FMCG SECTOR

FMCG- Fast Moving Consumer Goods, is the fourth largest sector in

Indian Economy. The market size of FMCG sector is estimated to be
around $1.1 trillion, which is likely to cross $2.2 trillion by 2025.
According to Neilson, the Indian FMCG industry grew at 9.4% in
January-March quarter of 2021, supported by consumption led growth
and value expansion from higher product prices.
Recently, FMCG has
Product-wise breakup witnessed rise of Direct
to Consumers (D2C)
Household & model and India is home
Healthcare Personal care to more than 800 D2C
Food & brands looking at
Beverages

19% 31% 50% around $100 billion

opportunity by 2025.

Top players

Mkt Cap - 5.71 tn 2.5 tn 1.7 tn

ROE - 16.77 % 21.8 % 105.76 % NIFTY P/E - 45.31
P/E - 71.45 20.42 78.18

NIFTY FMCG is designed to reflect the behavior and performance of

FMCG stocks. Unilever, ITC and Nestle are the top players in Indian
FMCG market having 29%, 25% and 8% in Nifty FMCG respectively.
 PORTER's Five FORCES
Bargaining
Barriers to Power of
Entry Suppliers

Low Low
Competitive
Rivalry

High
Bargaining
Threat of
power of
Substitutes
consumers

High High

1. Barriers to entry are low in FMCG sector due to low customer

switching costs and relatively lower capital requirements.
2. Bargaining power of suppliers of raw material and intermediate
goods is low due to presence of ample number of substitute suppliers.
3. Threat of substitutes is high due to low switching costs on
consumer's side and easy availability of competitor's products.
4. Bargaining power of consumers is very high even due to the fact
that high brand loyalty discourages customers to switch but easy
availability of substitues and agressive market strategies entice them.
5. Competitive Rivalry competitive rivalry is very high due to
availability of local brands entering due to low barriers of entry.
KEY PERFORMANCE INDICATORS
1. Numeric Distribution Percentage - Indicates the percentage of
stores that sells an FMCG product in a given area.
2. Product Penetration rate - Shows the percentage of people buying
the product in a particular area.
3. Share of wallet - An Indicator that helps managers understand the
amount of business that they receive from certain customers.
4. Market Share Distribution - A contextual KPI that can be used to
gauge a product’s potential in the market.
5. Market Share to sell - It shows the company’s sales turnover with
respect to the overall turnover of the sector.

Recent Developments
The Union Government's Production-
Linked Incentive (PLI) scheme gives
companies a major opportunity to boost
exports and has expanded its purview to
food processing industry too.
GOI has approved 100% FDI in the cash and carry segment and
in single-brand retail along with 51% in multi-brand retail.
Rural consumption has increased, led by a combination of
increasing income and higher aspirations.
FMCG giants that have dominated Indian markets for years are
now facing competition from D2C focused companies like
Mamaearth, The Moms Co., Bey Bee.
Companies with dedicated websites recorded an 88% YoY rise in
consumer demand due to adoption of D2C model.