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The Indian FMCG industry has grown at an average of 11% annually over the last decade and at 17.3% annually over the last five years, reaching an estimated market size of ~₹2 trillion. It accounts for nearly 2.5% of India's GDP and is characterized by competition between organized and unorganized players. Rural India represents over 70% of the population and 50% of the FMCG market. The untapped rural market and growing processed food industry represent major opportunities for growth, though high inflation, rising input costs, and infrastructure issues also pose challenges.

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87 views1 page

Sector Report PDF

The Indian FMCG industry has grown at an average of 11% annually over the last decade and at 17.3% annually over the last five years, reaching an estimated market size of ~₹2 trillion. It accounts for nearly 2.5% of India's GDP and is characterized by competition between organized and unorganized players. Rural India represents over 70% of the population and 50% of the FMCG market. The untapped rural market and growing processed food industry represent major opportunities for growth, though high inflation, rising input costs, and infrastructure issues also pose challenges.

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Joshua Andrews
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We take content rights seriously. If you suspect this is your content, claim it here.
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Research report::Indian FMCG Industry

July 30, 2013

OVERVIEW . With a population of over one billion, India is one of the largest economies in the world in terms of purchasing power and increasing consumer spending, next to China. The Indian FMCG industry, with an estimated market size of ~`2 trillion, accounts for the fourth largest sector in India. In the last decade, the FMCG sector has grown at an average of 11% a year; in the last five years, annual growth accelerated at compounded rate of ~17.3%. The sector is characterized by strong presence of global businesses, intense competition between organized and unorganized players, well established distribution network and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. During 2012, the country witnessed high inflation, muted salary hikes and slowing economic growth, which affected the FMCG sector with companies posting deceleration in volume growth in their quarterly results. However, the trend seen in 2012 is likely to accelerate in 2013 as growth will come from rural dwellers that are expected to see a rise in their disposable incomes. Fast Facts: Indian FMCG Industry

The Indian FMCG industry represents nearly 2.5% of the countrys GDP. The industry has tripled in size in past 10 years and has grown at ~17%CAGR in the last 5 years driven by rising income
levels, increasing urbanisation, strong rural demand and favourable demographic trends.

The sector accounted for 1.9% of the nations total FDI inflows in April 2000- September 2012. Cumulative FDI inflows into
India from April 2000 to April 2013 in the food processing sector stood at `9,000.3 crore, accounting for 0.96% of overall FDI inflows while the soaps, cosmetics and toiletries, accounting for 0.32% of overall FDI at `3,115.5 crore.

Food products and personal care together make up two-third of the sectors revenues. Rural India accounts for more than 700 mn consumers or 70% of the Indian population and accounts for 50% of the total
FMCG market.

With changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to cross $80 bn by 2026 in
towns with population of up to 10 lakh.

India's labor cost is amongst the lowest in the world, after China & Indonesia, giving it a competitive advantage over other
countries.

Unilever Plc's $5.4 billion bid for a 23% stake in Hindustan Unilever is the largest Asia Pacific cross border inbound merger
and acquisition (M&A) deal so far in FY14 and is the fifth largest India Inbound M&A transaction on record till date.

Excise duty on cigarette has been increased in the Union Budget for 2013-14, which would hit major industrial conglomerates
like ITC, VST Industries in the short term. Opportunities in FMCG Sector: Key Concerns for the sector:

Untapped rural market India is one of the worlds Food-processing

biggest producers of a number of FMCG products but the countrys exports account for a very small proportion of the overall output. Industry: With 200 mn people expected to shift to processed and packaged food, India needs around USD 30 bn of investment in the food processing industry.

High inflation Rising cost of inputs Emergence of private labels Counterfeits and pass-offs Rupee depreciation may hit margins of companies Infrastructure bottlenecks

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