INTRODUCTION……

What is FMCG?

FMCG is acronym for a 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. Products which have a quick turn over, and
relatively low cost are known as Fast Moving Consumer
Goods (FMCG).FMCG products are those that get replaced
within a year. Examples of FMCG generally include a wide
range of frequently purchased consumer products such as
toiletries, soap, cosmetics, tooth cleaning products, shaving
products and detergents, as well as other non-durables such
as glassware, bulbs, batteries, paper products, and plastic
goods. FMCG may also include pharmaceuticals, consumer
electronics, packaged food products, soft drinks, tissue
paper, and chocolate bars. A subset of FMCGs is Fast Moving
Consumer Electronics which include innovative electronic
products such as mobile phones, MP3 players, digital
cameras, GPS Systems and Laptops. These are replaced more
frequently than other electronic products. White goods in
FMCG refer to household electronic items such as
Refrigerators, T.Vs, Music Systems, etc. These types of goods
are required frequently by consumers and so a large part of
the monthly salary or income will be spent on buying all the
goods listed on the consumer's shopping list. New players
keep joining the FMCG circles but find the going tough unless
they have a well planned strategy along with large cash
reserves for their product promotion. A particular FMCG
company might be a strong urban market leader, but will
still find it tough to enter the rural markets or a new Indian
state or area. Although FMCG companies generate a large
volume of sales and money, they are always under pressure
as they keep facing a lot of competition from their fellow
competitors. Due to this, the FMCG companies try to do their
level best in maintaining a fine balance in their profits and
the product price. Thus they keep facing new challenges on
their margins month after month. One of the key factors for
an FMCG company to do well is a proper distribution
network. If a distribution network of a particular FMCG
company is well oiled, then that particular FMCG Company
will definitely find the going much easier in the market. But
companies have to allot a large chunk of their finances in
developing and fine tuning their distribution networks.
The promotion of a product of an FMCG company too is
considered very crucial for its success. The market has many
players. Every FMCG company has to fight for its space and
audience in the Indian market. Thus, when a multinational
company enters the Indian market, it creates an even bigger
challenge to the existing players on the FMCG scene. If the
promotion is done well, then the manufacturing of the
product can even be outsourced. This can save valuable
finance for a company. This in turn will help the company to
utilize their energies on other aspects of their product. Some
of the top players on the FMCG scene in India are Hindustan
Unilever Ltd., ITC (Indian Tobacco Company), Nestle India
and Dabur India. So, we can say that FMCG are the products
which are:

 Sold quickly at relatively low cost

 Sold in large quantities
 Have low absolute profit but high cumulative profit
FMCG industry provides a wide range of consumables
and accordingly the amount of money circulated against
FMCG products is also very high. The competition
among FMCG manufacturers is also growing and as a
result of this, investment in FMCG industry is also
increasing, specifically in India, where FMCG industry is
regarded as the fourth largest sector with total market
size of US$13.1 billion. FMCG industry is regarded as the
largest sector in New Zealand which accounts for 5% of
Gross Domestic Product (GDP).Some of the merits of
FMCG industry, which made this industry as a potential
one are low operational cost, strong distribution
 networks, presence of renowned FMCG companies.
Population growth is another factor which is
responsible behind the success of this industry.

Some of the well known FMCG companies are:

 Nestlé
 Reckitt Benckiser
 Unilever
 Procter & Gamble
 Coca-cola
 Carlsberg
 Pepsi
 Mars
FMCG industry creates a wide range of job opportunities.
This industry is a stable, diverse, challenging and high profile
industry providing a wide range of job categories like sales,
supply chain, finance, marketing, operations, purchasing,
human resources, product development, and general
management.
Fast Moving Consumer Goods popularly known FMCG is as
the name suggests is the most demanded products in the
market. It includes everything from food items like flour,
biscuits, ice creams, etc to body products soaps, face creams
to cigarettes to beverages, etc. consumers need these things
in their everyday life so they invests a good portion of their
income in these things. There are so many companies which
are dealing in FMCG products like HUL, Dabur , Cavinkare,
AMUL dealing in dairy products, etc. By the very nature of
the product the companies are seeing this as a great source
of income. As large number of companies is looking this
sector as a profitable venture, so for sustaining their position
and gain new market they have to bring something unique in
their products or services to gain position in the market or
to sustain there. In modern business distribution network
has a great impact on the success of any business. In the
FMCG segment the role of an excellent distribution channel
becomes even more crucial because the delivery of FMCG
Product is confined to day to day basic. Hence in order to
survive and thrive in a highly competitive market you have
to have a distribution channel which has no problem at any
point of the distribution channel. The factor which is of
crucial importance to survive in any business is the
understanding of the mind of the individual consumers.
What are main characteristics which consumer consider
while making a purchasing decision regarding FMCG
Product. In order to make right decision regarding all these
aspects the company requires a complete knowledge of the
problems faced in distribution channel and what should be
done in order to overcome all these problems. Better
infrastructure facilities will improve their supply chain.
FMCG sector is also likely to benefit from growing demand in
the market. Because of the low per capita consumption for
almost all the products in the country, FMCG companies
have immense possibilities for growth. And if the companies
are able to change the mindset of the consumers, i.e. if they
are able to take the consumers to branded products and
offer new generation products, they would be able to
generate higher growth in the near future.
 Some of Fast Moving Consumer Goods companies
operating in India:-

 Procter & Gamble

 Nestle
 Unilever
 Tata Tea
 Amul
 Dabur
 Kissan
 Parle
 Marico
 Britannia
 Coca-Cola
 Reckitt Benckiser
 PepsiCo
 Wilkinson
 Lakme
 L’Oreal
 GlaxoSmithKline
 Cadbury
 Everest
 ITC
How FMCG is important for consumers and market:-
Consumers play a crucial role in the Indian FMCG sector as the price
band of each FMCG product is fixed depending largely on the
consumer class which the particular company is targeting. A number
of variants are offered by each brand in the FMCG sector. For
example, the personal care, home care, bakery products, dairy
products, processed foods are more consumed by the urban classes
whereas the personal care items and fabric care are consumed more
by the rural population. Some of the FMCG companies like Nestle
India, Cadbury, Procter & Gamble (P&G) and SmithKline Beecham
offer high-priced branded products as these companies target the
elite and upper middle class consumers. These high-priced branded
products do not have high sales in the rural regions as much as it
does in the urban section of India. Processed food manufacturers
gain more profit in the urban areas as the urban population has a
higher preference for ready-to-eat meals. The consumption of
personal care items is high in the rural regions. High literacy rates
and an increase in the per capita income of the inhabitants led to a
rise in the consumption of the FMCG products in the country.
The FMCG sector has attracted a large number of consumers in both
the urban and rural sectors in India the past few decades through
better penetration and low-priced products. Various manufacturers
of FMCG products are concentrating on increasing the sales volume
due to the rising demand of the consumers. Creativity and
innovation are the major attributes required for success in the
sector. Large-scale FMCG companies have won the hearts of
consumers by delivering high-end and innovative products at
affordable range.
RATIONALE FOR CHOOSING THE PROJECT:-
In the current business environment, which appears to be difficult
and unpredictable, Indian industry has found a new avenue to pin
its hopes on. Supply chain and logistics management are suddenly
under close scrutiny. Between them, they offer companies the best
way to sustain their business in rough times. Thus studying and
evaluating one of the aspect of supply chain management i.e.
Distribution and that two of the industry, which is a key component
of India’s GDP and is a significant direct and indirect employer, is
worthwhile. Having an excellent distribution network is one of the
strengths of this FMCG sector, so we tried to carry out an in-depth
study in dynamics of distribution in FMCG industry with its
relevance in the new millennium.

OBJECTIVES:-
The objectives of the study can be divided into:-
1. To analyze the present scenario of FMCG industry in terms of
emerging opportunities and challenges.
2. To measure the status of distribution in overall marketing mix
of FMCG industry.
3. To identify the emerging paradigm of distribution in the era of
globalization and IT.
ITC:-
History and Evolution Of ITC:-

Established in 1910, ITC Limited is a diversified

conglomerate with businesses spanning Fast Moving
Consumer Goods comprising Foods, Personal Care,
Cigarettes and Cigars, Branded Apparel, Education &
Stationery Products, Incense Sticks and Safety Matches;
Hotels, Paperboards and Packaging, Agriculture
Business and Information Technology. The Company
was incorporated on August 24, 1910 under the name
Imperial Tobacco Company of India Limited. As the
Company's ownership progressively Indianised, the
name of the Company was changed to India Tobacco
Company Limited in 1970 and then to I.T.C. Limited in
1974. In recognition of the ITC's multi-business
portfolio encompassing a wide range of businesses, the
full stops in the Company's name were removed
effective September 18, 2001. The Company now stands
rechristened 'ITC Limited,' where 'ITC' is today no
longer an acronym or an initialized form.

A Modest Beginning:-
The Company's beginnings were humble. A leased office
on Radha Bazaar Lane, Kolkata, was the centre of the
Company's existence. The Company celebrated its 16th
birthday on August 24, 1926, by purchasing the plot of
land situated at 37, Chowringhee, (now renamed J.L.
Nehru Road) Kolkata, for the sum of Rs 310,000. This
decision of the Company was historic in more ways than
one. It was to mark the beginning of a long and eventful
journey into India's future. The Company's headquarter
building, 'Virginia House', which came up on that plot of
land two years later, would go on to become one of
Kolkata's most venerated landmarks.

Products and Brands:-

Cigarettes
ITC Ltd sells 81% of the Cigarettes, Bidis in India, where
275 million people use tobacco products and the total
cigarette market is worth close to $11 billion (around
Rs. 757399.4million).

ITC's major cigarette brands include Wills Navy Cut,

Gold Flake Kings, Gold Flake Premium lights, Gold Flake
Super Star, Insignia, India Kings, Classic (Verve,
Menthol, Menthol Rush, Regular, Citric Twist, Ice Burst,
Mild & Ultra Mild), 555, Silk Cut, Scissors, Capstan,
Berkeley, Bristol, Lucky Strike, Players, Flake and Duke
& Royal, wave.

Foods
ITC's major food brands include Aashirvaad, Sunrise
Foods, Sunfeast, Bingo!, Kitchens of India, Sunfeast
YiPPee!, B Natural, mint-o, Candyman, GumOn, Fabelle,
Sunbean, Sunfeast Wonderz Milk, ITC Master Chef,
Farmland. ITC is India's largest seller of branded foods
with of over Rs. 4,600 crore in 2012–13. It is present
across 6 categories in the food business including snack
foods, ready-to-eat meals, fruit juices, dairy products
and confectionery.

Personal care products

ITC's personal care products line includes perfumes,
hair care and skincare categories. Major brands are
Fiama Di Wills, Vivel, Savlon Soap & Handwash, Essenza
Di Wills, Superia and Engage.

Stationery
Brands include Classmate, PaperKraft and Colour Crew.
Launched in 2003, Classmate went on to become India's
largest notebook brand in 2007.

Safety Matches and Agarbattis

Ship, i Kno and Aim brands of safety matches and the
Mangaldeep brand of agarbattis (Incense Sticks).

Hotels
ITC's Hotels division (under brands including Welcome
Hotel) is India's second-largest hotel chain with over 90
hotels throughout India. ITC is also the exclusive
franchise in India of two brands owned by Sheraton
International Inc. Brands in the hospitality sector
owned and operated by its subsidiaries include Fortune
Park Hotels and Welcome Heritage Hotels.

Paperboard
Products such as specialty paper, graphic and other
paper are sold under the ITC brand by the ITC
Paperboards and Specialty Papers Division like
Classmate product of ITC, well known for their quality.

Packaging and Printing

ITC's Packaging and Printing division operates
manufacturing facilities at Haridwar and Chennai and
services domestic and export markets.

Information Technology
ITC operates through its fully owned subsidiary ITC
InfoTech India Limited.
Dairy Products
ITC also has started Dairy Products. Currently, Dairy
products are marketed under Brand name Sunfeast
Wonderz Milk which is flavored milk. However, they are
not yet in the regular daily usage milk business.

Shareholding and listings

ITC's equity shares are listed on Bombay Stock
Exchange (BSE), National Stock Exchange of India (NSE)
and Calcutta Stock Exchange (CSE). The company's
Global Depository Receipts (GDRs) are listed on the
Luxembourg Stock Exchange. ITC is part of 2 major
Stock Market Indices of India which are NIFTY of
National Stock Exchange (NSE) & Sensex of Bombay
Stock Exchange (BSE).[

ITC launches "Sunfeast'' range of biscuits:-

"Sunfeast" - the umbrella brand name introduced in the
Glucose, Marie and Cream segments

"Sun" mascot - the brand ambassador reinforcing the

positioning of the brand "Spread the Smile"
Product Innovation - two unique and new flavors - for
the first time in the India market- Orange Marie and
Butterscotch Cream biscuit

"Sunfeast" - to be launched nationally in phases in over

One million retail outlets across the country.

Kolkata - July 30, 2003: ITC's Foods business today

announced the launch of the "Sunfeast" range of high
quality and great tasting biscuits with offerings in
Glucose, Marie and Cream segments. Speaking on the
occasion, Mr. Ravi Naware, Divisional Chief Executive,
ITC Limited - Foods Division said, "the launch of
"Sunfeast", marks ITC Foods entry into the branded
biscuit market with a range of offerings in both basic
and value added segments."

"Sunfeast", with the Brand Essence "Spread the Smile"

connotes happiness, contentment, satisfaction and
pleasure one would derive from great tasting and high
quality biscuits. The brand positioning and imagery is
reinforced by the Sun mascot conveying the emotional
and gratifying aspects of the product.

"The latest offering from ITC Foods is in tune with the

company's strategic direction to develop new product
lines by synergizing its proven competencies. We
believe that our understanding of the Indian consumer
is reflected in the increasing confidence in the "ITC"
brand and more importantly the trust that Indian
consumers are reposing in all our products" added Mr.
Naware.

"Sunfeast" range of biscuits is competitively priced and

would include two new product innovations - Orange
flavoured Marie and Butterscotch flavoured Cream
biscuits launched for the first time in the Indian market.

"Sunfeast Biscuits" - Initial Offerings

Sunfeast Glucose Biscuits deliver the Natural Goodness

of Wheat and is available in 100 gms, 75 gms and 19
gms priced at Rs 4/-, Rs 3/- and Re 1/- respectively
targeting children between the age group 4-14 years
and their mother.

Aashirvaad Atta:-

ITC launched Aashirvaad Atta in Jaipur and Chandigarh

on 27th May 2002. Today, it is available all across India
and is the number one branded packaged wheat flour
across the country. The aim is to keep on providing the
best quality atta using the most traditional methods.
The motto ‘Khushiyaan Chun Chun ke’ (Happiness
handpicked) is achievied successfully by this initiative.
AASHIRVAAD whole wheat Atta was the first product
launched on 27th may 2002.