An Industrial Immersion Project on

“THE STUDY OF FMCG SECTOR IN INDIA”

Submitted By:

“SHWETA SINGH”

PGDM 2017-19

In partial fulfillment of the requirements for

POST GRADUATE DIPLOMA IN MANAGEMENT

Kohinoor Business School, Kohinoor City Road,  Kurla West, Mumbai.

Academic Year

“2017-2019”

Project Co-Ordinator

Prof. Sandeep Sawant

 DECLARATION:-

I, Ms. Shweta Vinod Singh Of Kohinoor BUSINESS SCHOOL, KOHINOOR CITY

ROAD, KURLA WEST, MUMBAI Of P.G.D.M. (2017-2018), Here By Declare That, I
Have Completed My Project, Titled “THE STUDY OF FMCG SECTOR IN INDIA ” In The
Academic Year 2017-2019.

I hereby declare that the Industrial Immersion project report entitled “The Study Of FMCG
SECTOR IN INDIA’’ carried out at during September 2017 – August 2018 & submitted in
partial fulfillment of the requirement for the Post Graduate Diploma In Management from
KOHINOOR BUSINESS SCHOOL, KURLA, MUMBAI and not submitted for the award of
any degree, diploma, fellowship or any similar titles or prizes.
Wherever The Above Data/Information Have Been Taken From Any Book Or Other Sources
The Same Have Been Mentioned In Reference.

The Information Submitted Here In Is True And Original In Best Of My Knowledge

Date: 10/08/2018
Place: Mumbai Student Name: SHWETA SINGH

2
 CERTIFICATE:-

This Is To Certify That Ms.Shweta Vinod Singh Of P.G.D.M. (2017-2019),

has Successfully Completed by me in partial fulfillment of the Post Graduate Diploma
In Management, AICTE Approved , through KOHINOOR BUSINESS
SCHOOL, Kurla,
Project On “THE STUDY OF FMCG SECTOR IN INDIA”

Under The Guidance Of PROF. SANDEEP SAWANT.

Date: 10/08/2018

Place: Mumbai
Signature of Course Co-Ordinator

[Prof.Sandeep Sawant]

3
 ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere gratitude to those who
encouraged me to complete this project successfully. First and foremost, I would
like to express my sincere thanks to Prof. Sandeep Sawant, PGDM head of
Kohinoor Business School, Kurla for giving me this opportunity.

I am especially indebted to my college faculty guide Prof. Sandeep Sawant for

providing me continuous support and help in my Endeavour. I would also be
thankful to all the faculty members who imparted their knowledgeable insights in
the class which served to make my basics strong with clear conceptual knowledge
Last but not the least I would like to thank each and every one who helped me to
compile my project during the entire period.

I am especially indebted to my college faculty guide Prof. Sandeep Sawant for

providing me continuous support and help in my Endeavour.

Place: Mumbai
Signature of Course Co-Ordinator

[Prof.Sandeep Sawant]

4
 INDEX

Sr No. Title Page No.

1 Introduction 1
2 Executive Summary 7
3 Indian Fmcg market Vs Global Fmcg market 10
4 Food and Beverages 11
5 Personal Care 13
6 Household 15
7 Online vs Offline 17
8 Indian Logistic Sector 22
9 FDI In Organized Retail 23
10 Key M&A Deals 24
11 Recommendation 30
12 Bibliography 32

5
6
EXECUTIVE SUMMARY:

 With a population of over one billion, India is one of the largest economies in the world in terms of
purchasing power and consumer spending.
 The International Monetary Fund has projected that India’s GDP will grow by 7.4% during 2016–17,
making it the world’s fastest growing large economy.
 The fast-moving consumer goods (FMCG) sector is an important contributor to India’s GDP growth.
The sector includes food & dairy products, packaged food products, household products, drinks and
others.
 FMCG is the fourth largest sector in Indian economy and provides employment to around 3 million
people accounting for approximately 5% of the total factory employment in India.
 The sector is characterized by strong presence of leading multinational companies, competition between
organized and unorganized players, well established distribution network, and low operational cost.
 Growth in the country’s FMCG sector is being fuelled by improving scenario in both demand as well as
supply side. Major demand side drivers include growing affluence and appetite for consumption of the
Indian consumer, growing youth population, rise in per capita expenditure, and increasing brand
consciousness.
 On the other hand, easier import of materials and technology, reduced barriers to entry of foreign
players, and new product development, rapid real estate infrastructure development and improvement in
supply chain efficiency are the major supply side drivers for the sector. The growth of the FMCG sector,
which primarily includes Food & beverages, personal care and household care has been driven in both
the rural and urban segments. Rural consumption growth has outpaced urban consumption with the
increase in percentage in monthly per capita expenditure in rural markets surpassing its urban
counterparts over the past five years.
 Several government measures such as GST Bill, Food Security Bill and FDI in retail sector are expected
to have a significant positive impact on the country’s FMCG sector in the coming years.
 Favourable demographics and rise in income level to boost FMCG market
 FMCG market in India is expected to grow at a CAGR of 27.86 per cent and is expected to reach
US$ 103.70 billion by 2020 from US$ 52.75 billion in 2017-18.
 Final consumption expenditure is set to increase at a CAGR of 25.44 per cent from 2017-2021.
 Total consumption expenditure is expected to reach nearly US$ 3600 billion by 2020 from US$
1,824 billion in 2017
 Rise in rural consumption to drive the FMCG market

7
  In FY18, Rural consumption rose by 9.7 per cent ^
 The rural FMCG market in India is expected to grow to US$ 220 billion by 2025 from US$ 29.4
billion in 2016

OUTLOOK

 Fast-moving consumer goods (FMCG) can be defined as packaged goods that are consumed or sold at
regular and small intervals.
 The prices of the FMCG are low and profits earned are more dependent upon the volume sales of the
products.
 The FMCG market can be broadly categorised as Personal Care, Household care, Food & Beverages and
Others.
 The Indian FMCG sector is the fourth largest sector in the economy with a total market size of USD49
billion in 2016. The sector is projected to grow at a CAGR of 20.6% to reach USD 103 billion
8
  The FMCG industry in India, has grown rapidly over the last decade, predominantly on account of
increasing income levels and changing lifestyle of Indian consumers.

Indian FMCG Market in Comparison with Global FMCG Market:

Currently India accounts for a share of just 0.68% of the Global FMCG market, this share is expected to
increase significantly over the next 5 years mainly due to the macro-economic factors such as improving
demographics, rising disposable income, expansion of organised retail in tier II & III cities in India, changing
consumer preferences etc.

Major FMCG markets include USA, China, European Union, Japan etc. Globally, the FMCG sector is expected
to grow at a CAGR of 4.4%, which when compared to India is a lot slower.

Many foreign FMCG multinationals have established themselves in India. Globally, the FMCG companies have
now shifted their focus on E-commerce due to the increasing mobile internet penetration.

Globally, the share of online sales of FMCG products accounted for around 5% in 2015, which is relatively
higher than India where online FMCG sales accounted for a share of just 1-2% of the overall FMCG market in
2015.

The global economic growth has been decelerating as several large economies face decreasing economic
growth, primarily China and the Eurozone, as well as a few key emerging markets like Brazil and Russia.

This offers an advantage to India which has a significantly better economic condition. According to The World
Bank, India’s per capita income is expected to cross INR100,000 (USD 1,505.4) in FY 2017 from INR93,231
(USD 1,403.5) in FY 2016. Technology adoption, urbanisation and other structural reforms are the other major
drivers resulting in better market potential compared to other markets.

Market Size & Forecast:

Indian FMCG sector had a market size of USD43.08 billion in 2015. Well-established distribution networks, as
well as intense competition between the organised and unorganised segments are the characteristics of this
sector.

The FMCG market in India is anticipated to grow at a significantly high CAGR during the forecast period and
is expected to cross USD100 billion mark by 2020. FMCG in India has a strong distribution presence across the
entire value chain.

9
STRONG GROWTH IN INDIAN FMCG SECTOR

 Revenues of FMCG sector are estimated to grow from US$ 49 billion in 2016 to US$ 103.7 billion in 2020F.

 The sector is estimated to have witnessed revenue growth of 14.8 per cent in October-December 2017,
supported by improvement in consumer sentiment and rise in rural demand.

 The Union Budget 2018-19 initiatives are expected to increase the disposable income in the hands of the
common people, especially in the rural area, which will be beneficial for the sector.

 FMCG sector to gain support for growth from Inland Waterways Authority of India (IWAI) multi-modal
transportation project of freight village at Varanasi which will bring together retailers, warehouse operators and
logistics service providers, investment worth Rs 1.7 billion (US$ 25.35 million).

 The FMCG sector is expected to register net revenue growth of 11.8 per cent in Q4 March 2018 due to
accelerated volume growth, GST led savings and higher leverage benefits.

 Indian FMCG sector is forecasted to report revenue growth of around 11-12 per cent in FY19 from 8 per
cent in FY18.

10
1.FOOD AND BEVERAGES.

Food & beverages sector accounted for the largest share in India’s FMCG market. The changing preferences of
the upward middle class families from the urban areas gave importance to food & beverages sector and thus,
fuelled the growth in the last few years. India is the world’s second largest producer of food, next only to China,
and has the potential of being the largest player in food and agricultural sector. The food processing industry is
one of the largest industries in India and is ranked fifth in terms of production, consumption, export, and
expected growth.

Growing food services sector that includes both Indian and foreign food services restaurants boosted growth of
organised food services sector in India.

Furthermore, various policies undertaken by the government such as allowing 100% FDI in food services sector
in 2012 catalysed growth in Indian food services market.

11
In the food and beverages industry, emerging presence of private labelling has altered the buying habits of
consumers. Many companies in food and beverages segment are now focusing on innovation to offer various
categories across various price points in order to penetrate majority of buyers across each income group.

Some common trends which are being witnessed in this segment are growing affordability among increasing
income groups in urban India, greater consumer acceptability of newer products due to the factors such as
younger population, faster urbanization, more working women and smaller families, easier availability due to
better distribution Number of Food Services Outlets in India, By Type, 2014 Type Geographical Presence QSRs
61,470 Others 1,729,530 Total Standalone 1,791,000 Total Café Outlets 21,889 Total Retail Outlets 136,100
Total Lodging Facilities 68,800 Total Food Services Outlets 2,017,789 Source: TechSci Research

Indian FMCG Market 2020 9 Indian FMCG Market 2020 by FMCG players coupled with growth in organized
retail and creating product understanding amongst consumers. Food & beverages segment has one of the
smallest share in Indian E-commerce market; however, due to change in consumer shopping habits, significant
growth has been witnessed in purchase of food and beverages through online channels.

Personal Care:
12
Personal care products (PCP) market in India is estimated to be worth USD9.91 billion in 2015.

Personal hygiene products such as bath and shower products, deodorants, etc., hair care, skin care, colour
cosmetics and fragrances are the key segments of the personal care market.

Each of these segments exhibit their unique trends and growth patterns.

Favorable demographic factors and increasing consciousness among the population indicates high future
demand for personal care products and specifically for active ingredients.

Globally, the personal care market stood at USD700 billion in 2015, of which India’s share stood at around
1.4%.

13
Bath and shower products, which includes bar soap, body wash, shower gel, etc. occupied the maximum share
in the market followed by hair care products.

Lower priced small quantity products offered by the companies have improved the pace of penetration of
FMCG personal care products market.

Growing literacy levels, higher government spending on welfare programs, increasing support to agricultural
sector, and rising DTH and mobile connections have also acted as a catalyst in bolstering rural demand for
FMCG personal care products in rural areas.

Household Care

14
The household care segment mostly includes fabric wash and household cleaners. This segment is a volume
driven market with low margins and is marked with stiff competition.

This segment occupied a share of 11% in Indian FMCG market and recorded robust growth in the past five
years due to focused innovation in the product portfolio to provide greater consumer value.

The increasing household budgets have allowed for new categories of household care products to enter the
Indian market.

Leading brands in household care categories such as laundry care, air care and toilet care have launched variants
of their regular products with additional benefits such as fragrance, germ-fighting capabilities, bettercleaning
and packaging in order to increase their sales value.

Although, majority of household care products sales are generated through local independent small grocers,
modern grocery retailers. Internet retailing has emerged as a potential channel for the growth of household care
segment in cities.

15
Other FMCG Products:

Other FMCG products include OTC drugs and tobacco products, which had a combined market share of 20% in
2015. Rising awareness about preventive care is driving the growth of various categories like nutraceuticals,
vitamins, and dietary supplements.

However, declining market of chewing tobacco products has affected the overall tobacco market of India.

Stringent anti-tobacco measures taken by the government such as a ban on the sales of loose cigarettes and
consecutive hikes in excise duty on cigarettes is expected to decrease the segment’s share to 17% by 2020.

16
Online Vs Offline:

FMCG sales through E-commerce channels have been increasing on account of mounting smartphone sales
leading to rise in the number of mobile internet users, internet penetration rate in the country grew from 19% in
2014 to around 25% in 2015.

Online shopping has emerged very fast in recent years.

17
Indian Vs Multinational Companies:

Indian companies such as ITC, Patanjali, Amul, Godrej, etc. have witnessed a higher revenue growth compared
to foreign brands namely HUL, GSK, Nestle, etc. Indian companies have increased their product portfolios,
improved their supply chain, and increased their market share through inorganic growth.

Indian companies have focussed on increasing their presence in unexploited markets such as Ayurvedic
products.

Other factors such as increasing product innovations, proper product pricing, growing international business
have also helped these companies improve their presence compared to the multinational firms.

Performance of Indian FMCG Companies

Performance of International Companies :

18
STRATERGIES ADOPTED BY INDIAN FMCG COMPANIES:

19
GROWTH DRIVERS FOR INDIA’S FMCG SECTOR

20
SUPPLY CHAIN ANALYSIS:

The FMCG industry is characterised by complex distribution network and intense competition, forcing firms to
constantly work on supply chain innovation.

Although, the basic structure of supply chain in the Indian FMCG sector has not changed over the years. Micro-
economics play an important role in the supply chain structure of India.

The Indian FMCG sector is a low margin business, where success mostly depends on the volume of products
sold.

In order to develop and maintain an efficient supply chain, the companies focus on availability of products in
the complex distribution network.

21
Presence of multiple layers between company and end customer results in increase in the number of Stock
Keeping Units (SKUs), to ensure availability at the last stage of distribution.

In order to increase market penetration, a growing number of companies are focusing on launching smaller
packaged size products to address needs of consumers present at the lower end of the economic scale.

The entry of large third party logistics (3PL) carriers and the expansion of domestic networks of Indian firms
like Gati and Shreyas Shipping is transforming the nature of services and the business practices across the
sector

Emergence of modern retail formats have an advantage over small stores as they are able to demand huge
discounts from FMCG companies. Moreover, a huge emphasis is laid by modern retailers on ensuring
permanent on-shelf product availability during peak periods; cost optimization and R&D.

INDIAN LOGISTICS SECTOR FACT:

Government Policies:

Goods and Service Tax (GST):

GST, upon being implemented shall replace the multiple indirect taxes levied on FMCG sector with a uniform,
simplified and single-point taxation system.

A swift move to the proposed GST may reduce prices, bolstering consumption of FMCG products. Food
Security Bill The Food Security Bill has been passed recently by the Union Cabinet.

22
As per the bill, 5Kg of food grains per person per month will be provided at subsidized prices by the State
Governments under the targeted public distribution system.

This is expected to result in higher inflow of investments into the agriculture sector in the coming years.

Excise Duty:

Excise duty on other beverages and lemonade would be decreased to reduce retail sale price by 35%.

Excise duty on various tobacco products other than beedi would be increased, resulting in retail price of
tobacco products going up by 10-15%.

Relaxation of License Rules

Industrial license is not required for almost all food and agro-processing industries, barring certain items such
as alcoholic beverages, cane sugar, and hydrogenated & animal fats as well as items reserved for exclusive
manufacture in the small-scale sector.

Cumulative FDI inflows in India from April 2000 to March 2016 (USD Million)

FDI in Organised Retail:

The government approved 100% FDI in selling of food products through E-commerce in 2016.

This is expected to boost the online food market in the country in the coming years. It also allowed 100% FDI
in the cash and carry segment and in singlebrand retail.

Other government initiatives such as Pradhan Mantri Jan Dhan Yojana through which wage seekers are
encouraged to open up bank accounts under Mahatma Gandhi National Rural Employee Guarantee Act.

23
KEY M&A DEALS IN THE INDUSTRY:

Note: * - According to Department of Industrial Policy and Promotion - DIPP statistics

DIPP, Media articles
Target name (segment) Acquirer name (segment) Merger/ Acquisition Year
Acquisition (26%
Brillare Science Emami 2018
stake)
Future Capital Investment
Future Consumer Limited Acquisition 2017
Private Limited
D&A Cosmetics Proprietary Ltd and Atlanta
Dabur India Acqusition 2017
Body & Health Products Proprietary Ltd
Acquisition (30%
Helios Lifestyle Pvt Ltd Emami Ltd 2017
stake)
Godfrey Phillips India (GPI) (packed tea
Goodricke Group Ltd Acquisition 2017
brands)
HyperCity Future Retail (Future Group) Acquisition 2017
Godrej Industries Godrej Agrovet Ltd. Increase in stake 2017
Godrej Consumer Products
Argencos, Argentina (Hair care products) Acquisition 2016
Ltd (Home and personal care)
Issue Group, Argentina (Hair products) GCPL (Home and personal Acquisition 2016
care)
GCPL (Home and personal
Tura, Nigeria (Soap and cleaning products ) Acquisition 2015
care)
Godrej Consumer Products
Frika Hair (Pty) Ltd, Africa Acquisition 2015
Ltd (Home and personal care)
Megasari, Indonesia (Soap and cleaning GCPL (Home and personal
Acquisition 2014
products ) care)

24
MARKET CHALLENGES:

Counterfeiting: In 2015, sales of counterfeit products stood at more than USD1 billion. Counterfeit products
have an economy-wide effect on trade, investment, employment, innovation, environment, and most
importantly on the health and safety of consumers. Indian retail sector is heavily dependent upon the
unorganised sector.

While the growing retail landscape provides great shopping choices and experiences to Indian shoppers today,
there has also been a growth in the availability of counterfeit goods in the marketplace as well.

The counterfeiting issue certainly encompasses many facets of the economy, including intellectual property
rights (IPR), security concerns, and global trade.

Distribution centres, retail outlets, and third party logistics providers are the most vulnerable to infiltration of
counterfeit products. Indian supply chains are not equipped in terms of their ability to protect and detect the
penetration of counterfeit goods into legitimate and secured supply chains.

Several leading online marketplaces were accused by many consumer brands and channel partners for
undercutting prices and encouraging the sales of counterfeit goods by sellers of dubious origins on their sites.

There has been an increase in the number of cases about the quality of products sold. Some of the technologies
used by FMCG players to tackle counterfeiting include usage of tamper evident packaging, barcodes with
proper standards, barcodes & RFID, laser coding, and optically variable features.

Companies should focus on utilizing universally accepted global standards, and organizations should implement
a comprehensive track and trace system.

Poor Supply Chain Infrastructure:

Lack of storage and transport facilities coupled with rising costs of raw materials and energy has been a major
challenge for the Indian FMCG market.

Food items tend to have a significantly shorter shelf life and requires quick delivery systems, regular
replenishment of products on the shelf, and vast different distribution and storage requirements. In the F&B
segment, shelf life can vary from seven days to three months on average, while in the HPC space the shelf life
can be up to three years.
25
Many small towns and villages in India lack adequate infrastructure, a major bottleneck in setting up supply-
chain networks.

It is easier to bring home and personal care products to consumers in rural areas of India, as the shelf life is
comparatively longer compared to food & beverage products such as milk, chocolate, and ice-cream, which
have a shorter shelf life and need investments in cold storage facilities.

Multiple Micro-markets:

Multiple micro-markets across geographies have distinct needs, which triggers category preferences that vary
from state to state and from one district to another.

This poses a continuous challenge for players to balance out the market needs and the inefficiencies related to
customization.

Fragmented Retail Landscape:

The estimated 8 million retail outlets in India selling F&B are direct indicators of this fragmentation.

Even the best in class companies are able to reach around 2 million outlets directly and approx. 6 million outlets
totally.

Large Geographical Expanse:

Large states in India such as Madhya Pradesh presents a problem of large distances between two adjacent
markets. This has a crippling effect on viability of channel partners, which are serving the isolated markets.

Limited Cold Chain Infrastructure:

Growth of many categories have been severely constrained by the lack of cold chain infrastructure in the Indian
market landscape.

Multiple Layers of Taxation:

Multiple and inconsistent taxes levied on FMCG products have made it difficult for the companies to offer their
products at a proper/consistent prices. Implementation of GST would simplify taxation system in the country;
thereby, reducing the burden of optimum product pricing amongst the companies.

Impact of GST on Indian FMCG Market

The Union Cabinet’s approved the Constitution amendment Bill for implementing the goods and services tax
(GST) in the monsoon budget session (8-August, 2016 in Lok Sabha). This system of taxation which is to be
implemented in India proposes a comprehensive indirect tax imposed on manufacture, sales and consumption
of goods and services at a national level. GST is currently used in more than 140 countries globally.

26
Salient features of GST:
• GST would be applicable only on supply of goods and services as compared to the current concept of tax on
sales of goods or on the manufacture of goods or on provision of services. • It would be a dual GST where
Centre and States would be simultaneously imposing Goods and Services Tax on a common base
The GST which is to be levied by the States would be called State GST (SGST) and that to be imposed by the
Centre would be called Central GST (CGST).
An Integrated GST (IGST) would be levied on inter-State supply of goods or services including stock transfers.
In order to maintain the credit chain from being disrupted, the Centre would be collecting this taxImport of
goods or services is expected to be considered as inter-State supplies and therefore, would be subjected to IGST
along with the applicable custom duties.
• CGST, SGST & IGST would be imposed at rates upon which Centre and the States have mutually agreed
under the guidance of Goods & Services Tax Council (GSTC).

Impact on FMCG Sector:

If the GST rate is less than or equal to 18%, then it should be positive for most consumer goods companies.
Indian FMCG sector contributes around USD6 billion in direct and indirect taxation. A shift from the current
indirect tax system to the GST regime would have a positive impact on pricing of the products.
Many FMCG companies that have manufacturing units in excise free zones enjoy excise holidays.
Currently, no decision has been taken on the treatment of excise free zone units under the GST regime, and
there is a possibility that the excise exemption schemes could be converted in to refund schemes.
Supply Chain Revamp:

27
GST would lead to a revamping of procurement and distribution arrangements.
The resulting removal of excise duty on products would result in cash flow improvements.
The proposed rate of GST on services is likely to be 16% and on goods to be 20%.

FDI in Food Sector

Food processing industry of India is one of the biggest in terms of production, consumption, export and growth
prospects. This sector has become an attractive FDI destination. Demand, growth, and supply advantages, have
been instrumental in attracting FDI in food sector.

India Cumulative FDI inflow in Food & Agriculture (April 2000 to September 2015), (USD Billion).

The government has allowed 100% FDI in trading of food products, including through digital marketing. The
move was made in a bid to strengthen the sector, provided these items are produced, processed or manufactured
in India. This will allow multibrand retail giants to focus on increasing their food business in India. Also, it will
help Indian hyperlocal grocery start-ups, like Grofers and Big Basket, etc., to raise funds easily.
Moreover, implementation of 100% FDI in food sector will consequently result in strengthening of the back-
end infrastructure such as logistics and warehousing and lead to direct purchase by the retailers. FDI also
enables the inculcation of global best practices within the food sector industry. The move is also expected to
bolster employment and supply chains, apart from providing high visibility for FMCG food companies in
organised retail markets, which in turn would boost consumer spending and encourage more product launches

28
Automatic approvals are provided for foreign investments and technology transfer in most cases. Units based
on agri-products that are 100% exportoriented are allowed to sell up to 50% in the domestic market.
Government of India is promoting the concept of Mega Food Parks (MFPs) and is expected to set up 30 such
parks across the country to attract FDI.

CONCLUSION :

Indian FMCG market is expected to exhibit a growth trend in the coming years. Positive economic
environment, low inflation rates and development initiatives led by the new government mainly are
instrumental in the uptick of the market.

The FMCG industry fared well in India in the recent years with consumer food services, soft drinks, household
and personal care segments experiencing a tremendous growth with the increasing disposable income and the
growing economy.

The alcoholic drinks, tobacco had witnessed low growth given the stricter government policies and the
increasing health awareness among the consumers. Ready to eat food segment such as instant noodles and pasta
would be experiencing enormous growth given the new FSSAI guidelines with clearly designed rules, along
with the relaunch of the most preferred brand of noodles in the country and with Patanjali starting its own ready
to eat food range.

The personal care products are anticipated to witness huge advancements especially among the haircare
segment.

Local Players such as Patanjali, with their aggressive marketing and expansion strategies and ever diversifying
product portfolio would dominate the market in the forthcoming period. Most of the consumer goods products
are moving to Online platforms and most of the major super markets have their own online ordering portals and
mobile apps making it convenient for the consumers to order online with just a click of a button during their
busy schedules.

29
Owing to lack of awareness and security issues Cash on Delivery (CoD) remains the most preferred method of
payment among the Indian consumers.

An increasing demand from the rural and tire-2 population can be witnessed given the increasing annual income
and the awareness for the products and the increasing digitization making them one of the major influencers of
the FMCG sector.

Given the fact that more than 66% of the population in India is rural it widens the scope for the FMCG segment
digitally.

30
RECOMMENDATION:

The emerging trends in new product launch (FMCG), has seen a wide range of innovations in India. Companies
can benefit by adopting certain strategies.

Capturing the Digital Consumer:

Growing internet connectivity, new business models and increasing digital media has provided many
companies an opportunity to create their product awareness. This can be done by creating effective supply
chain, engaging in online retail partnerships. Nowadays, companies are spending around 8-10% of their
marketing spend in digital marketing. Creating a personalised E-commerce portal, associating with horizontal
E-commerce players or engaging with vertical E-commerce specialists are the three commonly used approaches
in E-commerce these days.
Understanding the Right Nerve of the Consumer:

In order to create a loyal consumer base for a particular product, it is imperative for the FMCG companies to
understand the nature and target of their proposed product. In order to create an effective customer loyalty, the
segmentation, target and positioning of a particular product must be emulated. Factors such as geography,
income segment, consumption demand, etc., must be looked after. Increased Focus on TVC for Aggressive

Advertising:

Advertisement is the main source for FMCG companies to increase their product awareness. FMCG sector was
the most dominant sector with 28% share of the total Indian advertising industry in 2015.

Indian Television Advertising Market, 20122016 (USD Million):

Six out of top ten advertising companies in India are FMCG companies.
Television advertising holds the maximum market share of 40% in Indian advertising market wherein FMCG
contributes a significant 52% of the revenue share. This shows the significance of Indian TV advertising
market. Small as well as growing companies must focus on advertising through TVC to create maximum
awareness

Analysing the most Efficient Sales Channel:

In order to maximise their volume sales and product penetration the companies need to identify the most
feasible sales channel route. Both national or multinational companies, give importance to supply chain
management system to enhance their business especially in rural areas.

31
Ineffective supply chain can lead to significant losses for the companies, many offers and schemes launched by
the companies are unable to cause a significant impact on the market as most of these schemes are unable to
reach the end consumer due to inefficiency in supply chain. To prevent such losses, FMCG companies in India
have to ensure that they exercise greater control over their distribution channel and not just leave it to the
market forces.

Prevention of Counterfeiting:

In Indian FMCG sector, counterfeiting has been a major issue which has a potential to significantly affect the
market in a negative way.

Since India is an attractive prospect due to low-cost of manufacturing, it also becomes an attractive base for the
production of counterfeit goods both for domestic sale and export. Counterfeiting leads to brand dilution and
losses to companies.

One of the key reason for the growth of counterfeiting in India is the inability of current supply chain systems to
counter this activity.

It is imperative of Indian FMCG companies to collaborate with the retail industry to offer greater visibility,
traceability. Measures such as, regular spot checks, proper monitoring system, collaboration with local and
national law enforcement agencies can be taken to curb counterfeiting.

FDI and its Implications:

Implementation of FDI in various sectors such as food processing, retail, etc. has been largely beneficial for the
sector. Various multinational companies have now entered India’s retail and FMCG sector thereby increasing
the competitiveness of the sector. Companies in order to remain profitable in this competitive environment need
to focus on innovation and untapped markets.

Focus on innovation & Volume Sales :

Rising income levels, continuously growing demands has led to the development of new FMCG products. This
continuous demand for new innovative products has led to growth in breakthrough innovation of FMCG
products. To meet this demand, FMCG companies need to focus on R&D and innovation as a means to grow
the business. Strategies such as innovation in packaging, rebranding of products, product innovation etc. are
some of the innovation strategies adopted by the companies to cater the demand market.

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Bibliography:

1. IBEF
2. ASSOCHAM AND Tech-Sci Research.

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