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PROFILE OF FAST MOVING

CONSUMER GOODS COMPANIES

3.1 INTRODUCTION

This chapter is devoted to provide details about Fast Moving Consumer Goods (FMCG)

companies. It is divided into four parts. In the first part, the details about fast moving consumer goods

and the FMCG market are provided.

The second part deals with the top 10 FMCG companies in the

world and the third part highlights the top most FMCG companies in India. In these two parts, profiles

of the companies are given for knowing the products sold by them. The details presented in this chapter

are collected from the relevant websites of the companies.

Finally, the fourth part gives an account of

the classification of FMCG for the purpose of this research work.

3.2 FAST MOVING CONSUMER GOODS

Normally,

all

the

people

regularly

talk

about

things

like

butter,

potato

chips,

toothpastes, razors, household care products, packaged food and beverages, etc. But do they know

under which category these things come? These are comes under the category of Fast Moving

Consumer Goods (FMCG). Fast Moving Consumer Goods refers to things that the people buy from local

supermarkets on daily basis, the things that have high turnover and are relatively cheaper.

Fast Moving Consumer Goods are popularly named as consumer packaged goods. Items

in this category include all consumables (other than groceries/pulses) people buy at regular intervals.

The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe

polish, packaged foodstuff, and household accessories and extends to certain electronic goods.

These

items are meant for daily use of frequent consumption and have a high return.

The sector is divided into two distinct segments the premium segment catering mostly

to the urban upper middle class and the popular segment with prices as low as 40 per cent of the

premium segment, catering to mass segments in urban and rural markets. The premium segment is less

price-sensitive and more brand conscious.

The industry is volume driven and is characterized by low margins. The products are

branded and backed by marketing, heavy advertising, slick packaging and strong distribution networks.

Also, raw material prices play an important role in determining the pricing of the final product.

The Fast Moving Consumer Goods (FMCG) is a term that is used to refer to those goods

which are sold through retail stores. These goods have a short period of shelf life and as such are used

up within days, weeks, or months. At the most it lasts for a year. However there are also durable goods

which people replace after using the same for many years, for example kitchen or other household

appliances.

Some fast moving consumer goods perish within a short time while others have a shelf

life of more than a year.

Nevertheless the turnover rates for both these categories are very high

depending on customer demand and brand loyalty.

Fast moving consumer goods are made by companies that also make other products as

well.

Therefore to determine the best selling brands of fast moving consumer goods one has to look

into the performance of FMCG companies which manufacture these products. For this market analysts

apply different standard evaluations until they conclude on their findings.

3.2.1 Growth of FMCG Market:

FMCG’s growth story started following the deregulation of Indian economy in early

1990s which saw dismantling of the ‘license raj’, resulting in a spurt in new companies and entry of a

number of foreign brands. With relatively lesser capital and technological requirements, a number of

new brands emerged domestically as well, while the relaxed foreign direct investment (FDI) conditions

led to induction of many global players in the segment. Both these factors resulted in leading to rapid

development of the FMCG market in India. Riding on a rapidly growing economy, increasing per-capita

incomes, and rising trend of urbanization, the FMCG market in India is expected to further expand to Rs

1,80,000 crore by 2015 69 .

Despite the strong presence of multinational company players, the unorganized sector

has a significant presence in this industry.

Availability of key raw materials, cheaper labour costs and

presence across the entire value chain has provided Indian companies with a key competitive advantage

in the twenty-first century.

In most categories, the unorganized sector is almost as big if not bigger as

the organized sector.

Unorganized players offer higher margins to stockiest in order to gain market

share.

69 http://www.mbarendezvous.com

At present, urban India accounts for 66 per cent of total FMCG consumption, with rural

India accounting for the remaining 34 per cent. However, rural India accounts for more than 40 per cent

consumption in major FMCG categories such as personal care, fabric care and hot beverages. In urban

areas, home and personal care category, including skin care, household care and feminine hygiene will

keep growing at relatively attractive rates.

Within the foods segment, it is estimated that processed foods, bakery, and dairy are

long-term growth categories in both rural and urban areas. The growing incline of rural and semi-urban

folks for FMCG products will be mainly responsible for the growth in this sector, as manufacturers will

have to deepen their concentration for higher sales volumes.

Major Players in this sector include HUL (Hindustan Unilever Ltd.), ITC (Indian Tobacco

Company), Nestle India, Amul, Dabur India, Asian Paints (India), Cadbury India, Britannia Industries,

Procter & Gamble (P&G) Hygiene and Health Care, Marico Industries, Nirma, Coca-Cola, Pepsi and

others.

Table 3.1 shows growth of consumption in all India rural and all India Urban.

TABLE 3.1

Growth of FMCG in Rural and Urban India

(Figures in %)

   

All India Rural

   

All India Urban

 

Volume Growth

Value Growth

Volume Growth

Value Growth

Categories

2010

2011

2010

2011

2010

2011

2010

2011

over

over

over

over

over

over

over

over

2009

2010

2009

2010

2009

2010

2009

2010

Personal Care

3

4

8

9

4

3

10

10

Household

10

5

8

13

9

3

9

6

Care

Food and

-4

12

-2

12

1

4

2

6

Beverages

Source: Samidha Sharma. “Rural Consumption Drives FMCG Growth”. The Times

of India, Madurai Edition, January 13, 2012, p.18.

From Table 3.1 it is observed that the ‘food and beverages’ market witnessed a hectic

growth in volume as well as in value in rural India during the year 2011. Further, the table reveals that

there is also growth in value in ‘household care’ segment in rural India during the year but the growth in

volume is decreased.

rural consumption.

From this it is concluded that the main reason for the drives in FMCG growth is

3.3 GLOBAL TOP 10 FMCG COMPANIES

This is the second part of this chapter.

For deciding on the popularity of a fast moving

consumer good, the perspective of the consumer and the view of the marketer are taken into

consideration. From the consumer’s point of view those products which are purchased frequently can

be considered as top selling products. Another factor here is brand loyalty. Many consumer stick to a

particular brand for years because they are satisfied with its quality. Price is also a factor.

From the

marketer’s point of view the volume of sales, margin, distribution network and stock turnover are

determining factors for a product to become best selling.

Therefore when both these viewpoints are

analyzed and matched with actual facts and figures only then a clear picture emerges.

The Forbes Global 2000, released annually by the American business magazine

"Forbes", uses composite scores based on sales, profits, assets and market value to rank the top

companies. Companies that only partly engaged in FMCG industries may have ranked higher on

the "Forbes" list but are not counted here because it is not their primary business. Pharmaceutical

companies, for example, can make both over-the-counter FMCG products and prescription

drugs, which are not considered FMCG.

The Forbes' top 10 highest-ranking FMCG companies, in order, among its top

2,000 for the year 2010 are Proctor & Gamble (No. 29 on the overall list), Nestlé (36),

Anheuser-Busch (70), Unilever (85), Coca-Cola (104), PepsiCo (106), Kraft Foods (109), Philip

Morris International (132), British American Tobacco (133) and Nokia (135). 70 Their profile in

short is given in the following paragraphs:

3.3.1 Proctor & Gamble:

70 http://www.ehow.com/top-10-companies-fmcg-sector

Head quartered at Cincinnati in Ohio, United States, Procter and Gamble is a Fortune

500 American multinational company. It was founded in October 31, 1837 by William Procter and James

Gamble. Its flagship and bestselling brand is Ariel laundry detergent which was launched in 1967. This

detergent is available in different variants. The company also manufactures other best selling products

that are highly popular around the world.

3.3.2 Nestlé:

Nestle is a Swiss multinational engaged in the production of different food products. It

has its presence in more than 100 countries.

It produces several top selling products in different food

 

categories.

Some of its best selling products are Lean Cuisine, Maggi, Boost, Kit Kat, Friskies, Nescafe,

etc.

3.3.3

Anheuser-Busch:

Anheuser-Busch which is an American brewing firm is based in Belgium.

Some of the

best known beers of the world are manufactured by this company. The best selling brands of Anheuser-

Busch are Budweiser, Natural Light, Bud Light (America’s best selling beer), Bacardi, etc.

3.3.4 Unilever:

Unilever is a multinational engaged in the manufacture of different products like foods,

personal grooming products, detergents and beverages, etc. This British-Dutch company is the owner of

over 400 leading brands in the world out of which 13 are billion dollar brands. One of its top products is

Aviance which is a beauty product for women.

America and the Middle East.

This product is sold in many countries of Asia, Latin

3.3.5

Coca-Cola:

Coca-Cola Company which is based in Atlanta in Georgia manufactures the world’s most

popular soft drink Coca Cola.

It was Dr. John S. Pemberton who created this drink in 1886. Coca Cola

touched base in every part of the United States by 1895. The company began its franchisee operations

in 1899 and gradually it opened up bottling plants in every corner of the globe. The universal popularity

of Coca Cola is undisputed.

The Coca Cola syrup mixed with carbonated water created ripples

everywhere and today you can get a Coke in any part of the world.

3.3.6 PepsiCo:

PepsiCo was created out of the amalgamation of two companies named Pepsi Cola and

Frito Lay.

The company which was formed in 1965 has its headquarters at Purchase in Harrison New

York. It is a Fortune 500 company. PepsiCo is engaged in the manufacture of snack foods (grain based),

beverages and other similar products.

One of its best known brands is the cola beverage Pepsi-Cola.

Created in 1893 its former name was ‘Brad’s Drink’.

3.3.7 Kraft Foods:

Boasting of brands that are over a century old Kraft Foods is a United State based

multinational having its presence in over 155 countries. The company is engaged in the manufacture of

confectioneries, food products and beverages. It had gone for several acquisitions which has helped the

company to increase its product list with several top notch brands. Kraft Foods is known worldwide for

products like Cadbury, Jacobs, Kraft Dinner (in Canada), Oscar Mayer, Oreo, etc.

available in several continents.

All the products are

3.3.8 Philip Morris International:

Philip Morris International is one of the best known tobacco companies of the world.

This tobacco multinational sells its products in more than 160 countries. Some of its best known

cigarette brands are Marlboro, Philip Morris, Chesterfield, Virginia Slims etc.

3.3.9 British American Tobacco (BAT):

Another multinational tobacco major is the British American Tobacco company which is

the world’s second largest tobacco company. It sells its tobacco products in several top markets across

the globe.

Many world-famous cigarette brands are manufactured by BAT.

One of its top selling

cigarette brands is Pall Mall. Some other leading cigarette brands manufactured by the company are

Dunhill, Kent, Lucky Strike and Vogue.

3.3.10 Nokia:

Nokia is a Finnish multinational engaged primarily in the manufacture of mobile

telephones. The company has its headquarters at Keilaniemi, Espoo which is near Helsinki, the capital of

Finland.

This mobile communication giant is the largest manufacturer of mobile telephones in the

world.

Its products are sold in every part of the world. Nokia has launched many innovative mobile

systems and almost all its products have been hot sellers.

3.4 TOP MOST FMCG COMPANIES IN INDIA

This is the third part of this chapter. This part discusses about the top most fast moving

consumer goods companies in India.

Since the main objective of the study is to analyze the buying

decisions of rural consumers towards fast moving consumer goods, it is necessary to provide some

details about the fast moving consumer goods companies in India.

Hence, the researcher has taken

interest to list out the top most fast moving consumer goods companies selling their products in India.

3.4.1 Hindustan Unilever Limited (HUL):

It is India’s largest consumer goods company was formed in 1933 as Lever Brothers India

Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers.

The company was renamed in June 2007 as “Hindustan Unilever Limited”. It is a leading name in India in

producing personal and healthcare products. The company was awarded the Golden Super Star Trading

Company status from the Government of India.

HUL is the market leader in Indian consumer products with presence in over 20

consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million

Indian consumers using its products. Seventeen of HUL’s brands featured in the AC Nielsen Brand Equity

list of 100 Most Trusted Brands Annual Survey (2011). The company also happens to have the highest

number of brands in this list, with six brands featuring in the top 15 list. The company has a distribution

channel of 6.3 million outlets and owns 35 major Indian brands.

Two out of three Indians use Hindustan Unilever products.

From feeding the family to

keeping home clean and fresh, their brands are part of everyday life. Its brands include the following:

Home and Personal Care: Under this it has brands that cater to every income segment

of population. In this segment it has brands like Lakme, Axe, Pepsodent, Surf Excel,

Wheel, Lux, Dove, Fair & Lovely and many more.

Foods and Beverages:

Under this segment it has brand like Kissan, Knnor Soups,

Annapurna, Kwality Walls, Brooke Bond and Lipton. 71

3.4.2

Dabur India Limited:

The birth of Dabur is in 1884.

It produces a variety of healthcare products and

enjoys a turnover of Rs.5,283 crore for the financial year 2011-12. Its products are marketed in

over 60 countries.

It has two major strategic business units Consumer Care Business and

International Business Division. Consumer Care Business addresses consumer needs across the

entire FMCG spectrum through four distinct business portfolios of Personal Care, Health Care,

Home Care and Foods. International Business Division (IBD) caters to the health and personal

care needs of customers across different international markets, spanning Nepal, Bangladesh, the

Middle East, North & West Africa, EU and the US with its brands Dabur and Vatika. It other

master bands are:

Dabur Amla, Dabur Chyawanprash, Real, Dabur Red Toothpaste, Dabur Lal

Dant Manjan, Babool, Hajmola, Dabur Honey, Glucose, Fem and Odonil 72

3.4.3 Indian Tobacco Company (ITC):

ITC is in existence since 1910 and has a diversified presence in Cigarettes, Hotels,

Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Personal

Care, Stationery, Safety Matches and other FMCG products.

71 http://www.hul.com

72 http://www.dabur.com

It employs over 26,000 people at more

than 60 locations across India. ITC is one of India's foremost private sector companies with a market

capitalization of over US $ 33 billion and a turnover of US $ 7 billion. ITC is rated among the World's Best

Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among

India's Most Respected Companies by Business World and among India's Most Valuable Companies by

Business Today. 73

3.4.4 Marico Industries:

Marico is known for producing home care and personal care products in India. Marico's

Consumer Products Business (CPB) has established and nurtured brands that touch the lives of one out

of three Indians over the last two decades. Its beauty and wellness portfolio includes some powerful

brands such as Parachute, Parachute Advanced, Saffola, Nihar, Hair & Care, Mediker and Revive,

amongst others, which occupy leadership positions in their respective categories.

Marico is present in

more than 25 countries across Asia and the African continent. The company recorded a turnover of Rs.

31.3 billion (~USD 695 Million) in 2010-11.

Every month, over 70 million consumer packs from Marico reach 130 Million

consumers in about 23 million households, through a widespread distribution network of more

than 3.5 million outlets in India.

During 2010-11, Marico's Consumer Product Business

revenues grew by 17 per cent led by an underlying volume growth of 11 per cent. Backed by a

robust IT enabled supply chain, the business achieved a higher growth rate in rural markets,

taking its share of rural sales revenue to 30 per cent. 74

73 http://www.itcportal.com

74 http://www.marico.com

3.4.5

Nestle India:

Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With seven factories and a large

number of co-packers, Nestlé India is a vibrant Company that provides consumers in India with products

of global standards and is committed to long-term sustainable growth. Its relationship with India dates

back to 1912, when it began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export)

Limited, importing and selling finished products in the Indian market. It manufactures a variety of milk

products and nutrition, beverages, prepared dishes and cooking aids and chocolates and confectionary

under famous brand names such as Nescafe, Maggi, Milkybar, Kit-kat, Bar-One, Milkmaid and Nestea

and in recent years the Company has also introduced products of daily consumption and use such as

Nestle Milk, Nestle Slim Milk, Nestle Dahi and Nestle Jeera Raita. 75

3.4.6 Amul:

It all began when milk became a symbol of protest.

Founded in 1946 to stop the

exploitation by middlemen and inspired by the freedom movement, the first cooperative milk marketing

initiative in India. Gujarat Cooperative Milk Marketing Federation Limited (GCMMF) is India's largest

food product marketing organization with annual turnover of US$ 2.5 billion (for the year 2011-12). Its

approximate daily milk procurement is 13 million litre (peak period) per day from 16,117 village milk

cooperative societies, 17 member unions covering 24 districts, and 3.18 million milk producer members.

Currently, it is the market leader in producing milk, butter, cheese, ghee, chocolates, ice cream and

other dairy items. 76

3.4.7 Cadbury India:

75 http://www.nestle.in

76 http://www.amul.com.

Cadbury India Ltd. is a part of Kraft Foods. Cadbury India operates in five categories

Chocolate confectionery, Beverages, Biscuits, Gum and Candy. In the Chocolate Confectionery business,

Cadbury has maintained its undisputed leadership over the years. In India, Cadbury began its operations

in 1948 by importing chocolates. But apart from chocolates, the company also manufactures other food

and health drink products like Bournvita.

chocolate category. 77

It enjoys a value market share of over 70 percent in the

3.4.8 Procter & Gamble (P&G) Hygiene and Health Care:

It

is

one

of the

largest

and amongst the fastest

growing consumer goods

companies in India. Established in 1964, P&G India now serves over 650 million consumers

across India. Its presence pans across the Beauty and Grooming segment, the Household Care

segment as well as the Health and Well Being segment, with trusted brands that are household

names across India. These include Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur,

Pampers, Pantene, Oral-B, Head & Shoulders, Wella and Duracell.

P&G operates under three

entities in India - two listed entities “Procter & Gamble Hygiene and Health Care Limited” and

‘Gillette India Limited’, as well as one 100% subsidiary of the parent company in the U.S. called

‘Procter & Gamble Home Products’. 78

3.4.9 Britannia Industries:

It was established in 1892 and it has grown to become one of the top most FMCG

companies in India.

It is known for manufacturing varieties of biscuits, cookies and also milk,

cheese, butter, ghee, etc. and enjoys all India market. 79

77 http://www.cadburyindia.com

78 http://www.pg.com

79 http://www.britannia.co.in

3.4.10

GlaxoSmithKline:

It is one of the leading medicine and vaccine manufacturers in the country. It has a

challenging and impression mission, to improve the quality of human life by enabling people to do more,

feel better and live longer. Headquartered in the UK, it is a global organization with offices in over 100

countries and major research centres in the UK, USA, Spain, Belgium and China.

It has committed to

tackle the three "priority" diseases identified by the World Health Organization: HIV/AIDS, tuberculosis

and malaria.

In 2011, it has distributed 1.1 billion doses of vaccines to 173 countries, of which over 80

per cent were supplied to developing countries. Many of our consumer brands are household names:

Ribena, Horlicks, Lucozade, Aquafresh, Sensodyne, Panadol, Tums. 80

3.4.11 Colgate Palmolive:

The small soap and candle business that William Colgate began in New York City early in

the 19th century is now, more than 200 years later, a truly global company serving hundreds of millions

of consumers worldwide.

It is a trusted name in India for Oral Care, Personal Care, Home Care and

Professional Oral Care. Colgate is named as India’s Most Trusted Brand in 2011 in the survey conducted

by the Nielson. 81

3.5 CLASSIFICATION OF FAST MOVING CONSUMER GOODS

For understanding the buying decisions of rural consumers with reference to fast

moving consumer goods, it is necessary for the researcher to define the products. For the purpose of

this study, the researcher has classified the fast moving consumer goods into four categories, viz. a)

80 http://www.gsk.com

81 http://www.colgate.co.in

Personal Care, b) Home or Household Care, c) Oral Care; and c) Food and Beverages based on the

manufacturing of FMCG companies in India.

In Personal Care, products like soaps for beauty soaps, hand wash soaps, beauty

solutions, shampoo and oil, anti-dandruff hair products, deodorant, fragrance, fairness products, skin

cleansing, skin care lotions, after shaving lotions, talcs and creams (excluding oral care products). These

are usually called as personal wash, skin care and hair care.

For fresh, soft clothes or sparklingly clean bathrooms, the Home Care products are

useful.

Products such as detergent and bleach, cream cleaner, toilet cleaner, dish wash come under this

classification.

In oral care, products like tooth powder, tooth brush and tooth paste are included.

Under Food and Beverages, from ice creams to scrumptious sauces are included.

It

normally covers products like noodles, macaronis, soft-drinks, packaged fruit juices, tea, coffee, soups,

ice creams, salt, atta, milk chocolates, biscuits and other bakery items.

All the top most FMCG companies discussed in this chapter are selling their products in

rural areas of Madurai District.

According to sector analysts ‘Food and Beverages’ market witnessed

hectic action in rural India with players like ITC and Hindustan Unilever Limited (HUL).

ITC’s Sunfeast