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Overview Of FMCG Sector |
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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.
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FMCG Products and Categories
- Personal Care,
Oral Care,
Hair Care,
Skin Care,
Personal Wash (soaps);
- Cosmetics and toiletries,
deodorants, perfumes,
feminine hygiene,
paper products;
- Household care
fabric wash including laundry soaps and synthetic detergents;
household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners,
air fresheners,
insecticides and mosquito repellents,
metal polish and furniture polish;
FMCG in 2006
The performance of the industry was inconsistent in terms of sales and
growth for over 4 years. The investors in the sector were not gainers at par
with other booming sectors. After two years of sinking performance of FMCG
sector, the year 2005 has witnessed the FMCGs demand growing. Strong growth
was seen across various segments in FY06. With the rise in disposable income
and the economy in good health, the urban consumers continued with their
shopping spree.
- Food and health beverages,
branded flour,
branded sugarcane,
bakery products such as bread, biscuits, etc., milk and dairy products,
beverages such as tea,
coffee,
juices,
bottled water etc,
snack food,
chocolates, etc.
- Frequently replaced electronic products, such as audio equipments, digital cameras, Laptops,
CTVs;
other electronic items such as Refrigerator, washing machines, etc. coming under the category of White Goods in FMCG;
Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000 crores. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India.
Analysis of FMCG Sector
Strengths:
1. Low operational costs
2. Presence of established distribution networks in both urban and rural areas
3. Presence of well-known brands in FMCG sector
Weaknesses:
1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market.
Opportunities:
1. Untapped rural market
2. Rising income levels, i.e. increase in purchasing power of consumers
3. Large domestic market- a population of over one billion.
4. Export potential
5. High consumer goods spending
Threats:
1. Removal of import restrictions resulting in replacing of domestic brands
2. Slowdown in rural demand
Tax and regulatory structure
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