Indian FMCG Industry

 

Introduction

The fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector accounting for 50% of FMCG sales in India.

Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector.

The urban segment is the largest contributor to the overall revenue generated by the FMCG sector in India.

However, in the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India.

Semi-urban and rural segments are growing at a rapid pace. FMCG products account for 50% of the total rural spending.

Market Size

In the year 2020 retail industry is expected to reach 1.1 trillion

Revenue of the FMCG sector reached Rs. US$ 103.7 billion in 2020.

The Indian FMCG industry grew 9.4% in the January-March quarter of 2021. Moreover supported by consumption-led growth and value expansion from higher product prices, particularly for staples.

Moreover, the rural market registered an increase of 14.6% in the same quarter. Also, the metro markets recorded positive growth after two quarters.

Investments

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

This would increase employment, supply chain, and high visibility for FMCG brands across organized retail markets. T hereby increasing consumer spending and encouraging more product launches.

The sector witnessed healthy FDI inflows of US$ 18.03 billion from April 2000 to December 2020.

Some of the recent developments in the FMCG sector are as follows:

  • In May 2021, Nepal-based company, known for its popular noodles brand Wai Wai, announced its plan to invest Rs. 200 crore  to set up two new manufacturing plants in West Bengal and Uttar Pradesh.
  • In April 2021, Rasna launched affordable immunity boosting syrup concentrates, comprising Vitamin E.
  • In March 2021, Sanjay Ghodawat Group launched RIDER, an energy drink. It is available across all modern retail formats such as supermarkets, general stores and e-commerce platforms.
  • In February 2021, Nestle India announced plans to reach 1.2 lakh villages  over the next 2-3 years.
  • In February 2021, Food and snack company, Hadrian’s partnered with Africa’s Future Life to bring its nutritional food product range to India. The two companies launched a range of four products—Smart Foods, Smart Oats and Ancient Grains, Crunchy Granola and High Protein.
  •  Tata Consumer Products announced that it is looking for ways to add more of its beverages’ portfolio onto a direct-to-consumer platform to capture the urban online market.
  • Tata Consumer Products introduced two new products, TATA Tea Tulsi Green and TATA Tea Gold Care, and reformulated its existing Tetley Green Tea, with added Vitamin C.
  • In January 2021, Del Monte launched a special 1 liter pouch pack in India, priced at Rs. 250 (US$ 3.42), thereby making olive oil affordable to consumers.

Conclusion

In the year 2025 FMCG Market in India is expected to grow 220 billion

Rural consumption has increased day by day. Consequently, there is an increased demand for branded products in rural India.

On the other hand, with the unorganized market’s share of the FMCG sector declining. Additionally, the organized sector’s growth is expected to increase with increased brand consciousness, augmented by growth in modern retail.

India has a large base of young consumers who form the majority of the workforce. Also due to time constraints, barely get time for cooking.

Additionally, Online portals are expected to play an important role for companies trying to enter the market.

Consequently, the Internet has contributed in a big way, facilitating a cheaper.

Additionally more convenient mode to increase a company’s reach.

Moreover, the number of internet users in India is likely to reach 1 billion by 2025.

By 2020, 40% of all FMCG consumption in India will become online.

The online FMCG market will grow from US$ 20 billion in 2017 to US$ 45 billion in 2020.

Additionally, introducing GST will net India $15 billion each year.

GST and demonetization will increase demand. Additionally, both in rural and urban areas. Also the long-term economic growth and improved performance of enterprises in the sector.

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