FMCG

FMCG Industry

Fast-moving consumer goods (FMCG) or consumer packaged

goods (CPG). 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 of
frequent consumption and have a high return.

FMCG main
segments
1.
2.
3.
4.

Household Care: Fabric wash, Household cleaners

Personal Care: Oral care, hair care, skin care, cosmetics/deodorants, perfumes, feminine hygiene and paper products
Food & Beverages: Health beverages, staples/cereals, bakery products, snacks, chocolates, ice cream, tea/coffee/soft drinks, processed fruits and vegetables, dairy products, and branded flour
Health Care: OTC products and ethicals

1. Household Care: Fabric wash, Household cleaners

2. Personal Care: Oral care, hair care, skin care, cosmetics/deodorants, perfumes, feminine hygiene and
paper products
3. Food & Beverages: Health beverages, staples/cereals, bakery products, snacks, chocolates, ice cream,
tea/coffee/soft drinks, processed fruits and vegetables, dairy products, and branded flour
4. Health Care: OTC products and ethicals

Trends in FMCG revenues over the years (USD billion)

110

82.5

55

27.5

2006

2007

2008

2009

2010

2011

2012

2015F

2020F

Fourth Largest sector in the Indian Economy.

Has grown at an annual average of 11% over the last decade.

Food Products

Personal Care

Fabric Care

4%

Hair Care

2%

Households

OTC products

5%

4%
8%

43%

12%

22%

Market break-up by revenue (2009)

Baby Care

Others

Urban/Rural Industry break-up (2013)

Rural; 34%

Urban; 66%

Future Expectations:
Penetration of many product categories is still low. Even among those where the penetration is higher, per capita consumption is
comparatively low, thereby offering scope for high growth in future.
India offers huge opportunity for the FMCG market compared to its regional counterparts. Per capita consumption of skincare
products (USD0.3), shampoos (USD0.3) and toothpastes (USD0.4) indicates high potential for FMCG companies to expand their
reach.

Modern; 6%
Modern; 30%

Traditional ; 70%
Traditional ; 94%

2012

2020E

Growth Drivers of Indian FMCG Sector

Porters Five Forces Analysis

Competitive Rivalry

Private label brands by retailers are priced at a discount to mainframe brands

limits competition for the weak brands
Highly fragmented industry as more MNCs are entering

Threat of New
Entrants

Huge investments in setting up distribution network and promoting brands

Spending on advertisements is aggressive

Substitute Products

Presence of multiple brands

Narrow product differentiation under many brands

Bargaining Power of
Suppliers

Big FMCG companies are able to dictate the prices through local sourcing from
a fragmented group of key commodity suppliers

Bargaining Power of
Customers

Low switching cost induces the customers product shift

Influence of marketing strategies

Colgate Palmolive
(India)

11

Introduction
Colgate Palmolive (India) is the subsidiary of American multinational , Colgate Palmolive
consumer products company focused on the production, distribution and provision of household,
health care and personal products.
It is Indias 4th largest personal care product manufacturer, with market cap. of Rs 26,534 crore.
For the third consecutive year, Colgate has been ranked as the #1 Most Trusted Brand by
Brand Equitys Annual Survey.
It is noteworthy that Colgate is the only Brand to be ranked in the top 3 from the inception of
the survey in the year 2001.
Colgatehasmarketshareof57.1%intoothpastecategoryand42.3%intoothbrushcategory.

Products

CPIL

HUL

DABUR

Others

Toothpaste Market share

9%
13%
21%

56%

Major Competitors:
1. Hindustan Unilever
2. Dabur India
3. Godrej Consumer
4. Marico
5. P and G

Main Revenue Sources (2014)

Product Name

Sales Value
(Rs. Million)

% of Total Sales

Soaps, Cosmetics and

31323.76
Toilet Preparation

82.62

Toothbrushes and
Shave Brushes

13.31

5044.96

Soaps, Cosmetics and

1180.75
Toilet Preparation

3.11

Other Operating
Revenue

0.96

363.6

Major Shareholders
22%
51%
27%

Promoter and promoter Group

Institutions
Non-Institution

tern is more or less same.

ding is constant at 51%

Category of Shareholder

%of total shares

Total shareholding of Promoter and

Promoter Group

51

Mutual Funds / UTI

1.68

Financial Institutions / Banks

0.27

Central Government / State

Government(s)

0.11

Insurance Companies

4.14

Foreign Institutional Investors

19.16

Foreign Portolio Investor

( Corporate)

1.37

Bodies Corporate

1.33

Individual shareholders holding

nominal share capital up to Rs. 1
lakh

20.14

Individual shareholders holding

nominal share capital in excess of
Rs. 1 lakh

0.17

Others( NRIs, Trusts, Foreign

Nationals)

0.63

FIIs shareholding pattern

27.5

22

16.5

11

5.5

0
2009

2010

2011

2012

2013

2014

Peer Average

CP

Quick Ratio
1.1

0.83

0.55

0.28

0
2010

2011

2012

2013

2014

Peer Average

CP

Current Ratio
2

1.6

1.2

0.8

0.4

0
2010

2011

2012

2013

2014

Peer Average

CP

Retrun On Equity
200

160

120

80

40

0
2010

2011

2012

2013

2014

Peer Average

CP

Net Profit Margin

26.25

21

15.75

10.5

5.25

0
2010

2011

2012

2013

2014

Peer Average

CP

Retrun on Capital Employed

225

180

135

90

45

0
2010

2011

2012

2013

2014

Peer Average

CP

Return on Asset
50

37.5

25

12.5

0
2010

2011

2012

2013

2014

Peer Average

CP

Dividend Payout Ratio

125

100

75

50

25

0
2010

2011

2012

2013

2014

SWOT ANALYSIS

Strength
1. It is one of the biggest brands in the personal care consumer products industry.
2. It has over 38000 employees globally.
3. One of the market leaders globally with excellent R&D.
4. Colgate focuses on two core businesses: Oral Care, Personal Care .
5. Colgate has excellent reach and distribution.
6. Excellent advertising and brand visibility of products with a strong customer loyalty for
brands.
7.Diversified product mix

Weakness

1. Market share is limited due to presence of other strong FMCG brands.

2. Fake brands are supplied under their brand names.
3, Revenues mainly dependent on one brand i.e Colgate Toothpaste.

Opportunity
1. Tap rural markets and increase penetration in urban areas
2.Mergers and acquisitions to strengthen the brand
3. Rural consumption has increased, led by a combination of increasing incomes and higher
aspiration levels there is an increased demand for branded products in rural India.
4. Low penetration levels in rural market offers room for growth.
5. The FMCG industry is expected to grow at the rate of 12-17% in next decade.

Threats

1. Intense and increasing competition amongst other FMCG companies

2.FDI in retail thereby allowing international brands
3. Competition from unbranded and local products

Future Plans
&
News

New Projects
1. Toothpaste manufacturing facility at Sanand in Gujarat to cater the increasing demand.
2. Toothbrush manufacturing facility at Sricity in Chittoor District in Andhra Pradesh.

New Products
1. Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer , its first and only family
toothpaste that directly fights sugar acids, the leading cause of cavities.
2. Colgate Active Salt Healthy White toothpaste which offers the benefit of Yellowness
removal from teeth. This product has the combination of salt and lemon that delivers
yellowness removal.
3. Colgate Maxfresh Fresh Tea toothpaste which offers consumers a unique and exciting Tea
flavor experience.
4. Colgate Slim Soft, a toothbrush with super slim and ultra-soft tapered bristles - 17X slimmer
than ordinary end-rounded bristles;
5. Colgate Wave Gum Comfort Toothbrush
6. Colgate Super Flexi Toothbrush

TM

News
1. GST will be implemented from next fiscal year, it will help the FMCG industry.
2. The policy changes announced in Union Budget of 2015-16, will help the sector to grow,
like reduction in corporate tax.
3. Indian economy is expected to grow as much at the rate of 8.3% in the fiscal year 201516.

The Verdict

The company is fundamentally strong with strong financials

and a good business model.