Indian FMCG industry shows potential for growth driven by increased consumer spending and company innovations

The report provides detailed market analysis, information and insights, including overview of FMCG industry in India.

The overall fast moving consumer goods (FMCG) market in India is expected to grow at a CAGR of 14.7% to reach USD 110.4 billion between 2012 and 2020. On the other hand, the rural FMCG market is predicted to increase at a CAGR of 17.7% to USD 100 billion through 2011 to 2025. The growth of the Indian FMCG industry is fuelled by the rising incomes and growing youth population. Furthermore, brand consciousness has also aided rising demand of the products. According to market research, it has been projected that First Time Modern Trade Shoppers (FTMTS) spend will reach USD 1 billion by 2015. With healthy foreign direct investments (FDI) inflow, the sector alone accounted for 3% of the country’s total FDI inflow from 2009 to 2013.

This report, Market Snapshot - Indian FMCG Industry provides a detailed market analysis, information and insights. One of the largest growing economies in the world in terms of purchasing power and increased consumer spending, India ranks second only to China. Over the last five years, the FMCG sector has grown at an average of 11% annually. Segmented further into food and beverages, household care and personal care, the Indian FMCG market is the fourth biggest market segment in the Indian economy. The big players include Godrej Consumer products Ltd., ITC Ltd., Hindustan Unilever Ltd., and Dabur India Ltd. In 2014, growth will be further boosted by the rise in disposable incomes among rural dwellers due to direct cash transfer schemes. The market has a great opportunity for growth in the country, mainly due to increased rural consumption, rising disposable income, growing population, urbanization, growing modern retail and consumption driven society.

Market overview

With policy makers giving investment approvals of up to 100% foreign equity in single brand retail and 51% in multi brand retail, and initiatives like Food Security Bill and direct cash transfer subsidies reaching about 40% of households in India, the Indian FMCG market is expected to experience strong growth. To cite an instance, with these initiatives, the retail market in India is estimated to reach USD 450 billion by 2015 with organized retail accounting for 14 to 15% share which is expected to boost revenues of FMCG companies.

Food products are the key players in the FMCG market and accounts for 43% of the overall market revenue. Personal care comes second (22%), closely followed by fabric care (12%). The major drivers for this segment are the urban cities who accounts for over two thirds of total revenue. However, the semi-urban and rural segments are also growing at a rapid pace and currently accounts for 33.5% of revenues. Furthermore, the rising number of middle class and the rich has accelerated the purchase of premium products.

All these growth prospects are making Indian FMCG companies consolidate their existing portfolios. Furthermore, several companies have also started innovating and customizing their existing product portfolios for new consumer segments, as market experts indicate that consumers are becoming more conscious and prefer lifestyle and premium range products, given the rise in disposable income. Lastly, seeing the potential of the market, companies too are focusing on the rural market segment, which is growing at a rapid pace, and contributing about 33% of the total FMCG market.

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