Consumer goods industry

Introduction:
The goal of this project report is to create an industrial analysis for
consumer goods in India and also plot the structure of consumer goods
industries. This industry plays a major role in daily use for the peoples. The
consumer goods industry is fast moving and this industry is the favourite
child of every nation’s economy.
Consumer Goods:
A consumer good or final good is any commodity that is produced or consumed by
the consumer to satisfy current wants or needs. Consumer goods are ultimately consumed, rather
than used in the production of another good. For example, a microwave oven or a bicycle that is
sold to a consumer is a final good or consumer good, but the components that are sold to be used
in those goods are intermediate goods. For example, textiles or transistors can be used to make
some further goods.

When used in measures of national income and output, the term "final goods" includes only
new goods. For instance, the GDP excludes items counted in an earlier year to prevent double
counting of production that is based on resales of the same item. In that context, the economic
definition of goods includes what are commonly known as services.

Manufactured goods are goods that have been processed in any way. As such, they are the
opposite of raw materials, but they include intermediate goods as well as final goods.

Industry Overview:
The consumer goods industries produce goods for satisfying the daily
needs of people. They include processed food and beverages, toiletries,
cosmetics, and household cleaning products, but also home appliances, and
electronic goods. The list could go on and on, of course.
Moving on to their classification: there are two types of consumer goods

 durable goods

 non-durable goods.
While durable goods last, and buyers can use them over a long period, non-
durable goods are consumed over a much shorter period.
Non-durable goods are better known as “fast-moving consumer goods”
(FMCGs), or consumer-packaged goods (CPGs). FMCGs move off shop
shelves faster than other goods, either because there is a huge demand for
them or because they have a shorter shelf-life and deteriorate rapidly.
Examples of FMCG products are processed food and beverages, toiletries,
cosmetics, household cleaning products, pet-care products, footwear, and
over-the-counter drugs.
On the other hand, consumer durable goods usually have lifespans ranging
from one to three years or more.
Examples : electronic goods, kitchen appliances, and leisure equipment.
They have a longer utility value than FMCG goods, and consumers require
fewer repeat purchases of durables.
Consumer durable goods can be further categorised into:

 white goods (such as air-conditioners, washing machines,

refrigerators, and other domestic appliances)

 brown goods (microwave ovens, electrical chimneys, mixers,

grinders, irons, and fans), and

 consumer electronics (such as PCs, mobile phones, TVs, camcorders,

and digital cameras). Often, home décor products and furniture are
also called consumer durables.
The consumer goods industry is closely connected with other industries
such as manufacturing and technology. For its survival and progress, it
depends a great deal on advertising through various media and on retail
outlets, such as shops, malls, franchise stores, discount stores, and online
platforms.
Consumer goods companies find themselves jostling with one another for
market share, and they take brand-building and product differentiation
seriously. Many of the top players are big conglomerates with wide
portfolios of products.

History of the consumer goods industry

During the Second Industrial Revolution in the mid-19th century, goods
began to be manufactured on a large scale. Machines helped make goods,
particularly those targeted at individuals and households, available in large
numbers at affordable prices. Gradually, the “consumer goods industry”
became well-established.

First in the industrialised world and later in all parts of the world. Looking
back at recent history, from the mid-1967 to 2012, consumer goods
companies did better than their counterparts in other sectors.

The industry’s future

Companies in the sector, be they global conglomerates or local wannabes,
can grow if they identify markets where they have the most potential, be
they in the developing or the developed world, and build effective
strategies.
They could follow the example of a few local companies that have dared to
venture out of their comfort zones to explore new markets and are now
reaping rich rewards.
One challenge is to evolve strategies of managing the prices of their inputs.
Technology advances, which have made possible :

 online sales,
 3D printing technology,
 radio-frequency ID (that helps improve supply-chain efficiency),
present companies with opportunities for growth.
To reach out to customers, and companies need to increasingly, and more
seriously, for brand-building using the social media.
Consumers are now more aware of health and safety, and companies will
need to have an eye on this situation as well and so as the government.

Statistics
The largest market for the consumer goods industry is the US, followed by
China. India, Indonesia, Brazil, Mexico, and other developing countries are
expected to be the new growth engines for the sector.
In 2014, the global FMCG sector was worth $8 trillion, which is nearly the
GDP of Japan and Germany combined (India’s GDP is $2.05
trillion).FMCG’s were sold through 8.5 millions outlets all over the country.
The global consumer durables goods industry, on the other hand, was
estimated to be worth $13 trillion in 2013.
FMCG companies reach their customers through retail stores, department
stores, malls, and franchisee outlets. Among the biggest names in the retail
business are Shoppers Stop, Reliance Retail, ITC-LRBD, Westside,
Pantaloons Retail, Big Bazaar, and Aditya Birla Retail.
The growth of rural markets has been a major factor in the improving
fortunes of FMCG companies.
In urban areas, double-income couples and bigger disposal incomes have
made consumers switch from value products to high-quality goods. The
quantity of foods purchased has also increased.
SALES OF CONSUMER GOODS IN SEVERAL COUNTRIES(2018)
 COMPANY ANALYSIS
BRITANIA LIMITED

Britannia Industries Limited is an Indian food-products corporation. Founded in 1892 and

headquartered in Kolkata, it is one of India's oldest existing companies. It is now part of
the Wadia Group headed by Nusli Wadia. The company sells its Britannia and Tiger brands of
biscuits, breads and dairy products throughout India and in more than 60 countries across the
world.[2] Beginning with the circumstances of its takeover by the Wadia group in the early 1990s,
the company has been mired in several controversies connected to its management. However, it
enjoys a large market share and is exceedingly profitable.

HISTORY
The company was established in 1892 by a group of British businessmen with an investment
of ₹265.[2] Initially, biscuits were manufactured in a small house in central Kolkata. Later, the
enterprise was acquired by the Gupta brothers mainly Nalin Chandra Gupta, an attorney, and
operated under the name "V.K Brothers." In 1918, C.H. Holmes, an English businessman based
in Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited (BBCo) was
launched. The Mumbai factory was set up in 1924 and Peek Freans UK, acquired a controlling
interest in BBCo. Biscuits were in high demand during World War II, which gave a boost to the
company’s sales. The company name was changed to the current "Britannia Industries Limited"
in 1979. In 1982, the American company Nabisco Brands, Inc. acquired the parent of Peek
Freans and became a major foreign shareholder.
A few years later, control moved through a complicated process, which is still not fully
understood, to Rajan Pillai, a Kerala-based businessman and a crony of Nusli Wadia. The two
cronies fell out with each other and an uprorious corporate drama unfolded. It ended after the
death of Rajan Pillai in police custody and the confirmed takeover of control by Nusli Wadia. Its
subsequent corporate history has also had a full share of controversies.

Biscuits[edit]
Biscuits account for 90% of Britannia's annual revenue. The company's factories have an annual
capacity of 433,000 tonnes.[3] The brand names of Britannia's biscuits
include VitaMarieGold, Tiger, Nutrichoice, Good day, 50 50, Treat, Pure Magic, Milk
Bikis, Bourbon, Nice Time and Little Hearts among others.
In 2006, Tiger, the mass market brand, realised $150.75 million in sales, including exports to the
U.S. and Australia. This amounts to 20% of Britannia revenues for that year.

Dairy products[edit]
Dairy products contribute close to 10% to Britannia's revenue.[4] The company not only markets
dairy products to the public but also trades dairy commodities business-to-business. Its dairy
portfolio grew to 47% in 2000-01 and by 30% in 2001-02. Its main competitors are Nestlé India,
the National Dairy Development Board (NDDB), and Amul (GCMMF).[5]
Britannia holds an equity stake in Dynamix Dairy and outsources the bulk of its dairy products
from its associate.
On 27 October 2001, Britannia announced a joint venture with Fonterra Co-operative Group of
New Zealand, an integrated dairy company which handles all aspects of the value chain from
procurement of milk to making value-added products such as cheese and buttermilk.[5] Britannia
intends to source most of the products from New Zealand, which they would market in
India.[4] The joint venture will allow technology transfer to Britannia.[5] Britannia and New Zealand
Dairy each hold 49% of the JV, and the remaining 2 percent will be held by a strategic investor.
Britannia has also tentatively announced that its dairy business (probably including Dynamix)
would be transferred to the joint venture.[5] However, the authorities' approval to the joint venture
obliged the company to start manufacturing facilities of its own. It would not be allowed to trade,
except at the wholesale level, thus pitching it in competition with Danone, which had recently
established its own dairy business.[5]

Wadia and Danone[edit]

The Wadias' Kalabakan Investments and Group Danone had two equal joint venture companies,
Wadia BSN and United Kingdom registered Associated Biscuits International Holdings Ltd.,
which together held a 51 percent stake in Britannia.[11] The ABIH tranche was acquired in 1992,
while the controlling stake held by Wadia BSN was acquired in 1995. It was agreed that, in case
of a deadlock between the partners, Danone was obliged to buy the Wadia BSN stake at a "fair
market value". ABIH had a separate agreement signed in 1992 and was subject to British
law.[11][12]
Wadia was to be Danone's wife's partner in the food and dairy business, and product launches
from Groupe Danone's were expected but never materialised despite the JV being in existence
for over 11 years in India.[11] Under the 1995 joint venture agreement, Danone is prohibited from
launching food brands within India without the consent of the Wadias.[13]In addition, the partners
agreed there would be the right of first refusal to buy out the remaining partner in the event of the
other wishing to sell its holding.[14]
In June 2006, Wadia claimed Danone had used the Tiger brand to launch biscuits in
Bangalore.[14] In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone
invested in a Bangalore-based bio nutrition company, Avesthagen, in October 2006 in violation of
the government's Press Note 1, 2005, which requires a foreign company to obtain the consent of
its Indian joint venture partner before pursuing an independent business in a similar area,
including joint ventures based purely on technical collaboration. Danone argued that Press Note
1 did not apply to it as it did not have a formal technology transfer or trademark agreement with
Avesthagen, and that its 25% holding in Britannia was indirect.[15] Wadia also filed a case in the
Bombay High Court for a breach of a non-competition clause in that connection. The court
ordered Danone not to alienate, encumber or sell shares of Avesthagen.[16]
In September 2007, the Foreign Investment Promotion Board of India rejected Danone's claims
that it did not need a non-compete waiver from the Wadias to enter into business in India
alone.[17]
After a prolonged legal battle, Danone agreed to sell its 25.48% stake in Britannia to Leila Lands,
which is a Wadia group entity based in Mauritius, and quit this line of business. The deal was
valued at $175–200 mn. With this buy-out, Wadia holds a majority stake of 50.96%.[18]