1.

1 INTODUCTION

FMCG Means Fast Moving Consumer Goods are popularly named as consumer packaged goods. Items in
this category include all consumables (other than groceries/ pulses) people buy at regular intervals. The most
common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe
polish, packaged foodstuff, and household accessories and extends to certain electronic
goods. These items are meant for daily of frequent consumption and have a high return. A major portion of
the monthly budget of each household is reserved for FMCG products. The volume of money circulated
in the economy against FMCG products is very high, as the Number of products the consumer use is very
high. Competition in the FMCG sector is very high resulting in high pressure on margins. FMCG
companies maintain intense distribution network. Companies spend a large portion of their budget
on maintaining distribution networks. New entrants who wish to bring their products in the national level
need to invest huge sums of money on promoting brands. Manufacturing can be outsourced. A recent
phenomenon in the sector was entry of multinationals and cheaper imports. Also the market is
more pressurized with presence of local players in rural areas and state brands.

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of
US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-established distribution
network, intense competition between the organized and unorganized segments and low operational cost.
Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India
a competitive advantage. Penetration level as well as per capita consumption in most product categories like
jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential.
Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity
to makers of branded products to convert consumers to branded products. Growth is also likely to come from
consumers ‘upgrading’ in the matured product categories. With 200 million people expected to shift to
processed and packaged food by 2010, India needs around US$ 28 billion of investment in the Food-
processing industry. Automatic investment approval (including foreign technology agreements within
specified norms), up to 100 % foreign equity or 100 % for NRI and Overseas Corporate Bodies (OBCs)
investments, is allowed for most of the food processing sectors. FMCG sector joins India Inc’s growth party
by posting surprising double-digit growth sales in the past couple of years. With annual revenues of Rs
72,000 crore, it is the one of the largest sectors in the Indian economy.

The industry’s future prospects look bright, considering rising household incomes and the spread of modern
retail. However, the per capita income level in India is still very low compared to the developed world.
Besides, the penetration level of many products is also relatively low and several categories remain fairly
unbranded. All these factors provide a huge untapped potential for the industry. In contrast to other
manufacturing sectors, FMCG is relatively less capital-intensive, but demands immense skills and
expenditure on branding and distribution. Most companies in the sector create value through product
differentiation, package innovation, and differential pricing and highlighting the functional aspect of foods.
While inflation restricts the industry’s growth, many companies in the sector thrive under inflationary
pressures. Most companies pass on the cost inflation to consumers, via a judicious blend of price hikes,
packaged size reduction and change in product mix. Few consumers react by down-trading to lower priced
products, but most hang on to their preferred brands if price hikes are moderate. The top five FMCG
companies constitute nearly 70% of the total revenues generated by this sector.

Multinational FMCG companies like Hindustan Unilever, ITC, Nestle, Procter & Gamble and
GlaxoSmithKline Consumer Healthcare traditionally comprise the first category of FMCG companies. They
tend to spend nearly 10% of their revenues on an average on advertising and promoting their products,
which is the highest ad spend figure in the industry. Justifying their high product pricing, these companies
largely tend to capture value by addressing a felt need. Another category is non-traditional FMCG
companies, which is dominated by homegrown comcanies like Asian paints, Dabur, Tata Tea, Marico
and United Spirits. These companies have grown to become market leaders in their respective segments,
giving strong competition to MNC brands. Their average ad expenditure is much lower than that of the
MNC biggies. The third tier includes small, but strong regional players operating on a smaller scale. They
are mostly price warriors, who expand by eating into the market share of national players. But the Biggest
worry for national players is the emergence of private labels, i.e. the in-house brands of retail companies. As
retailers don’t have to incur marketing costs on these in-house brands' they are cheaper than their branded
counterparts. FMCG companies can also be segregated according to the product categories in which they
exist.

Various products have different demand drivers; hence, the growth of companies tends to be different. For
instance, paints makers witness growth during a housing boom. But the same may not be the case with soap
manufacturers, which may witness some down-trading by consumers. With the market in a bearish phase,
the FMCG sector has found flavor among investors. The sector’s defensiveness is demonstrated by the
stability in returns generated even during times of slow economic growth. While the sensex is down by
29% since the beginning of this year, the ET FMCG index comprising the top 20 stocks in the sector, has
fallen only by 12.5%. For investors eyeing the FMCG space, large domestic companies offer attractive
growth prospects. These companies are outperforming their MNC peers and small Indian companies in the
sector. But the MNC pack - specifically GlaxoSmithKline Consumer Healthcare, Nestle and HUL - has
fared better in terms of profit margins. While the FMCG sector’s revenue growth has been positive since the
last three quarters, profits are showing a downward trend. Nevertheless, the FMCG growth story is here to
stay. Although double-digit revenue growth is likely to continue, margins may come under pressure as the
industry is finding it difficult to pass on cost inflation without impacting consumer demand. Moreover, the
scenario has become more challenging for FMCG companies, given the emergence of modern retail and
regional brands. The growth in media industry has also led to innovative advertising, which has changed the
rules of the game.
1.2 What are FMCGs?

We regularly talk about things like butter, potato chips, toothpastes, razors, household care products,
packaged food and beverages, etc. But do we know under which category these things come? They are
called FMCGs. FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy
from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper.
FMCG Category and Products
1.4 In context of the world, the top 10 FMCG companies 2021 are as follows:

1. Hindustan Unilever Limited

HUL is a subsidiary of Unilever, one of the world’s leading suppliers of food, homecare, and personal hygiene
products with offices in 190 countries. Hindustan Unilever is one of the best FMCGs that there is, serving more than 2
billion happy consumers for 85 years.

HUL has over 35 brands across 20 categories such as soaps, detergent, skincare, cosmetics, tea, toothpaste and some
famous names include Surf Excel, Dove, Lux, Lifebuoy, Clinic Plus, Wheel, Sunsilk, Knorr etc. Here is the Annual
Report of 2017-2018, Which Shows that the Company has 18,000 employees and has sales of INR 34619 crores.

Corporate Office: Mumbai, Maharashtra

Turnover: 4 Billion Dollars

2. Colgate-Palmolive

Colgate-Palmolive grew from a small toothpaste and candle manufacturing unit in the 19th century New
York and more than 200 years later, a global leader in personal healthcare products.

The popular brands include the Colgate Toothpaste, Colgate Plax Active Salt Mouthwash, Halo Shampoo,
Palmolive Naturals and Protex Soap. Colgate-Palmolive’s core values of caring, global teamwork and
constant improvement makes them a prestigious name not only in the Indian Fast Moving Consumer Goods
industry but globally. According to the Annual Report of 2017-2018, the Company has roughly 38000
employees and has sales of INR 12045 crores.

Corporate Office: New York, USA

Turnover: 17.08 Billion Dollar

 3. ITC Limited

From its humble beginnings in 1910 Calcutta, ITC Limited has flourished into a premium brand which with
a multi-business portfolio that includes FMCG, hospitality, paperboards and speciality papers, agri-business
and information technology.

The Fast Moving Consumer Goods supplied by ITC Limited includes soaps, incense sticks, apparel,
cigarettes and cigars, safety matches and food. ITC Limited has a deep understanding of the Indian
consumer psyche.

Their products boast of high quality in manufacture and packaging. Some of their labels include old Flake,
Classic, Navy Cut, Bingo, Sunfeast, Aashirvaad, Fiama, Vivel, Wills Lifestyle, Paperkraft and
Classmate. Annual report of 2017-2018 states that the company’s growth is about Rs. 10500 crores within a
Financial year.

Corporate Office: Kolkata, West Bengal

Turnover: 7.0 Billion Dollars

4. Nestle

Nestlé is a transnational food and beverage company, headquartered in Switzerland. Nestle India is a
subsidiary of NESTLE S.A. of Switzerland.

Nestle India dates back to 1912 when it began operating as the Nestle Anglo-Swiss Condensed Milk
Company. Post independence, Nestle has worked closely with indigenous manufacturing and today has eight
manufacturing facilities in the country for their products. The India offices are in Kolkata, Mumbai,
Chennai, and Delhi.

They cater to the nutritional and wellness requirements of Indian consumers and the popular labels include
Nescafe, Maggi, Milky Bar, Kit Kat, Bar One, Milkmaid, Nestea, Nestlé Milk, Nestlé Slim Milk, Nestle
Dahi and Nestle Jeera Raita. Nestle has truly emerged as the largest manufacturer of food items globally.
The Nestle Annual Report 2017-2018 shows that the company has 328000 workers and has sales of INR 12045
crores.

Corporate Office: Vevey, Switzerland

Turnover: 87.0 Billion Dollar

5. Parle Agro

Parle Agro has been in the food and beverage industry since 1985. It is India’s largest beverage company
and valued at Rs. 3000 crores According to the Annual Report of 2017-2018. Parle Agro employs about
5000 people and successfully operates 76 highly developed manufacturing units.

The most well-known labels include Frooti, Frooti Fizz, Appy Fizz, Appy, Bailey, Bailey Soda, Dhishoom,
and Frio. Parle Agro has a strong presence in 50 countries and multiple business verticals like beverages,
packaged drinking water, and PET Preforms.

One of the best FMCG, Parle Agro beverages have achieved a landmark stature in the industry and they are
on their way to becoming India’s first global giant in the food and beverages sector.

Corporate Office: Mumbai, Maharashtra

Turnover: 1 Billion dollar (Approx)

6. Britannia Industries Limited

Britannia Industries is one of the oldest food producing companies in the country with a heritage spanning more than
a hundred years and According to the Annual report of 2017-2018, the annual revenues exceeding Rs. 9000 crore.
Their products are available in more than five million retail outlets and more than 50% of Indian homes are proud
users of their range of food items.

The Britannia Industries Limited ethic has been encapsulated in their slogan, “Eat Healthy. Think Better”. Britannia
has successfully removed 8500 tones of Trans Fats from their products and is India’s first Zero Trans Fat Company.
Over 50% of the company’s products are enriched with nutrients that are important to the body.

The labels include Good Day, Tiger, Milk Bikis, Marie Gold, Cake, Cheese, Milk, and Yoghurt.  The company is the
largest brand in the organized bread market. Britannia’s commitment to health and taste makes it one of the best
FMCGs in the country.

Corporate Office: Kolkata, WB

Turnover: 730 Million Dollar

7. Marico Limited

Marico is currently operating in 25 countries, in the emerging markets of Asia and Africa. Determined to make a
difference to FMCG (in line with their slogan, Make a Difference), Marico has multiple brands in men’s grooming,
fabric care, edible oils, skin care, hair care and health foods.

Marico’s household brands include Parachute, Parachute Advanced, Saffola, Hair & Care, Nihar, Nihar Naturals,
Livon, Set Wet, Mediker and the global business offers brands such as Parachute, HairCode, Fiancée, Caivil, Hercules,
Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat. Marico products are used by 1 out of 3 Indians which
makes it one of the best FMCGs in the business. Their annual turnover was INR 63 billion as shown in the Annual
report of 2017-2018.

Corporate Office: Bandra, Maharastra

Turnover: 61 Billion Dolla

 8. Proctor & Gamble

Procter and Gamble are one of the most reputed and flourishing consumer goods companies in the country. P&G
operates under three entities in India – Procter & Gamble Hygiene and Health Care Limited, Gillette India Limited and
as one 100% subsidiary of the parent company in the U.S. called ‘Procter & Gamble Home Products’ One of the best
FMCGs, Procter and Gamble India serve 650 million consumers.

The products are of grooming, personal hygiene, child care, health and wellbeing and household use. Vicks, Ariel,
Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head & Shoulders, Wella and Duracell are famous
Procter and Gamble labels. The company has five plants and over nine contractual manufacturing sites. The
Company has the Sales of INR 58590 and 125000 workers according to the Annual Report of 2017-2018.

Corporate Office: Cincinnati, USA

Turnover: 83 Billion Dollar

9. The Godrej Group

Started in 1897, the Godrej Group has business dealings in consumer goods, real estate, appliances and agriculture.
The Annual Report 2017-2018 of the company has generated revenues of over 4.1 billion dollars and enjoys the
support of 1.1 billion consumers on a global scale.

Godrej has a substantial standing in Indian, Indonesian, Sub Saharan, and Latin American markets where their goods
especially household items, personal wash, and hair care products are in high demand.

Some of their biggest brands are Good Night, Godrej Expert, Cinthol, B-Blunt, Hit, Protekt, Godrej Aer, Frika, Soft and
Gentle, Ilicit Colour, Cuticura, and Ezee. Godrej is also a leading player in the United Kingdom as on one the prime
manufacturers of hand sanitizers and female deodorants. The Godrej Group has cemented its position as one of the
best FMCGs in the Indian market, with a legacy dating back to 120 years now.

Corporate Office: Mumbai, Maharashtra

Turnover: 4 Billion Dollar

 10.Amul

Amul is an integral part of India’s economic heritage. Amul traces its journey to 1946 as a response to the
exploitation suffered by the villagers due to the involvement of the middlemen. To combat the disruptive presence
of the cartels, villagers of Gujarat formed the Kaira District Co-operative Milk Producers Union Ltd under the
guidance of Vallabhai Patel, Morarji Desai, and Tribhuvandas Patel.

Popular Amul products include milk (Deshi A2 Cow Milk, Amul Gold), bread spreads (butter, buttery chocolate, Amul
Lite), cheese (processed cheese, Amul Gouda, Emmental Cheese, Mozzarella), beverage (Amul Kool, Amul Kool Café)
paneer, curd, milk powder (Amulya, Amul Spray), chocolates, lactose free milk etc, and also Annual Report 2016-
2017 states that the company has sales of INR 15177.

Amul is an extremely trustworthy brand in the dairy and consumer products industry and it is the trust factor that
makes it one of the best FMCGs.

Corporate Office: Anand, Gujarat

Turnover: 2.15 Billion Dollar

Weak areas of FMCG sector:

 Lower scope of investing in technology and achieving economies of scale, especially in small sectors
 Rising income levels and higher disposable income, resulting in increase in purchasing power of
consumers
 Large domestic market with more population of age group between 20 and 30
 Low exports levels.

Threats:

 Liberal import policies resulting in replacing of domestic brands.

 Government Taxation policies and regulatory structure
 Rural demand is seasonal and depends upon monsoon. Fast moving consumer goods (FMCG) – or
Consumer Packaged Goods (CPG) – are products that are consumed quickly over a shorter period of
time. Examples include non-durable goods such as grocery items, soft drinks, dairy products and
toiletries. Conditionally, the absolute margins on goods are very low and profit made on FMCG
is comparatively low, the products are sold large quantities so the substantial profits are
generated. The term FMCG refers to those consumer goods that are sold quickly and at lesser
prices. The life of the FMCG is very short and the products are used up over a short period of
 days, weeks, or months, and within one year. FMCGs have a short period of life, either due to
high consumer demand or because the product deteriorates rapidly. Some FMCGs – such as dairy
products, fruits and vegetables, meat, etc. are highly perishable in nature and should be used at
earliest. Other goods such as soft drinks, alcohol, cleaning products, toiletries and pre-packaged
foods, have higher sales volume and high turnover rates.

The main characteristics of FMCGs are:

From the consumers' perspective:
 Frequent purchase or Daily consumed products.
 Low involvement (little or no effort to choose the item--Products with strong brand loyalty are
exceptions to this rule)
 Low price

From the marketers' angle:

 High volumes
 Low contribution margins
 Extensive distribution networks
 High stock turnover
FMCG denotes Fast Moving Consumer Goods, supplied in the retail marketing as per the daily
consumer demand. These daily needs and wants have to be served to satisfy their hunger. Therefore
these trillion in the total economy with rural India contributing to a third of revenues.
 Consumer preferences in rural markets have shown a paradigm shift over the last few years. Their
consumption basket looks very similar to that of urban counterparts. Premium products are replacing
basic versions and brands are making their presence felt. Nielsen estimates that the FMCG market in
rural India will mark US$ 100 billion by 2025, from the current level of US$ 12 billion.
 Low per capita consumption: Per capita consumption levels in FMCG categories such as skin care,
shampoos and toothpastes are much lower in India as compared to other markets and are expected to
drive growth in future.
 Favorable demographics: 65% of India’s population is below the age of 35 years, making India
one of the youngest nations and an important aspect of consumption growth.
 Low penetration levels of consumer products in most.

MARKETING OF FAST MOVING GOODS