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Indian Industry

FMCG Sector on a Buying Spree

The Indian FMCG industry is valued at Rs. 69,000 crore. To attain a maximum growth, many FMCG companies have fixed various major buy out deals in both domestic as well as international market. As an example, Tata Tea, the largest tea manufacturing company in India and the second largest tea company in the world and its promoter Tata Sons have jointly acquired a 30% stake in Energy brands Inc (Energy Brands was founded in 1996 and is a subsidiary of Coca-Cola.) for Rs. 3148 crore in August 2006. This acquisition was the third largest global acquisition after Videocon and Tata Steel by an Indian company.

Also in the year 2006, Tata Coffee Ltd. Acquired Eight O' Clock coffee company (EOC), USA from Gryphon Investors worth Rs 1015 crore.
In another example, Marico Ltd.-a leading Indian group in Consumer Products and Services, acquired Hindustan Lever Ltd's brand Nihar for Rs 227 crore in 2006. In the year 2006, Marico had acquired two Egyptian color and hair care brand by the name of Hairmode and fiancée.

In domestic market Godrej Beverages & foods Ltd. (GBFL) has acquired Nutrine, a confectionary brand.

These acquisitions have played a major role to push the growth in the sector. Also the FMCG majors hiked the prices and that move proved to be good for them. Another factor that is driving the growth up is increase in advertising budgets, and investing heavily behind brands.

In essence, the major factors that have propelled the growth of FMCG Sector are:
  • Major acquisitions
  • Pricing power
  • Effective marketing and advertising strategy.
Major FMCG companies are now planning to enter new categories with fresh marketing objectives and are also gearing up for more acquisition in domestic and international markets that will certainly give a spur to the growth in FMCG sector.


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