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companies in India. Our goal is to provide state of the art solutions to the corporates
and upskill aspirants as per industry standards. InSAKEsolutions expanded their
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across the Globe and students of InSAKE solutons got placed in many top MNC's
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CONTENTS
1. Introduction
2. Global FMCG Market
3. Top 10 FMCG companies in the world
4. Indian FMCG Market
5. FMCG Industry Dynamics and Pricing Policies
6. Growth Prospects of FMCG Industry
7. Government Initiatives
8. Impact of FMCG Industry and Conclusion

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 INTRODUCTION
Why FMCG is important?
FMCG stands for fast-moving consumer goods (also known as consumer packaged goods),
such products are high in demand, are sold rapidly, and are also affordable in nature. Such
products are easily available on shelves in supermarkets and are often cheap. Consumers use
such products on a regular basis. They include essential everyday items such as food and
beverages, personal care, homecare, cigarettes and alcohol and OTC or common medicines. 

What are FMCG Products?

FMCG products can be broadly categorized into three main segments:

 Food and beverages: This segment includes packaged foods, snacks, dairy

products, carbonated and non-carbonated beverages, and alcoholic drinks.
 Personal care and toiletries: This segment comprises cosmetics, soaps,
shampoos, skincare items, and oral care products.
 Household and cleaning items: This segment covers cleaning supplies, laundry
detergents, insecticides, and other essential household items.

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 Global FMCG Market
The global FMCG market size was valued at $11,490.9 billion in 2021 and is projected
to reach $18,939.4 billion by 2031, registering a CAGR of 5.1% from 2022 to 2031.
Shopping online via apps is becoming a current trend in the FMCG business as a
consequence of the massive increase in internet access across metros and non-metros.
It is expected that by 2020, that around 75-90 million customers would have purchased
FMCG goods online and that 55-60 million consumers will be digitally touched by
FMCG, with 12-20 million doing so. As per a study, the FMCG industry is well positioned
to register a growth of $310.5 billion between 2022 and 2026. The global FMCG industry
generated $11,490.9 billion in 2021 and is estimated to accrue $18,939.4 billion by2031,
witnessing a CAGR of 5.1% from 2022 to 2031. Asia Pacific to achieve a noteworthy
growth by 2031. FMCG B2B e-Commerce Market is projected to reach $1220.5 billion
by 2031.

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 Top 10 FMCG Companies in the world

  Rank 1. Johnson & Johnson

 Rank 2. Pepsi Co
 Rank 3. Procter & Gamble
 Rank 4. Nestle AG
 Rank 5. JBS
 Rank 6. Unilever
 Rank 7. AB InBev
 Rank 8. Tyson Foods
 Rank 9. Coca Cola
 Rank 10. L’Oréal S.A.

FMCG  is the only sector that has been in the green in 2023 so far in an exceptionally
volatile market environment. The Nifty FMCG index is up nearly 2 percent in 2023 year-
to-date (YTD) as against a 6.5 percent decline in benchmark Nifty. The FMCG market
is expected to grow 7-9% year-on-year in calendar year 2023. Calendar year 2022 saw
the domestic FMCG market grow at about 7-8% versus the previous year.

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 Overview of Indian FMCG Market
India's FMCG market grew at 16% in FY21, the fastest seen in the previous nine years.E-
commerce share of total FMCG sales is expected to increase by 11% by 2030.  In 2022,
urban segment contributed 65% whereas rural India contributed more than 35% to the
overall annual FMCG sales. Indian food processing market size reached US$ 307.2 trillion
in 2022 and is expected to reach US$ 547.3 trillion by 2028, exhibiting a growth rate
(CAGR) of 9.5% during 2023-2028.Indian villages, which contribute more than 35% to
overall annual FMCG sales, are crucial for overall revival of the sector. Indian e-commerce
market is anticipated to reach a value of Rs. 26,459.18 billion (US$ 319.3 trillion) by the end
of 2027, expanding at a CAGR of ~26.71% during the 2022 - 2027 period. The Indian
FMCG industry grew by 16% in CY21 a 9- year high, despite nationwide lockdowns,
supported by consumption-led growth and value expansion from higher product prices,
particularly for staples.The urban segment (accounts for a revenue share of around 55%) is
the largest contributor to the overall revenue generated by the FMCG sector in India. Fast-
moving consumer goods (FMCG) sector is India’s fourth-largest sector and has been
expanding at a healthy rate over the years as a result of rising disposable income, a rising
youth population, and rising brand awareness among consumers. With household and
personal care accounting for 50% of FMCG sales in India, the industry is an important
contributor to India’s GDP. The FMCG sector in India expanded due to consumer-driven
growth and higher product prices, especially for essential goods. FMCG sector provides
employment to around 3 million people accounting for approximately 5% of the total factory
employment in India. FMCG sales in the country was expected to grow 7-9% by revenues in
2022-23. 

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 FMCG Industry Dynamics And Pricing Policies
The year 2022 has been a bit of a mixed bag for the fast-moving consumer
goods (FMCG) sector. At the beginning of the year, even as consumer demand
recovered to some extent from the second pandemic wave, the incoming third wave did
dampen sentiments for a while, though not for long, at least in urban markets. As a
matter of fact,the urban market even saw a considerable emand surge for regular
FMCG products including the discretionary segment. In Year 2023 also there will be
overall increase in demand in FMCG products due to higher sales. So FMCG
companies will also give a more immersive shopping experience for customers during
both in-store and online shopping activities.FMCG manufacturers will maintain hygiene
and quality of products through increased adoption of environmentally-friendly
packaging, resulting in hygiene and longer shelf life of products and also minimise
carbon footprint.FMCG pricing strategy is based on “last” generation supermarketing
retailing. FMCG pricing strategy is inward-looking,very tactical and changes
rapidly. Cost-Plus pricing, Penetration Pricing, Price Skimming , Promotional Pricing,
Psychological Pricing are the pricing strategies for FMCG products. Coca-Cola also
uses promotional pricing tactics such as discounts, coupons, limited time offers to drive sales
and enhance its market share. The overall pricing strategy of Dove is based on value-based
pricing, meaning that each product is priced according to the value it provides to the
customers. Pricing Strategies for FMCG Brands in 2023 includes Pay as you go, subscription
model, penetration pricing, demand driven and dynamic pricing, hook them and hold them.

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 Growth Prospects Of FMCG Industry
The FMCG industry has seen a significant transition over the last two decades and is
now believed to be India's fourth largest sector. Here are some of the driving variables
that will play a significant influence on the sector's growth and development in FY23:

Digitalization
During many waves of the coronavirus pandemic, supply and distribution were severely
disrupted. In a country where small Kirana stores still account for 80% of sales, it is vital
to ensure that orders from such channels remain consistent. That is what digitalization
has ensured in recent years. FMCG firms are using digital capabilities to integrate
suppliers, inventory management, and distributor management into a single ecosystem.

A simple ordering app currently allows retailers to safely make contactless orders and
provides visibility into the fulfilment of those purchases—from order placement
through logistics to supplies. AI, Big Data, and Predictive Analysis are increasingly
being utilised by FMCG companies to accurately forecast customer behaviour, allowing
them to better understand what their customers are interested in. Increased internet and
smartphone penetration will make it easier for people in rural areas to shop online at
various e-commerce websites.

Direct Sale to Consumers

The profit margin associated with selling directly to consumers is gradually enticing
brands to establish stand-alone online stores and websites, as well as direct digital
sales channels on various digital marketplaces. The majority of FMCG firms have
already capitalised on the trend by delivering products to consumers' homes. In 2021,
brands with separate websites for customer sales reported an 88% increase in year-on-
year client demand. Direct-to-Consumer is becoming a favoured business strategy for
FMCG companies, and it will become more relevant in the next years.

The strong growth rate of India's FMCG industry goes beyond growth drivers like
income growth and urbanisation. The purchase habits of India's new-age consumers
have resulted in a market attitudinal shift. In 2030, India will have 370 million generation
Z consumers with different purchasing priorities.SHARP, a Foxconn-powered company,

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 has introduced a line of unique air purifiers and humidifiers aimed exclusively at the
Indian market. 

Government Initiatives
Some of the major initiatives taken by the Government to promote the FMCG sector in
India are as follows:

 In 2022, Government announced that food processing industry has invested Rs. 4,900
crore (US$ 593 million) so far under the PLI scheme which was approved in March
2021, with a budget outlay of Rs. 10,900 crore (US$ 1.3 billion), likely to increase sales
and exports of food products.

 A total of 182 applications have been approved under the PLI scheme for the food
processing industry. This includes 30 applications for millets-based products under the
PLI scheme (8 large entities and 22 SMEs)

 In 2022, a total of 112 food processing projects were completed and operationalized,
leveraging private investment of Rs. 706.04 crore (US$ 85.4 million) and generating
direct and indirect employment for 25,293 people.

 In order to boost the food processing sector, the Centre has permitted under the Income
Tax Act a deduction of 100% of profit for five years and 25% of profit in the next five
years in case of new agro processing industries set up to package and preserve fruits
and vegetables.

 Excise Duty of 16% on dairy machinery has been fully waived off and excise duty on
meat, poultry and fish products has been reduced from 16% to 8%.

 An amount of Rs. 1,000 crore (US$ 120.7 million) is being set up initially in NITI Aayog
for SETU for setting up of incubation centres and enhance skill development to facilitate
the startup ecosystem in the country while improving the ease of doing business.

 The governments’ incentives and the FDI funds have helped the FMCG sector
strengthen employment, establish a more robust supply chain, and capture high visibility
for FMCG brands across established retail markets.

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 Union Budget 2023-24 has allocated US$ 976 million for PLI schemes that aims to
reduce import costs, improve the cost competitiveness of domestically produced goods,
increase domestic capacity, and promote exports.

 As per the Union Budget 2022-23:

o Rs. 1,725 crore (US$ 222.19 million) has been allocated to the Department of
Consumer Affairs

o Rs. 215,960 crore (US$ 27.82 billion) has been allocated to the Department of Food
and Public Distribution.

o In 2021-22, the government approved Production Linked Incentive Scheme for Food
Processing Industry (PLISFPI) with an outlay of Rs. 10,900 crore (US$ 1.4 billion) to
help Indian brands of food products in the international markets.

 The government’s production-linked incentive (PLI) scheme gives companies a major

opportunity to boost exports with an outlay of US$ 1.42 billion.

 In November 2021, Flipkart signed an MoU with the Ministry of Rural Development of
the Government of India (MoRD) for their ambitious Deendayal Antyodaya Yojana –
National Rural Livelihood Mission (DAY-NRLM) programme to empower local
businesses and self-help groups (SHGs) by bringing them into the e-commerce fold.

 Companies are counting on recent budget announcements like direct transfer of 2.37
lakh crore (US$ 30.93 billion) in minimum support payment (MSP) to wheat and paddy
farmers and the integration of 150,000 post offices into the core banking system to
expand their reach in rural India.

 The Government of India has approved 100% FDI in the cash and carry segment and in
single-brand retail along with 51% FDI in multi-brand retail.

 The Government has drafted a new Consumer Protection Bill with special emphasis on
setting up an extensive mechanism to ensure simple, speedy, accessible, affordable
and timely delivery of justice to consumers.

 The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the
FMCG products such as soap, toothpaste and hair oil now come under the 18% tax
bracket against the previous rate of 23-24%. Also, GST on food products and hygiene
products has been reduced to 0-5% and 12-18% respectively.

 GST is expected to transform logistics in the FMCG sector into a modern and efficient model
as all major corporations are remodelling their operations into larger logistics and
warehousing.

 To encourage employment, supply chains, as well as consumer spending, the

Government allowed 100% Foreign Direct Investment (FDI) in food processing and
single-brand retail and 51% in multi-brand retail. The government has taken some serious

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 initiatives to facilitate further investment in the sector and open up new avenues for foreign
companies.

 The FMCG sector in India witnessed a robust foreign direct investment (FDI) inflow
of $20.11 billion from April 2000-March 2022. Furthermore, as per the Union Budget
2022-23, Rs.1,725 crore ($222.2 million) has been allocated to the Department of
Consumer Affairs, Rs. 215,960 crore ($27.8 billion) has been allocated to the Department
of Food and Public Distribution. In FY 2021-22, the government approved Production
Linked Incentive Scheme for Food Processing Industry (PLISFPI) with an outlay of Rs.
10,900 crore ($1.4 billion) to help Indian brands of food products in the international
markets.
Impact Of FMCG Industry

The fast-moving consumer goods (FMCG) sector and climate change are deeply intertwined
— the sector is a major cause of GHG emissions but is also heavily impacted by it. 26% of global
GHG emissions come from food production, with food waste and deforestation also major
contributors to GHG emissions. Reducing carbon footprint through buying local produce, Paying
close attention to the seasonal availability of food, purchasing sustainable products are also
some sustainable activities by consumers for FMCG industry. Sustainability could bring $382
billion to FMCG brands.FMCG packaging is contributing to enormous amount of plastic pollution.
Certain FMCG brands are also actively recycling non-eco-friendly material present in their supply
chains to minimise waste. Certain brands are shifting from using of plastic inner separators and
paper to sustainable options such as plant-based alternatives including specific leaves and
bamboo etc. So, FMCG companies active in the sustainability sphere by supporting
environmental causes and speaking about it on their social media platforms and in
advertisements are buying the trust of consumers as well as their mindshare. Today, it is not only
important that an FMCG company takes the environmental sustainability route in its souring,
production, distribution and sales operations and strategies but also it must be seen to be doing
so. sustainability drive must be continued and sustained in the longer run.  For FMCG
firms, direct-to-consumer is emerging as a favored business strategy that will have greater
significance in the coming years. Also employing more than 10 million people, contributing to
nearly 10% of the country's GDP, the Fast-Moving Consumer Goods (FMCG) sector in India
plays a quintessential role in the Indian economy.

Conclusion
The FMCG sector is still unorganized and has an immense amount of potential to unleash. The
changing consumption patterns and digital transformation are likely to give a boost to the overall
growth of the industry. In the future, the FMCG companies need to be resilient and agile in their
daily operations, supply-distribution, manufacturing process and other practices, to withstand the
coming hurdles and create a better value proposition for their customers.

The future looks bright for the industry as the sector is becoming more organized, with increasing
share of modern retail business (including e-commerce). Start-ups are reaching the success level
and securing a strong foothold in the growing FMCG market. In the coming times, the Indian

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FMCG sector is set to emerge as a digitally oriented industry due to the increasing use of
disruptive technologies such as mobile analytics, artificial intelligence, and cloud, making it one of
the most sought-after business markets in the world.

   

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