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SYNOPSIS : FMCG INDUSTRY

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FMCG INDUSTRY : SIZE AND GROWTH RATE
490
500
540
585
710
860
1020
1160
1300
1671
1831
2000
0
200
400
600
800
1000
1200
1400
1600
1800
2000
FY02 FY04 FY
06
FY
08
FY
10
FY12
FMCG Industry Size
6%
16%
Figures in Rs. bn
Size of the FMCG industry is about Rs. 200,000 crores in FY 2013.
About 40% of the FMCG sales are in Rural areas.
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FMCG INDUSTRY : CHARACTERISTICS
One of the extremely competitive industry. Very difficult for new players
to enter and make a big impact. (ITC is yet to become profitable in their
FMCG business even after 10 years)
Very diverse industry. Analysis should happen on category by category
basis because trends, brands and players differ significantly across the
categories.
There are strong MNCs and also strong Indian players.
In the last 5 years the growth rates has been 16%. It has picked up
compared to the previous 10 years.
This sector is relatively immune to recession.
The growth in FMCG depends on several factors - Penetration levels,
Per capita consumption, Per capita income increase, Urban and Rural
proportion
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Opportunities in Low Penetration and Low-per Capita Consumption Categories
There is immense opportunities in several categories on account of low
penetration level and low per capita consumption.
Despite having high penetration level, categories like detergent soap,
personal soap and washing powder have low per capita consumption therefore
change in the consumption pattern will drive these categories.
Apart from this, categories like oral care, shampoo, skin cream, deodorant
and packaged juice etc where penetration level and per capita consumption
both is low.
Therefore, these categories have enormous opportunity to grow through
addition in consumer base as well as change in the consumption pattern.
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PENETRATION LEVEL OF MAJOR FMCG PRODUCTS
Penetration levels of many FMCG products like Ketchups, juices etc are much
less than even 10%
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PER CAPITA CONSUMPTION OF KEY FMCG PRODUCTS:
COMPARISON WITH GLOBAL TRENDS
Toothpaste ( kg)
Tea ( kg)
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PER CAPITA CONSUMPTION OF KEY FMCG PRODUCTS:
COMPARISON WITH GLOBAL TRENDS
Skincare ( Rs)
Shampoo ( kg)
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PER CAPITA CONSUMPTION OF KEY FMCG PRODUCTS:
COMPARISON WITH GLOBAL TRENDS
Fabric Wash ( kg)
Ice-creams ( litre)
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CRITICAL SUCCESS FACTORS (APART FROM BRANDING)
R - Range (coverage of price points and wide variety)
I Innovation (packaging, product attributes, new launches, brand
ambassadors)
V Value Weightage (Items weightage on their monthly expenses)
E Engage
R-Reach

RIVER
Product Proliferation
Slight excess capacities
Market Penetration, Product Development, Market Development and product
diversification
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Some companies are over dependent on their power brands which could
impact their growth and profitability
Company Dependence on Power Brand
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EFFECTIVE STRATEGY REGARDING POWER BRANDS
The over dependence on a brand or few brands (for sales and margins) can
create trouble for the company in the long term.
It is important to have multiple power brands like HUL
High Dependence : Nestle, Marico and Jyothy Labs
Medium Dependence : Emami and Colgate
Low Dependence : HUL and Dabur
HUL has managed the power brands better. They have done brand
extensions so that the power brands do not depend on one category. Ex:
Dove, Lux, Lifebuoy
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Beauty and Personal Care
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OVERVIEW
Overall Size : Rs. 40,000 crores
Share of Major segments in Personal Care :
Bath and Shower: 30%
Hair care: 25%
Oral Care: 14%
Skin Care: 13%
Mens grooming: 8%
Color cosmetics: 6%
Others : 5% (others include Baby and child specific
products, Deodrants, Depilatories, Fragrances, Sun care
etc)
Personal care industry is Rs. 40,000 crores. Bath and Shower, Hair-
Care, Oral and Skin care constitute about 80% of the overall personal
care value.
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Bath and Shower
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BATH AND SHOWER : CATEGORY BREAK-UP
88% of the products in bath and shower are bar soap. The
contribution of shower gel and liquid soap are less than 3%
Products
Value (in Rs.
Mn)
% of Total
Category Value
Bar soap 106674 88%
Body wash and Shower
Gel 993 1%
Liquid Soap 2287 2%
Talcum Powder 11408 9%
Total 121362 100%
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BATH AND SHOWER : COMPANY MARKET SHARES
HUL, GCPL, Reckitts and Wipro holds more than 75% share
Company
Market Shares
2007 2012
Losers
HUL 53.5% 49.8%
Nirma 6.60% 3.90%
Gainers
Reckitts
Benckiser 5% 9%
Wipro 7.3% 8%
ITC 0% 3.60%
Anchor 0% 2%
GCPL 8.90% 10%
Though HUL is the market leader
with almost 50% share, it has lost close
3% share along with other major loser
Nirma which also lost 3% share.
Reckitts, ITC, Anchor (Dyna
brand), Godrej and Wipro are the
major gainers.
Reckitts share increase is due to
launch of new dettol soap variants,
liquid wash and awareness
campaign Proper Handwashing
campaigns.
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BATH AND SHOWER : BRAND SHARES
Top 6 brands constitute 50% of the bath and shower category.
Brand Company Market Shares
2007 2012
Lux HUL 15.3% 13.1%
Lifebuoy HUL 13.3% 11.8%
Dettol Reckitt Benckiser 5.5% 9.1%
Santoor Wipro 7.1% 8.1%
Godrej
No.1
GCPL 5.4% 6%
Dove HUL 1.5% 4.3%
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BATH AND SHOWER : GROWTH
Though the overall growth is expected to slow down, liquid
soap will still grow at impressive rate.
Category CAGR
2007-12 2012-17
Bar Soap 13.8% 3.7%
Body Wash &
Shower Gel
15.9% 7.3%
Liquid Soap 33.5% 15.3%
Talcum Powder 5.2% 0.9%
Overall Bath
and Shower
13% 3.8%
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BATH AND SHOWER : KEY TRENDS
Health and Hygiene concerns driving growth
Increasing Realizations
New launches
Importance of social media

Health and hygiene concerns driving the demand on liquid soap

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BATH AND SHOWER : KEY TRENDS
Driven by increasing health and hygiene concerns, consumers
continued to move towards liquid soap, including hand sanitisers.
Most of the leading companies, including Reckitt Benckiser and
Dabur India, continued to cash-in on this growing trend by running
campaigns to promote the germicidal properties of liquid soap.
Dabur India launched Fem Safe Handz, an instant hand sanitiser
which offers protection against bacteria and viruses.
Health and Hygiene concerns driving growth
Health and hygiene concerns driving the demand on liquid soap
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BATH AND SHOWER : KEY TRENDS
Increasing Realizations
Average unit prices continued to increase, mainly due to
commodity inflation, which led to increases in the prices of the
main ingredients of such products, including oils and glycerine.
In addition, strong growth in liquid soap and body
wash/shower gel, which are comparatively more expensive than
other products, pushed unit prices even higher.
Realizations are increasing due to increase in commodity inflation
and movement towards expensive liquid soap and shower gel.
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BATH AND SHOWER : KEY TRENDS
NEW LAUNCHES
Male targeted products:
Ex: Acqua pulse mens shower from Fiama Di Wills
Nivea for men
Combination Products:
Manufacturers focused on combination products to position their
products as better-value offerings.
For instance, extra moisturising bar soaps such as Dove continued to
perform well, and hand sanitisers with moisturiser, such as Lifebuoy.

Products with new Attributes
Ex: Exfoliators and scrubs (Exfoliators, which are known for their
property of removing dead skin cells, picked up well)
Focus of new launches has been on male targeted products,
combination products and products with new attributes.
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BATH AND SHOWER : KEY TRENDS
IMPORTANCE OF SOCIAL MEDIA
There is a growing importance of social media in brand
promotions.
Many companies also moved to social media websites such as
Facebook to promote their brands.
For instance, The Himalaya Drug Co rolled out an innovative
marketing campaign on Facebook to promote its brand
PureHands.
The company invited young and creative minds to make a video
highlighting the product benefits, and announced Rs1 lakh as the
prize money for the best video.
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Hair-Care
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HAIR-CARE : CATEGORY BREAK-UP
Hair Oils/ Conditioners and Shampoos constitute more than
77% of the Hair-Care category.
Products
Value in
Rs.mn
%of Total Category
Value
Hair
Oils/Conditioners 40,445 41%
Shampoos 36,726 37%
Colourants 15,420 16%
Saloon Hair Care and
Styling agents 5,512 6%
Total 98,103 100%
Note:
1. Others include Salon Hair care, Hair-loss treatments, styling agents etc.
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HAIR-CARE : COMPANY MARKET SHARES
Hair care category is quite fragmented. Top 7 companies put
together account for only 65% of the share.
Company Market Shares
2007 2012
HUL 18.3% 17.9%
Dabur 11.1% 11.2%
Marico 9.8% 9.5%
L'Oral India Pvt Ltd 5.8% 8%
Procter & Gamble 7.3% 7.7%
GCPL 4.2% 5.8%
Cavinkare 4.7% 4%
LOreals increase is due to its strong presence in Saloon Hair Care (56%) and
Colourants (10%)
GCPLs increase is due to growth of Godrej Hair Dye and Bryl cream brands.
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HAIR-CARE : BRAND SHARES
Clinic Plus, Dabur and Parachute are the 3 biggest brands.
Brand Company Market Shares
2007 2012
Clinic Plus HUL 9.1% 7.6%
Dabur Dabur India 5.4% 5.6%
Parachute Marico 4.8% 5.3%
Heads &
Shoulders
P & G 4.6% 4.2%
Sun silk HUL 4.4% 4.1%
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HAIR-CARE : GROWTH
Category
CAGR
2007-12 2012-17
Hair
Oils/Conditioners
12.8% 10.5%
Shampoos
12.3% 3.8%
Colourants
21.9% 17.2%
Saloon Hair Care and
Styling agents
25.2% 14.5%
Total 14.3% 9.7%
Colourants, Saloon Hair care, Styling products will drive the
growth in the Hair-Care category.
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HAIR-CARE : KEY TRENDS
Colourants, Saloon Hair care, Styling products will drive the
growth in the Hair-Care category.
GROWTH IN DO-IT-YOURSELF (DIY) PRODUCTS
Young consumers continued to pick up do it yourself (DIY) styling
gels and colourants to style their hair themselves.
The DIY trend was also picked up by budget-conscious
consumers, who consider such products an affordable option.
The growing desire to look good encouraged budget-conscious
consumers to accept DIY products, which are considerably cheaper
than salon products.

INCREASING REALIZATIONS
Average unit prices increased by 10% in 2011, mainly due to higher
manufacturing costs and growing acceptance of premium products.
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HAIR-CARE : KEY TRENDS
Colourants, Saloon Hair care, Styling products will drive the
growth in the Hair-Care category.
ANTI-DANDRUFF PRODUCTS
Anti-dandruff formulae continued to grow, as the climatic
conditions led to a high occurrence of dandruff amongst consumers.
Furthermore, media campaigns pushed the uptake of anti-
dandruff shampoos amongst consumers.
SALOON HAIR CARE
The faster growth in salon hair care will be driven by the increasing
number of females going to salons for hair care. In addition, growing
looks-co
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Skin Care
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SKIN-CARE : CATEGORY BREAK-UP
Products Value in Rs.mn %of Total Category Value
Facial Care 45914 90.0%
Body Care 4982 9.8%
Hand Care 127.4 0.2%
Total 51023.4 100%
Facial creams constitute 90% of the skin care category
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SKIN-CARE : COMPANY MARKET SHARES
Company Market Shares
2007 2012
Hindustan Unilever 59% 56.4%
L'Oral India Pvt Ltd
3.9% 6.5%
Amway India
Enterprises
4.5% 5%
CavinKare Pvt Ltd
3.3% 3.4%
Oriflame 2.3% 3.2%
HUL is the market leader by a huge margin over other competitors
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SKIN-CARE : BRAND SHARES
Fair & Lovely is the biggest brand in skin care with about 43%
share.
Brand Company Market Shares
2007 2012
Fair & Lovely HUL 45.3% 42.9%
Ponds HUL 5.7% 6%
Garnier Skin
Naturals
L'Oral India Pvt
Ltd
4.3% 5.8%
Lakme HUL 4.6% 4.5%
Fairever Cavinkare 3.3% 3.4%
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SKIN-CARE : GROWTH
Category
CAGR
2007-12 2012-17
Facial Care
16.9% 9%
Body Care
14.3% 10%
Hand Care
35% 17%
Overall 16.7% 10%
Skin care is expected to grow by healthy 10% between 2012-17.
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SKIN-CARE : KEY TRENDS
The growing desire to lose weight and look slim continued to fuel
growth in firming/anti-cellulite body care. Oriflame and Amway
continued to be the leading brands which pushed growth.
Other growing categories are:
Anti ageing
Cleansers
Acne treatments
GROWTH BEYOND FAIRNESS PRODUCTS
DOMINANCE OF HUL
Hindustan Unilever continued to dominate skin care with a share of
56% .
The company enjoys a leading position with established brands such as
Fair & Lovely and Ponds, which have enjoyed an established presence
in the country for years.
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SKIN-CARE : KEY TRENDS
Skin whitening continued to be a key trend, particularly in facial
moisturisers. Fair & Lovely by Hindustan Unilever alone account for
a 43% value share in skin care.
In addition to being sold as an added benefit in anti-agers and facial
cleansers, whitening emerged as a major trend in face masks.
For instance, The Himalaya Drug Co launched face masks for
skin whitening, which proved to be successful.
Manufacturers started to focus on mens skin care, which is the next
major area with potential.

Indias obsession with fainess products continues
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Biscuits
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BISCUITS : CATEGORY BREAK-UP
Products Value in Rs.mn
%of Total Category
Value
Cookies 33,776 22%
Plain Biscuits 85,814 55%
Filled and Sandwich Biscuits 23087 15%
Savoury Biscuits and Crackers 13490 9%
Total 156167 100%
Biscuit category is about Rs. 15,600 crores and Plain biscuits are
the biggest selling product category
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BISCUITS : COMPANY MARKET SHARES
Company Market Shares
2007 2012
Parle 35.7% 35.4%
Britannia
36% 33%
ITC
7.9% 13.2%
Surya Foods
4.1% 4.5%
Parle and Britannia are the two strong players with ITC increasing
their share over the last few years.
BISCUITS : BRAND SHARES
Brand Company Market Shares
2007 2012
Parle Parle 31.4% 33.1%
Britannia Britannia 36.2% 32.8%
SunFeast ITC
7.9% 13.2%
Anmol Anmol 3.6% 3
Priyagold Surya 2 2.1%
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BISCUITS : GROWTH
Products
CAGR
2007-12 2012-17
Cookies
32% 12%
Plain Biscuits
15.6% 6%
Filled and Sandwich Biscuits
23% 9%
Savoury Biscuits and Crackers
14.3% 8.2%
Overall Biscuits
18.6% 8%
Cookies will be the fastest growing product category in
biscuits.
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BISCUITS : KEY TRENDS
Cookies the Fastest growing segment
Value sales of cookies registered the fastest growth, driven by higher
consumption and a preference of cookies among children.
The expansion of chained grocery stores and increase in product offerings,
such as more imported brands on retailers shelves, was another key driver
behind growth in cookies.
Innovations in Savories and Crackers
The industry witnessed considerable innovation in savoury biscuits and
crackers. The launch of Aliva by Frito-Lay, the snack food division of PepsiCo
in 2009, introduced baked crackers to consumers.
Parle Products introduced sugar-free cream crackers.
Consumers are moving towards savoury biscuits and crackers which have
added health benefits.
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BISCUITS : KEY TRENDS
Dominance of Plain Biscuits
Plain biscuits is the largest category in biscuits.
The popularity of plain biscuits was mainly due to their affordability.
However, its growth was slowest among sweet biscuits as plain biscuits is
relatively mature and there was less product innovation in this category.
New Launches in Premium price points
Players focusing on premium launches to drive up value sales. For example
PepsiCo launched its global Quaker Oats brand of premium
cookies at a price point of Rs30.
ITC launched two products under its Sunfeast brand, Dark
Fantasy Choco Fills and Dark Fantasy cream biscuits, which
were priced Rs30 and Rs20 respectively.
Britannia also launched a cream biscuit brand, Treat-O, in
addition to its other premium launches such as Diabetes
Friendly Essentials and Chocodecker.
The launches in the premium segment are expected to be
successful, because urban consumers are increasingly looking
for varieties and better quality products.
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BISCUITS : KEY TRENDS
Dominance of Parle and Britannia
Parle and Britannia derive their dominance from wide range of products
while others focus mainly on niche segments.
These 2 companies also have the greatest reach in terms of distribution.
The above 2 reasons make biscuits a very difficult category for new players.
ITC has been the only exception to penetrate this category in a big way over
the last 5 years.
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Soft Drinks
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SOFT DRINKS : CATEGORY BREAK-UP
Bottled water, Carbonates, Fruits and Vegetable juices constitute
about 95% of the soft drinks market.
Products
Value in
Rs.mn
%of Total Category
Value
Bottled Water 128773 37%
Carbonates 156119 44%
Fruits and
vegetable Juices 54031 15%
Others 12549 4%
Total 351472 100%
Note: Others include Concentrates, Sports and Energy Drinks,
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SOFT DRINKS : OFF-TRADE VS ON-TRADE
Almost half of Soft drinks sales by value are to on-trade channel.
Products Off-trade On-trade
Bottled Water 51% 49%
Carbonates 41% 59%
Fruits and
vegetable Juices 75% 25%
Others 40% 60%
Total 51% 49%
Note:
1. On-trade is selling to hotels , restaurants, pubs.
2. Off-trade is sales to the end customers through retail outlets.
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Bottled Water
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BOTTLED WATER : COMPANY MARKET SHARES
Company Market Shares
2007 2012
Parle Bisleri 37.5% 42.8%
Pepsico
13.5% 14.9%
Coca Cola
9.2% 11.3%
Dhariwal Co
9% 8%
Others (Small and
regional play
28% 20%
Top 3 players have gained about 8% market shares mainly at the
cost of regional players.
BOTTLED WATER : BRAND SHARES
Brand Company Market Shares
2007 2012
Bisleri
Parle Bisleri 37.5% 42.8%
Acquafina Pepsico
13.5% 14.9%
Kinley Coca Cola
9.2% 11.3%
Oxyrich Dhariwal Co
9% 8%
Bisleri is the biggest brand by huge margin follwed by Acquafina
and Kinley
BOTTLED WATER : GROWTH
Period Growth (CAGR
2007-12 28%
2012-17 24%
Bottled water has been and will be one of the fastest growing
category.
BOTTLED WATER : KEY TRENDS
Still bottled water is the only product. Flavored or functional water are
sold in negligible quantities.
Fastest growing product category in soft drinks
High awareness of safety and hygiene, poor quality of tap water driving
sales.
Few years back only high income groups were the target segment but
today middle classes, tourists and travelers also consume bottled water.
Prices have remained constant or increased very little. Because there is
very little customer loyalty and the customer could easily shift to other
brands.
Distribution is the key to be competitive. All the top 3 players have strong
distribution network. In 2011, Parle Bisleri launched Bisleri hubs to drive
consumption, with local stationery shops and dairies exclusively selling the
Bisleri brand.

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Carbonated Drinks
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CARBONATES : CATEGORY BREAK-UP
Products
Value in
Rs.mn
%of Total Category
Value
Regular Cola
Carbonates 63133 40%
Low Calorie Cola
Carbonates 1235 1%
Lemonade / Lime
Carbonates 49242 32%
Orange Carbonates 23462 15%
Other Non-Cola
Carbonates 19047 12%
Total 156119 100%
Cola and Lime carbonates corms more than 70% of the category.
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CARBONATES : GROWTH
Products

CAGR
2007-12 2012-17
Regular Cola Carbonates 10.5% 7.5%
Low Calorie Cola
Carbonates 10.7% 10.2%
Lemonade / Lime
Carbonates 14.5% 16%
Orange Carbonates 4.3% 4%
Other Non-Cola
Carbonates 15.5% 15.5%
Overall 10.5% 10.1%
Non cola carbonates especially lime based are the major drivers of
growth.
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CARBONATES : GROWTH
Products

CAGR
2007-12 2012-17
Regular Cola Carbonates 10.5% 7.5%
Low Calorie Cola
Carbonates 10.7% 10.2%
Lemonade / Lime
Carbonates 14.5% 16%
Orange Carbonates 4.3% 4%
Other Non-Cola
Carbonates 15.5% 15.5%
Overall 10.5% 10.1%
Non cola carbonates especially lime based are the major drivers of
growth.
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CARBONATES : COMPANY MARKET SHARES
Company Market Shares
2007 2012
Coca-Cola 56.2% 60%
Pepsi Co
39.6% 37.2%
Others
2.6% 1.6%
Carbonates is effectively a 2 player category. Coca cola gained 3 %
share between 2007-12.
CARBONATES : BRAND SHARES
Brand Company Market Shares
2007 2012
Sprite
Coca-Cola 12.3% 16.5%
Thums Up Coca-cola
14.9% 16.5%
Pepsi Pepsi Co
14.5% 15%
Coca Cola Coca-cola
8.7% 8.8%
Limca Coca-cola
8.6% 8.3%
Mirinda Pepsi Co
9.6% 7.6%
Coca-Colas brands dominate 4 of the top 6 carbonates brands.
CARBONATES : KEY TRENDS
Convenience and distribution are driving this category .
Non-Cola carbonates especially lemonade is growing much faster
due to its perceived as a substitute of nimbu paani.
Off-Trade sales have grown faster than the on-trade, reflecting the
trend of increasing home buyers.
Carbonates sales show a lot of seasonal fluctuations. Players are
trying to overcome the seasonal fluctuations by targeting homes,
shopping centers, cinema halls, pubs, etc.
Growing health concerns is a threat for this category and some urban
consumers are shifting to fruit juices.
Players are trying to neutralize the health concern threat by:
Focusing on heavy advertisement campaigns
Launching products in non-carbonate category.