The Fast Moving Consumer Goods (FMCG) industry is the fourth-largest sector of the Indian economy. Household and Personal Care account for 50% of all sales in the country in this area. As households have a growing awareness of product availability, better access to items, and improved income levels that lead to changing lifestyles, there are several key growth drivers that could make its future growth an unprecedented component of the local economy.
FMCG products in rural India account for up to half of all the total spending for some communities. Semi-urban segments are seeing double-digit growth in this area repetitively. The retail market is already valued at more than $1 trillion, and it could end up being ten times that amount as India moves toward becoming an economy on par with the United States.
One of the primary reasons why there has been such a high level of expansion for the FMCG industry is that the government allows 100% Foreign Direct Investment in single-brand retail and food processing. 51% FDI is permissible in multi-brand retail.
Fascinating FMCG Industry Statistics
#1. Online sales of FMCG products were worth $20 billion in 2017. Indian officials expect this figure to reach $45 billion by 2017. (India Brand Equity Foundation)
#2. The retail market in India for FMCG products was valued at $840 million in 2017, with trade growing as high as 25% each year. By 2020, this market could be worth $1.1 trillion or more. (India Brand Equity Foundation)
#3. Revenues from the FMCG sector reached Rs 3.4 lakh crore for 2018, or the equivalent of $52.75 billion. This figure could also double to over $104 billion by the end of 2020. (India Brand Equity Foundation)
#4. The FMCG industry saw a quarterly growth rate of 16.5% in value terms from July to September 2018 thanks to moderate inflation levels, increases in private consumption, and improvements to rural income levels. (India Brand Equity Foundation)
#5. Nestle AG reported the highest levels of net sales in the FMCG industry for 2018, achieving $93.4 billion in total revenues. Procter and Gamble came in second at $66.3 billion. PepsiCo ($64.6 billion), Unilever ($60.1 billion), and AB-InBev ($54.6 billion) rounded out the top 5 for this category. (Statista)
#6. Any product that has a lifespan shorter than 12 months fits into the FMCG category. Outside of India, these items are known as Consumer Packaged Goods. (Statista)
#7. North American FMCG products comprise one of the largest industries on the continent. 45% of the sales that occur in the United States involve purchases within the grocery segment of the industry. (PwC)
#8. Small businesses operating in the FMCG industry have experienced a growth of 6.2% since 2009 when present in mature markets. That figure is about three times higher than what the largest companies in this space have achieved during the same period. (PwC)
#9. Private-label products are helping to inspire the rapid growth of the FMCG industry, accounting for an annual 2.8% rise in sales in mature markets. Indian companies can sometimes achieve a 10% growth in their rural communities. (PwC)
#10. Medium-sized companies that manufacture FMCG saw their market share decline by almost 4% in the United States since 2009. (PwC)
#11. The biggest companies that provide fast-moving consumer goods around the world have experienced a 43% increase in their overall market share due to increased volume only. (PwC)
#12. One out of every four of the world’s top brands sells FMCG either domestically, globally, or both. Over the past 45 years, the total return from these items has been 15%, creating strong returns for shareholders. The only global industry to outperform Consumer Packaged Goods was the materials industry. (McKinsey)
#13. India’s FMCG industry experienced a healthy surge of FDI between 2000 and 2019, with almost $15 billion coming into the country to expand the range of offerings and choices to consumers. (India Brand Equity Foundation)
#14. Patanjali is spending over $740 million in various food parks in Assam, Andhra Pradesh, Uttar Pradesh, and Madhya Pradesh. (India Brand Equity Foundation)
#15. Dabur plans to invest up to $46 million in 2018 to expand its capacity and make additional acquisitions to its domestic market. (India Brand Equity Foundation)
#16. RP-Sanjiv Goenka Group created a $15 million venture capital fund to help FMCG startups become innovative disrupters in the industry. (India Brand Equity Foundation)
#17. A new Goods and Services Tax (GST) structure puts heavily used products into lower taxation brackets to help Indian consumers save money. Some food and hygiene products now qualify for 0% GST. Even hair oil and toothpaste moved to an 18% bracket instead of being at its normal 24% rate. (India Brand Equity Foundation)
#18. The number of mega food parks in India rose from 2 being available from 2008 to 2014 to 13 operating at the end of 2018. (India Brand Equity Foundation)
#19. The capacity for food preservation and processing in India’s FMCG industry increased from 308,000 units to 1.41 million units between 2008 to 2018. (India Brand Equity Foundation)
#20. The number of operational food labs increased by 11, from 31 to 42, between 2014 to 2018. (India Brand Equity Foundation)
#21. Young people have access to 10% less wealth than their parents and grandparents in the world’s mature economies. That means the FMCG industry focuses on value purchasing and more choices to encourage strong revenues. Between 1886-2000, the Coca-Cola Company only offered one additional flavor of soda – cherry. Since then, they’ve introduced vanilla, lime, blood orange, raspberry, black cherry vanilla, Blak, orange, ginger, feisty cherry, ginger lime, twisted mango, Georgia peach, California raspberry, and Lemon-Do to various markets. (Southern Kitchen)
#22. 50% of the customers in mature economies who buy FMCG products say that they’re struggling to make ends meet. 45% of households describe their financial situation as “strained,” with many living paycheck-to-paycheck. (Consumer Connect)
#23. Over 30% of the households in mature economies that primarily buy FMCG goods say that they don’t have enough money to meet their basic food requirements. (Consumer Connect)
#24. 73% of households making $35,000 per year or less say that they don’t have enough money for the food items they want, so they decide to purchase FMCG industry items so that they don’t go hungry. 23% of families who make at least $100,000 or more per year say the same thing. (Consumer Connect)
#25. 4 out of 5 Millennials say that they’re willing to alter their loyalty to specific brands if that means they can save money on their basic needs. (Consumer Connect)
#26. Almost 60% of shoppers who are Baby Boomers or part of Generation X say that they purchase items from the FMCG industry based on the availability of coupons, discount codes, or one-time promotions. (Consumer Connect)
#27. 20% of the consumers who regularly shop for FMCG industry items say that they are willing to pay a little more for their preferred items if they know that it comes from sustainable methods and contains eco-friendly solutions. (Consumer Connect)
#28. 31% of the FMCG industry items introduced to mature markets in 2016 involved personal care items. (IRI)
#29. 23% of new items for the industry were intended for general care or beauty needs, while 18% of them were healthcare items. (IRI)
#30. Brands that introduce a new convenience item to the FMCG market generate revenues of $22 million in the first year of operations. If the company sells a non-food item, then that figure drops to $17 million. Food and beverage businesses see even less money, averaging about $11 million per year. (IRI)
#31. 23% of the world’s top brands are found in the FMCG industry. (McKinsey)
#32. The venture capital industry is fueling the expansion of small brands in the FMCG industry. Between 2014 to 2017, over $7.2 billion in total funding went into this segment. The $1.99 billion spent in 2017 represents more than the investments made in 2008-2012 combined. (McKinsey)
#33. Retailers in mature markets like the United States are giving small-brand FMCG provides double the share of new listings because it helps to drive margins for the industry. The smallest providers tend to rarely promote themselves while offering premium solutions, allowing them to capture 3x their share of growth. (McKinsey)
#34. Born-digital challenger brands already represent 10% of the color cosmetics market for the FMCG industry. It is growing at a rate that’s four times faster than the rest of this segment. Over $1.6 billion of venture capitalism has been sent in this direction, with 80% of the investments happening since 2014. (McKinsey)
#35. Almost 1.5 million beauty-related videos get posted to YouTube each month, and almost all of them are user-generated content that helps to promote FMCG items. (McKinsey)
#36. 3 out of 5 consumers say that they look for products based on the pain points they can resolve when using the item in question. Millennials are the most likely to see this trait as being the most valuable. (IRI)
#37. Almost 60% of the manufacturers in the food and beverage FMCG segment focus on health and wellness solutions in their product presentation. Including information in this area promotes faster growth and bigger revenues. (IRI)
#38. Just 8% of consumers who regularly shop for FMCG items say that they look for specific products that can help them to relax. (IRI)
#39. About 40% of customers say that they splurge on premium FMCG industry products when they go shopping about half of the time. 25% of people say that these “treats” are a top priority even when their health and wellness plan places them on a restricted nutritional profile. (IRI)
#40. Only 25% of the households in India and the mature economies of the world qualify as being in the Middle Class. This figure could triple by the end of 2030. (Deloitte)
#41. By the end of 2030, up to 75% of the spending in the FMCG industry could be initiated by women instead of men. 3 out of 10 women are already earning more money than their spouse or significant other. (Deloitte)
#42. Consumers in the United States are spending 5% less on FMCG industry products now than they were in the 1980s after adjustments for inflation. (Nielsen)
#43. 93% of customers say that the taste or flavor of the items they choose in the food and beverage segment is their top priority when shopping for FCMG industry items. 83% say that price is an important consideration, while 70% say that health and wellness qualities are essential. (IRI)
#44. The option for grab-and-go items is a positive aspect of the FMCG industry for 51% of households. 48% say lower prices is a top priority, while family preferences rate at only 41% in this category. (IRI)
#45. Over half (52%) of customers who shop for FMCG items regularly say that their selected products offer “freshness” instead of containing artificial ingredients or additional processing that can prolong the shelf life of the item. (IRI)
#46. The most significant gains for the FMCG industry for specific products were found in the refrigerated lunches segment, with sales achieving a 13% gain. Frozen side dishes experienced an 11% increase. Ready-to-use coffee, ready-to-use tea, and bottled water had 8% gains each. (IRI)
FMCG Industry Trends and Analysis
Rural consumption continues to increase for the FMCG industry. This outcome is being led by an increase in income and higher levels of aspiration. A significantly higher level of demand for branded products is surging through the Indian economy. That means the rural market will grow by at least 10% through 2025, bringing with it an additional $23 billion to contribute to the GDP. Urban communities could see growth rates as high as 16% per year during this period.
One of the primary factors that propel the demand for FMCG products, especially in the food segment, is a growing youth population. As higher levels of brand consciousness impact this demographic, the industry can augment growth by embracing the desire for associations as the retail level. Time constraints between work and home life also leave little time for cooking, which encourages even more sales.
Only the implementation of a Goods and Services Tax that decreases the value of earnings could adversely impact this industry. Under the current structure, India’s government stands to gain $15 billion per year with minimal implementation.
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