Create a snapshot of the chosen industry (FMCG) in Indian context with number trends for
last three years.
The fast-moving consumer goods (FMCG) sector is India's fourth largest sector. Out of the
three main segments, household and personal care segment accounts for half of FMCG sales
in the country, while food and beverages (F&B) and healthcare account for 19% and 31%,
respectively. The primary growth factors for the sector have been increased awareness,
easier access, and changing lifestyles. The urban segment generates 55% of total revenue
generated by the FMCG sector in India and contributes the most to sector. However, in
recent years, the FMCG market in rural India has developed at a higher pace than in urban
India.
Market Sizes
Over the years, FMCG market
size has increased
significantly, from US$ 49
billion in 2016 to US$ 52
billion in 2017, US$ 68.4
billion in 2018, US$ 83.3
billion in 2019, and US$ 110
billion in 2020. Because of the
various growth factors fuelling
the industry's growth, it is
predicted to rise at a CAGR of
14.9 percent to reach US$ 220
billion by 2025, up from US$
110 billion in 2020.
Growth Drivers for Indian FMCG Industry
1. Government Initiatives:
The Indian government has permitted 100% FDI in single-brand retail and 51% FDI in
multi-brand retail.
The Union Cabinet approved the production-linked incentive (PLI) to increase India's
manufacturing capacity, exports, and promote the 'Atmanirbhar Bharat' initiative.
The government has reduced the GST rates for some oral & personal hygiene
products from 23%-24% to 18%.
The government has created a new Consumer Protection Bill, with a special
emphasis on establishing a comprehensive framework to ensure that justice is
served to consumers in a simple, quick, accessible, inexpensive, and timely manner.
2. Rural Consumption: Rural India is home to 65 percent of the population. FMCG
consumption in these places has increased over time as income levels and demand for
branded items have risen. According to estimates, rural households account for around
36-37 percent of overall FMCG sales in the country.
3. Easy Access: Even though conventional channels dominated FMCG sales, online retail of
consumer products was predicted to attain a retail market share of up to 5% by 2020.
The country's e-commerce sector is one of the world's fastest developing sector. When
India announced its first nationwide lockdown in the wake of the coronavirus outbreak
in March 2020, internet shopping became a more viable option to traditional FMCG
purchases.
Impact of Covid-19 pandemic on the industry
The Covid 19 pandemic in 2020 has wreaked havoc on the global economy.
Businesses across India ceased operations because of the countrywide shutdown
imposed to stop the virus's spread.
Despite seeing an overwhelming demand during the initial phase of lockdown,
grocery retailers, which account for 60% of total store-based retail, failed to
replenish stockpiles owing to supply chain interruptions.
During the pandemic, the industry also witnessed a paradigm change in consumer
purchasing behaviour. It resulted in an increase in demand for personal hygiene
goods such as hand sanitizers, soaps, handwash, wipes, masks, toilet cleansers, and
disinfectants. Companies selling basic staples and convenience items saw a
significant boost in sales.
According to industry executives, Rural India is expected to be the future revenue
generator, backed up by government support, reverse migration, and a low
unemployment rate.
Recent trends in the industry
1. Increased emphasis on digitization: During the COVID-19 crisis, digitization was a major
trend in the Indian FMCG business. Most FMCG firms partnered with prominent e-
commerce websites such as Flipkart, Big-basket, Groffers, and others to supply goods to
consumers while complying to safety requirements.
2. Cloud Kitchens: Most food and beverage firms are aggressively shifting to cloud kitchen
models because of the sharp decrease in consumer footfall. This strategy is primarily
supported by tie-ups, which collaborate with food aggregators to provide online simple
and speedy delivery system.
3. Health and Wellness Category: Consumers are becoming more conscious of the
importance of hygiene and well-being. Organic items, nutritious meals, and self-care
hygiene products are in high demand. Leading FMCG firms are embracing these new
trends and leveraging their efforts to develop innovative healthcare goods.
4. Increase in demand of packaged foods: Following the health and cleanliness trend of
the COVID times, there is a growth in demand for packaged food items in the food and
beverage market.
