ppt analysis of fmcg sector 28 4 13

ANALYSIS OF FMCG SECTOR: A GLOBAL ECONOMIC

PERSPECTIVE

Vinod 036 Divya Verma 041Shobhit Bhatnagar 042Vaibhav Hitkari 043

GLOBAL BUSINESS ENVIRONMENT

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INDUSTRY PROFILE

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SECTOR OVERVIEW

INDUSTRY PROFILE

• At present, FMCG sector is the fourth largest sector in India with a market size of USD 13 Billion as of 2012.

• It is projected to grow to a USD 33 Billion industry by 2015 & USD 100 Billion industry by the year 2025.

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MAJOR SEGMENTS

• It includes products such as Laundry soaps/bars, Washing powder etc. & is dominated by brands such as Ariel, Surf Excel, Vim, Tide etc.

• Increase in awareness about easy to use home cleaning products & steady economic growth have acted as major stimulants for market growth in this segment.

• The segment is characterized by the presence of both domestic & foreign players.

INDUSTRY PROFILE

Household care

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MAJOR SEGMENTS (contd.)

• It comprises of products such as Soap, Personal wash market, Oral care, Skin care etc.

• A highly positive trend can be seen in the growth of this segment on account of the changes in the buying behavior.

INDUSTRY PROFILE

Personal care

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MAJOR SEGMENTS (contd.)

• Comprises of bakery products, tea, coffee, mineral water, soft drink etc.

• Indian hot beverage market is tea dominated. Coffee is consumed largely in the southern states.

• The major share of tea market is dominated by non unorganized players.

INDUSTRY PROFILE

Food & Beverage

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POLICIES & RULES

• Foreign direct investment (FDI)

• Removal of Quantitative Restrictions & Reservations Policy

• Central & state initiatives

• Food laws

INDUSTRY PROFILE

Policies

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POLICIES & RULES (contd.)

• Heavy launch costs on new products

• Existence of contract manufacturing

• Marketing assumes a significant place in the brand building process

• Providing good price points is the key to success

INDUSTRY PROFILE

Rules

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COMPETITIVE LANDSCAPE

INDUSTRY PROFILE

• 3 well identified set of players operate in the Indian FMCG market.

– foreign players who are present through their subsidiaries.

– strong Indian players with established national presence.

– regional or small domestic players.

LEADING PLAYERS

• Currently the largest Indian FMCG company.

• Has a portfolio of over 50 brands.

• Enjoys a formidable distribution network.

INDUSTRY PROFILE04/08/2023 10

Hindustan Unilever Ltd. (HUL)

LEADING PLAYERS (contd.)

• Second largest player in soaps & largest in hair color market.

• Includes Good Knight, Cinthol, Expert, Hit, Jet etc.

• The company employs 950 people & has state of the art manufacturing facilities in Assam, Madhya Pradesh & Himachal Pradesh


Godrej Consumer Products Ltd. (GCPL)


• Largest Indian FMCG & ayurvedic products company.

• Product portfolio of the company includes health care, food products, pharma etc.


Dabur India Ltd.


• Largest oral care company in India.

• Has a 51 % market share in toothpaste segment, 48 % in toothpowder & 30 % share in the toothbrush segment.

• The company’s strategy is to focus on growing volumes by improving penetration through aggressive campaigning & consumer promotions.


Colgate-Palmolive India Ltd.

RECENT DEVELOPMENTS

• GST is a comprehensive tax levy on manufacture, sale & consumption of goods & services at a national level.

• It is an indirect tax that will lead to the abolishment of taxes such as central sales tax, excise duty, service tax & VAT.

• The main purpose of GST is to simplify India’s tax structure.


Goods & Services Tax (GST)

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SCOPE OF THE SECTOR

• Continues growth in sales and profit lead to right

future

• Growth will be positive because of recent

development and good recent future

• GST motivates FMCG sector and export as well

INDUSTRY PROFILE

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ANALYSIS OF THE SECTOR

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PORTER’S 5 FORCE MODEL


• Threat Of New Entrants: MODERATE– presence of low regulatory barriers– high competitive industries require large

investments, so small players create less impact

• Threat Of Substitutes: HIGH– multiple brands with low product differentiation– new companies compete at prices which increase

product substitution

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PORTER’S 5 FORCE MODEL (contd.)


• Bargaining Power Of Suppliers: MODERATE– due to long term relations with suppliers

• Rivalry Among Competitors: HIGH– as more MNC’s are entering the country

• Bargaining Power Of Customers: LOW– due to high brand loyalty & low switching costs

INDUSTRY ANALYSIS

• Price of inputs

• Emergence of private labels

• Counterfeit and pass offs

• Infrastructural bottleneck

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Key Challenges


INDUSTRY ANALYSIS (contd.)

• Consolidation• Product innovation• Lifestyle products• Backward integration• Third party manufacturing• Increased hiring from Tier 1 & 2 cities• Reducing carbon footprint

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Trends in the Industry



• Untapped rural market, it accounts for two thirds of the Indian population

• Food processing industry, around 200 million people are expected to shift to packaged & processed food

• Lack of infrastructure & storing facilities, huge investment in rural infrastructure & efficient utilization of resources for the overall growth of FMCG sector in India

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Opportunities in the Industry



• Investment approval, investment of up to 100 % foreign equity for NRI & overseas corporate bodies has been approved by the government.

• FDI in organized retail, India has allowed 51 % FDI in multi brand retail

• Relaxation of license rules• Priority sector

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Government Policies


PEST ANALYSIS

• Tax exclusion in sales & excise duty for small scale industries

• Transportation & infrastructure development in rural areas helps in distribution network

• Restrictions in import policies• Help for agricultural sector

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Political


PEST ANALYSIS (contd.)

• The GDP rate of Indian economy is increasing every year & is expected to get better in comparison to other countries

• New policies are being adopted by the government & RBI to control inflation rate

• There is an increase in disposable income due to increased GDP rate which has resulted in an increase in per capita income allowing consumers to spend more

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Economical



• Distribution of income• Changes in lifestyle• Consumerism• Education levels• Law affect social behavior• In 2003 46 million household achiever, whereas 124

million household are in position to spent on FMCG in 2013

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Social



• Technology has been made available in India & is also imported from foreign countries

• With research & development facilities available developments have been possible in technology field with the help of some foreign players

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Technological


SWOT ANALYSIS

• Operational costs for the FMCG sector in India are relatively low

• Presence of established distribution networks in both urban & rural areas

• Favorable governmental policies• Low labor costs as compared to other countries

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Strengths


SWOT ANALYSIS (contd.)

• Lower scope of investing in technology & achieving economies of scale, especially in small sectors

• Low exports levels

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Weaknesses



• Largely untapped rural market which can be capitalized due to population’s changing life style

• Rising income levels

• Large domestic market

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Opportunities



• Removal of import restrictions resulting in replacing of domestic brands

• Tax & regulatory structure

• Rural demand is cyclical in nature & also depends upon monsoon

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Threats


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ECONOMIC IMPLICATIONS

04/08/2023 32ECONOMIC IMPLICATIONS

Disposable Income

• Per capita disposal income is USD556 per annum

• Raise up to USD 1150 by 2015

• Food processing industry represented 6.3% of GDP

and accounted for 13% of country export

• Demand will be boom by 100% by 2015 and share of

middle class will about to be 88%

CONSUMPTION

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Rate of Inflation• No significant effect of inflation• Gross margin contribution is around 40-45%• Need to increase by up to 2-4% • Growth rate of industry is lower than that of

previous decade is about 9%

CONSUMPTION (contd.)


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Foreign Institutional Investor

INVESTMENT


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• Accounts for around 3 % of the total inflow an 7.3 of total sectorl investment

Foreign institutional investment

INVESTMENT (contd.)


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• Rigorous import duties to discourage import

• 100 % import duties levied on tea & coffee

• Purpose of export duties is to increase the

price up to international level as they

manufactured at very low cost

TARIFFS


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TO CONCLUDE

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CONCLUSION

• Future projection is highly optimistic($100 bn by 2025)

• Players showing positive results indicator of healthy economy

• Key growth drivers are low labor cost, more and better choices, changing preferences

• Abundant area of future growth• Opportunity in Indian rural market include of

60% population

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Conclusion

• Highly positive outlook as per economic perspective as the FMCG sector accounts a total investment of Rs. 40,000 cr.

• Favourable tariff is positive indicator• Approval of FDI is good indicator

THANK YOU

ppt analysis of fmcg sector 28 4 13

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