization – 127,144 crores
HUL is a major player in the Indian Consumer Goods industry and its products include foods, beverages, personal care products and cleaning agents. It is present in over 20 categories and its major brands include Lifebuoy, Clinic Plus, Fair & Lovely, Rin, Surf Excel, Lux, Pepsodent, CloseUp, Ponds, Dove, Sunsilk etc
Market Capitalization – 49,768 crores
Nestle India is a subsidiary of Nestle S.A, Switzerland and operates in the food processing industry. It owns brands like Nescafe, Maggi, Milkybar, Milo, Kit-Kat, Bar-One, Nestea, MilkMaid etc
Market Capitalization – 28,107 crores
Godrej Consumer Products Ltd is an Indian Consumer Goods Company offering products like toilet soaps, hair colour, liquid detergents, insecticides, toiletries etc. Roping in bollywood stars like Amir Khan also adds to the brand value of Godrej
Market Capitalization – 27,261 crores
Dabur India operates in the Healthcare and Food Industry. It is India’s largest Ayurvedic product manufacturer and brands include Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Its association with beauty pageant events also adds to its brand value
1.     Household care
The fabric wash market size is estimated to be ~USD 1 billion, household cleaners to be USD 239 million, with the production of synthetic detergents at 2.6 million tonnes. The demand for detergents has been growing at an annual growth rate of 10 to 11% during the past five years. On account of convenience of usage, increased purchasing power, aggressive advertising and increased penetration of washing machines, the urban market prefers washing powder and detergents to bars. The regional and small unorganized players account for a major share of the total detergent market in volumes. Household Care category recorded robust volume and value growth during the year through focused innovation in the portfolio to provide greater consumer value. Vim bar continues to delight consumers by delivering superior performance and new offerings like the Anti-Germ Bar and the Monthly Tub Pack. Vim liquid continues to develop the liquid dish wash category driven by superior product quality and strong advertising. It has effectively accomplished the dual job of growing the liquids market by reaching out to more households, while increasing consumption in existing households. Domex continued to provide clean and germ free toilets to the consumers.
2.     Personal care
The personal care products (PCP) market in India is estimated to be worth ~USD 4 bn p.a. Personal hygiene products (including bath and shower products, deodorants etc.), hair care, skin care, colour cosmetics and fragrances are the key segments of the personal care market. Each of these segments exhibits its unique trends and growth patterns. For example, the largest segment of personal hygiene products, largely dominated by bar soaps, has grown at ~5% p.a. over the last five years. In comparison, the second largest segment, hair care products has seen a much higher growth of ~9-10% p.a. during the same period.The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. The coconut oil market accounts for 72% share in the hair oil market. The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The oral care market can be segmented into toothpaste – 60%; toothpowder – 23%; toothbrushes – 17%.
3.     Food and beverages
Food processing industry is one of the largest industries in India, ranking fifth in terms of production, growth, consumption, and export. The total value of Indian food processing industry is expected to touch USD 194 billion by 2015 from a value of USD 121 billion in 2012, according to Indian Council of Agricultural Research (ICAR). The packaged food segment is expected to grow 9% annually to become a `6 lakh crore industry by 2030, dominated by milk, sweet and savoury snacks and processed poultry, among other products, according to the report by CII-McKinsey. The ready-to-drink tea and coffee market in India is expected to touch `2,200 crore in next four years, according to estimates arrived at the World Tea and Coffee Expo 2013. Branding could drive the next growth wave in the country’s food processing sector. The total soft drink (carbonated beverages and juices) market is estimated at ~USD 1 billion. The market is highly seasonal in nature with consumption varying from 25 million crates per month during peak season to 15 million during offseason. The market is predominantly urban with more than 25% contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks market.

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