FMCG Industry Analysis - Doperz
FMCG Industry Analysis - Doperz
FMCG Industry Analysis - Doperz
FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a
lot of thought, time and financial investment to purchase. Everything from toothpaste to
processed foods and health drinks to body care products comes from FMCG or alternatively
called as consumer packed goods. Three of the largest and best known examples of Fast
Moving Consumer Goods companies are Nestle, Unilever and Procter & Gamble.
The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth
largest sector in the economy and is responsible for 5% of the total factory employment in
India and captures a market capitalization of around 60,000 crore rupees .This has been due
to liberalization, urbanization and increase in the disposable incomes and altered lifestyle of
the people. The lower-middle income group accounts for over 60% of the sector's sales and
rural markets account for 56% of the total domestic FMCG demand. FMCG sector is
expected to grow by over 60% by 2011 and by 2015, the sector is predicted to scale up to
US$33.4 billion.
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Unilever.
According to advisory firm Grant Thorton, the total value of FMCG deals rose from $47.94
million in 2009 to $947.43 million in 2010, and fell to $366.85 million in 2011. The result:
Companies cash reserves showed a marked rise. The listed FMCG companies in India were
sitting on a combined cash reserve of more than Rs 52,000 crore as of the end of 2013-14.
Companies, primarily the home-grown majors active in the deal market, are looking for
acquisition opportunities. The total reserves of Godrej Consumer Products, which has, over a
decade, acquired 13 assets, eight of those between 2010 and 2012, have seen a four-fold jump
to Rs 2,990.32 crore in 2013-14 from Rs 796.65 crore in 2009-10.
Many of these companies are debt-free. Hindustan Unilever, Emami, Gillette India, P&G
India, Colgate Palmolive and GSK reported zero debt at the end of 2013-14. Marico reduced
its net debt to Rs 273.39 crore from Rs 652.70 crore the previous year and Rs 334.42 crore in
2009-10. Daburs net debt dropped to Rs 188.76 crore in 2013-14 from Rs 770.55 crore in
2010-11. Godrej Consumers net debt declined to Rs 1,668.05 crore in 2013-14 from Rs
1,773.84 crore in 2009-10.
2. HUL- HUL is owned by Anglo Dutch Company and Unilever which has 52% control
share in HUL happens to be a mammoth player in the FMCG domain. It is an Indian
company based in Mumbai, Maharashtra. The product segments that it spans include
foods, beverages, cleaning agents, and personal care products. HUL is a house of
brands. It has marked in several countries and has been growing its presence in India
as well. HUL happens to have a huge distribution network covering over 2 million
retail outlets across India directly and its products are available in over 6.4 million
outlets in the country. The major success point for the company was the support of
Shakti Amma.
Sales- Rs.28019cr
Market capitalization-Rs.138092cr
Profit-Rs.3867cr
3. Nestle - Nestle is in the food processing sector and its products range from the most
consumed Maggi to recently in the field Ice tea. Nestle has embarked its presence
countrywide. It is the world's leading Nutrition, Health and Wellness Company. Their
mission is of "Good Food, Good Life". Some of the market innovation that they
brought in was wet and dry sampling of Maggi noodles. The company now wants to
give health and taste to its consumers. This happens to be the company mission.
Carrying forward its mission they come up with innovative strategies to launch and
establish its products.
Sales-Rs.9101cr
Market Capitalisation- Rs.47258cr
Profits-Rs.1117cr
4. Dabur- Dabur was formed in 1884. It started as a small pharmacy and it had the
objective to provide affordable health care. Dabur is known worldwide as an
ayurvedic and natural products company. Dabur had been dedicated to serve since
past 125 years and it has helped people to stay naturally healthy or Life-Fit. The
global portfolio of the company suggests 1000 products in the skin, hair, oral and
health care space spreading the expanse over 60 countries, 5 continent and million of
loyal customers. It is of indian origin however it has expanded to other parts of the
world as well. As they call themselves, the Indian FMCG company. The portfolio of
the company includes brands like Real and Vatika. Real enjoys considerable market
share.
Sales-Rs.4349cr
Market Capitalization-Rs.33561cr
Profit-Rs.590cr
Market Size
The growing purchasing power and the rising influence of the social media have helped the
Indian consumers to splurge on good things. A study done by a leading industry body and Yes
Bank has stated that the consumer spending in India is expected to quadruple to US$ 4.2
trillion by 2017.
As per GSMA's study 'Smartphone forecasts and assumptions, 2007-2020' India ranks fourth
in the top 10 global smartphones markets. The country had 111 million smartphone
connections in the April-June quarter of 2014, behind leader China, US and Brazil.
India could become the world's largest middle class consumer market with a total consumer
spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled 'India matters:
Winning in growth markets'.
On the back of better incomes and increasing affordability, the consumer durables market is
anticipated to expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$
12.5 billion in FY15 from US$ 7.3 billion in FY12.
Online retailing, both direct and through marketplaces, will grow threefold to become a Rs
50,000 crore (US$ 8.06 billion) industry by 2016, as per rating agency Crisil. Also, the
growth of internet retail is expected to boost offline retail stores.
Financial performance
Government Regulations
Political factors
network
Restriction in import policies
Help for agricultural sector
FDI issues
Economical
Social
Rural employment
Volume-driven growth in rural market
Major young population can increase revenue
The Indian culture, social and life styles are changing drastically
Increasing education standards
Technology
Environmental
Legal