Fmcg industry analysis
There are plenty of substitute goods available in the market that can be re-placed if consumers are not satisfied with one.
Buying Pattern Shift:The crisis of declining FMCG markets during was driven by new avenues of expenditure for growing consumer income such as consumer durables, entertainment, mobiles, motorbikes etc.
The per-capita expenditure in rural market is half that of the urban market.
With the level of competition and sluggish growth most FMCG corporates are looking at IT to reduce costs in the supply chain, and flatten the bottom line Marketing and advertising through mobile and social media platforms Sensitivity to business cycle Inflation: High food inflation has an adverse effect on the FMCG industry.
Here also, HUL is the leader with market share of 53 per cent; Godrej occupies second position with market share of 10 per cent.
With rise in per capita incomes and awareness, the growth potential is huge. In toothpowders market, Colgate and Dabur are the major players.
Fmcg trends 2018
With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. FMCG products are those that get replaced within a year. However, performance of BSE FMCG index in was outstanding on back of fiscal stimulus but got hit again in due to European debt crisis and domestic reasons. Distribution —ITC services 1. Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities and 14 million in total. This is expected to make way for established FMCG firms to develop their existing brands to gain higher margins. If both these companies are excluded then the index comes out to be overvalued by only 7. Technological advances such as internet and e-commerce would enable better logistics in these areas. This is simply because these companies dont really have a wide network of sales agents and other force which is required and is ideal for catering their products to the markets.
What has been observed is that even though these FMCG companies are big multinationals and Indian but face a major challenge of making their products available in the market in the right quantities and in the right time. Bargaining Power of Suppliers: The bargaining power of suppliers of raw materials andintermediate goods is not very high.
Fmcg industry analysis
Rural focus: As market is getting saturated, companies are focusing on rural area for penetration, by providing consumers with bite-sized or single-use packs. ITC, market leader in cigarettes, has benefitted by favourable announcement in the Union Budget wherein the Government increased the excise duty on bidi and other tobacco products which could lead to consumers shifting to cigarettes. Personal wash can be further segregated into three segments namely Premium, Economy and Popular. Thus, FMCG index, being a defensive sector, will remain a safe bet for investors. Dabur India:- regularly conducts rural and adult education programs and provides training in rural areas to facilitate employability. Indian Attractiveness Industry has witnessed heavy foreign direct investment FDI inflows as they accounted for 2. Demand for quality goods and services have been going up in rural areas of India, on the back of improved distribution channels of manufacturing and FMCG companies. December and March quarter results have been pretty good for the top companies, a major reason for the overvaluation could be attributed to the current economic scenario. But on the other hand, the increase in excise duty more or less offset the above effect. Growing awareness, easier access, and changing lifestyles are the key growth drivers for the consumer market. The sector is projected to grow per cent in Technological advances such as internet and e-commerce would enable better logistics in these areas. In the branded coconut hair oil market, Marico with Parachute and Dabur are the leading players.
With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. Economical GDP Growth: Growth of the industry is consistent with the Indian economy Inflation: Inflationary pressures alter the purchasing power of money.
Research paper on fmcg sector in india
A total of 7. Single product leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Social Contribution -Create employment for people with lower educational qualifications. But on the other hand, the increase in excise duty more or less offset the above effect. Many FMCG companies are focusing on increasing their distribution network to penetrate with a step by step plan. That leaves just FMCG as a safe growth area. With increase in disposable income and favourable government policies, net sales growth is expected to remain robust in coming quarters. If both these companies are excluded then the index comes out to be overvalued by only 7. On the contrary to this, Nestle has always targeted the market of urban India and focuses largely upon the value added products for the elite class or upper middle class population. By default, it's likely to be the only counter-cyclical defensive sectoral play. We feel that smaller players would find it difficult to pass on the duty hikes to end consumers and will chose to take the brunt of this hike in a bid to maintain and grow market share. On the other hand, deep-pocket players like Nestle, ITC and HUL with their leadership position and strong brands will be able to pass on the hike to consumers. Unlike other sectors, the FMCG industry did not slow down during recent recession. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. FMCG is also dependent on the monsoons.
Therefore, the index has high dependency on these two companies.
based on 51 review