FMCG Industry

FMCG industry, alternatively called as CPG (Consumer packaged goods)

industry primarily deals with the production, distribution and marketing of
consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are
those consumables which are normally consumed by the consumers at a regular
interval. Some of the prime activities of FMCG industry are selling, marketing,
financing, purchasing, etc. The industry also engaged in operations, supply
chain, production and general management.

FMCG industry economy

FMCG industry provides a wide range of consumables and accordingly the

amount of money circulated against FMCG products is also very high. The
competition among FMCG manufacturers is also growing and as a result of this,
investment in FMCG industry is also increasing, specifically in India, where
FMCG industry is regarded as the fourth largest sector with total market size of
US$13.1 billion. FMCG Sector in India is estimated to grow 60% by 2010. FMCG
industry is regarded as the largest sector in New Zealand which accounts for 5%
of Gross Domestic Product (GDP).

Common FMCG products

Some common FMCG product categories include food and dairy products,
glassware, paper products, pharmaceuticals, consumer electronics, packaged
food products, plastic goods, printing and stationery, household products,
photography, drinks etc. and some of the examples of FMCG products are
coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes,
watches, soaps etc.
Market potentiality of FMCG industry

Some of the merits of FMCG industry, which made this industry as a potential
one are low operational cost, strong distribution networks, presence of renowned
FMCG companies. Population growth is another factor which is responsible
behind the success of this industry.

Leading FMCG companies

Some of the well known FMCG companies are Sara Lee, Nestlé, Reckitt
Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General
Mills, Pepsi and Mars etc.

Job opportunities in FMCG industry

FMCG industry creates a wide range of job opportunities. This industry is a

stable, diverse, challenging and high profile industry providing a wide range of
job categories like sales, supply chain, finance, marketing, operations,
purchasing, human resources, product development, general management.

Growth

In the last 10 years, the FMCG industry has reached a size of USD 25 billion from USD 9 billion.
This has primarily been due to high consumer spending leading to higher sale of premium
products as well as companies reaching out successfully to rural India. With a better distribution
reach, FMCG companies will garner USD 18 billion from rural India in 2010 versus just USD 5
billion in 2006
 THE TOP 10 COMPANIES IN FMCG SECTOR

S. Companies
NO.
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and
Health Care
10. Marico Industries

The companies mentioned above are the leaders in their respective sectors. The personal
care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair
and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799
crore or 54% of the personal care category. Cigarettes account for 17% of the top 100
FMCG sales, and just below the personal care category. ITC alone accounts for 60%
volume market share and 70% by value of all filter cigarettes in India.

The foods category in FMCG is gaining popularity with a swing of launches by HLL,
ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore.
Nestle and Amul slug it out in the powders segment. The food category has also seen
innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and
pizzas by both GCMMF and Godrej Pillsbury. This category seems to have faster
development than the stagnating personal care category. Amul, India's largest foods
company, has a good presence in the food category with its ice-creams, curd, milk, butter,
cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the
biscuits category and has launched a series of products at various prices.

In the household care category (like mosquito repellents), Godrej and Reckitt are two
players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's
Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to
the top 100, although P&G's Head and Shoulders and Pantene are also trying hard to be
positioned on top. Clinic is nearly double the size of Sunsilk.

Dabur is among the top five FMCG companies in India and is a herbal specialist. With a
turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like
Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a
formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East,
South Pacific, Caribbean, Africa and Europe. Asian Paints is India's largest paint
company, with a turnover of Rs.22.6 billion (around USD 513 million). Forbes Global
magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the World

Cadbury India is the market leader in the chocolate confectionery market with a 70%
market share and is ranked number two in the total food drinks market. Its popular brands
include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380
Million) Marico is a leading Indian group in consumer products and services in the
Global Beauty and Wellness space.

Current NEWS

May hike soap rates to offset rising raw material costs: Godrej
NEW DELHI: The Godrej group, a major player in the FMCG segment, today said it could hike soap prices
in order to offset rising input costs, particularly those of vegetable oils.

"Soap is one category which is affected because vegetable oil prices are rising. We are meeting it by
efficiency in manufacturing and distribution and by some price increase. There could be further price
increases," Godrej Group Chairman Adi Godrej told PTI.

When asked by how much the prices could go up, he said: "It is difficult to predict how much, but it depends
on how raw material prices will pan out. If the raw material prices go up significantly, we need to take a price
hike."

Godrej group firm Godrej Consumer Products Ltd (GCPL), which sells soap brands such as Cinthol and
Godrej No 1, raised prices of its soaps by 3-5 per cent in early January. It had also raised the prices of its
hair-colour products by 10 per cent around three months ago.

Godrej, however denied on cutting down on retailers' margins.

On the acquisition front, he said the company is no longer aggressively looking out for prospective
purchases after a spate of acquisitions last year, although it continues to keep its option open.

"We are looking for acquisitions, when suitable acquisition comes our way, we will. I won't use the word
aggressively, but we are looking for it," Godrej said.

Last year, GCPL had seven acquisitions to its credit, including the takeover of leading African personal care
brand Tura from Nigeria's Tura Group , Latin American hair colour firm Issue Group and Argentina's
Argencos.

Excise hike of 2 pc likely in Budget 2011: SMC

The government is likely to increase excise duty by 2 per cent in sectors like FMCG and
automobiles, as well as raise service tax, in the forthcoming Budget to reduce the fiscal deficit, a
report said.

SMC Global Securities Ltd, in its forecast for the 2010-11 Budget, said that service tax is
expected to be hiked to 12 per cent from the current level of 10 per cent.
In bad news for exporters, it said the Finance Minister is unlikely to extend the interest
subsidy of 2 per cent, as the country's exports are likely to cross the $ 200 billion target for
the current fiscal In the last Budget, the government had extended the concessional export
finance regime till March 31.
"In order to contain fiscal deficit, Pranab Mukherjee will stress on revenue generation by
expanding the excise tax base by another 2 per cent in sector such as automobile, cement,
FMCG, power and telecom, besides increasing service tax," SMC Group Managing Director
Subhash Aggarwal said.
India's fiscal deficit had ballooned to 6.8 per cent of the GDP in 2009-10 and is pegged quite
high at 5.5 per cent for the current fiscal.
Aggarwal said the minister may widen the service tax basket and include education and
healthcare in the Budget.
"... India is likely to resort to pre-crisis fiscal and monetary policies from April, 2011, onward,
focusing on revenue mobilisation," it said.
The report also said the government may increase spending in agriculture, infrastructure and
education.
In a bid to support agriculture growth, the finance minister could raise credit target for banks
to Rs 450,000 crore. In the last Budget, the target was raised to Rs 37,500 crore.
The minister may allocate Rs 40,000 crore to the Mahatma Gandhi NREGA, it said.
The report also said the government may increase spending in agriculture, infrastructure and
education.
In a bid to support agriculture growth, the finance minister could raise credit target for banks
to Rs 450,000 crore. In the last Budget, the target was raised to Rs 37,500 crore.
The minister may allocate Rs 40,000 crore to the Mahatma Gandhi NREGA, it said.
Furthermore, the pre-Budget analysis said that Mukherjee is likely to cap the combined debt
of the Centre and states close to 65 per cent of national GDP.
On disinvestment, the report states that the government is likely to fall short of capital
proceeds from its disinvestment target of Rs 40,000 crore in current fiscal.
In 2011-12, it is expected that the government would be able to generate between Rs 35,000
to Rs 40,000 crore through divestment in companies like IOCL, BHEL and MMTC Ltd, it said.
The report says that deregulation in diesel will take place only after inflation cools off to level
of 5 to 6 per cent, as a diesel price hike always has major ramifications on the economy.

Marico expects over $32 mn rev in FY12 from Vietnam buy

Personal care products maker Marico Ltd said on Friday it expects revenues of over $32 million in FY12
from its Vietnamese buy, a senior official said on Friday.
Earlier in the day, Marico said it has acquired 85 percent stake in Vietnamese company International
Consumer Products Corporation (ICP).

"The acquisition will contribute 15 percent to our international revenues," Vijay Subramaniam, chief
executive, international business, told Reuters.

The company did not disclose the size of the acquisition but said ICP had a turnover of over $25 million in
2010.

2010 Budget FMCG Industry Expectations - The FMCG sector is one that saw a
growth in the year 2009. The steady rise in prices saw an industry growth by 12%.
Additionally there was a excise reduction as offered by the stimulus package as offered
by the previous budget. In 2010 the FMCG industry is slated for a growth of 15%
compared with that of 2009.
Expectations of the FMCG industry - The primary expectation of the FMCG industry
from the Budget of 2010 -11 is that of tax benefits and better infrastructural benefits