Tài liệu FMCG (Fast Moving Consumer Goods) Sector ppt

FMCG (Fast Moving Consumer Goods) Sector Analyst: Ms. Binal R. Vora Indian FMCG sector is the fourth largest sector in the economy characterized by strong MNC presence, well established distribution network, intense competition between the organised and unorganised players and low operational cost. Easy availability of important raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. Penetration level and per capita consumption in many product categories is very low compared to world average standards representing the unexploited market potential. Mushrooming Indian population, particularly the middle class and the rural segments, presents the huge untapped opportunity to FMCG players. he Indian FMCG sector is the fourth largest sector in the economy with an estimated size of Rs.1,300 billion. The sector has shown an average annual growth of about 11% per annum over the last decade. Unlike the developed markets, which are prominently dominated by few large players, India’s FMCG market is highly fragmented and a considerable part of the market comprises of unorganized players selling unbranded and unpackaged products. There are approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. India FMCG sectors’ significant characteristics can be listed as strong MNC presence, well established distribution network, intense competition between the organised and unorganised players and low operational cost. Easy availability of important raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. Products which have a swift turnover and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG items are those which generally get replaced within a year. Examples of FMCG commonly include a wide range of repeatedly purchased consumer products such as toiletries, soap, cosmetics, oral care products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products etc. Penetration level and per capita consumption in many product categories is very low compared to world average standards representing the unexploited market potential. Mushrooming Indian population, particularly the middle class and the rural segments, presents the huge untapped opportunity to FMCG players. Growth is also likely to come from consumer 'upgrading' in the matured product categories like processed and packaged food, mouth wash etc. A distinct feature of the FMCG industry is the presence of international players through their subsidiaries (HLL, P&G, Nestle), which ensures innovative product launches in the market from their parent's portfolio. Our country has a varied agro-climatic condition which enables to offer extended raw material base suitable for many FMCG sub sections like food processing industries etc. India is the one of the major producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables. Similarly, India has an abundant supply of caustic soda and soda ash, the chief raw materials required in the production of soaps and detergents, which enables the household section of the industry to excel and grow. The accessibility of these raw materials gives India the locational advantage. T Source: IMF World economic Outlook Database, Oct 2010 As can be seen from the above diagram, labor cost in India is amongst the lowest in emerging Asian countries. Easy raw material availability and low labor costs have resulted in a lower cost of production. Many multi-nationals have set up large low cost production bases in India to outsource for domestic as well as export markets. MAJOR SEGMENTS OF THE FMCG INDUSTRY: Household Care The detergents segment is growing at an annual growth rate of 10 to 11 per cent during the past five years. The local and unorganized players account for a major share of the total volume of the detergent market. The preference is given to detergents in urban area compared to bars. Household care segment is featured by intense competition and high level of penetration. With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is booming. In washing powder segment, HUL is the leader with ~38 per cent of market share. Other major players are Nirma, Henkel and Proctor & Gamble. Personal Care Personal care segment includes personal wash products, hair care products, oral care products, cosmetics etc. The Indian skin care and cosmetics market is valued at $274 million and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. The coconut oil market accounts for 72 per cent share in the hair oil market. The hair care market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. Sachet makes up to 40 per cent of the total shampoo sale. Again the market is dominated by HUL with around ~47 per cent market share; P&G occupies second position with market share of around ~23 per cent. Personal wash can be further segregated into three segments namely Premium, Economy and Popular. Here also, HUL is the leader with market share of ~53 per cent; Godrej occupies second position with market share of ~10 per cent. Swelling disposable incomes of the Indian consumers, growth in rural demand and upgrading to the premium products are the key drivers for future demand growth in major FMCG categories. 5824 2250 1889 1619 1052 943 Malasiya China Nepal Srilanka Pakistan India Labor Cost (in US $ p.a.) Labor cost in India is amongst the lowest in emerging Asian countries The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The major players in this segment are Hindustan Unilever with a market share of ~54 per cent, followed by CavinKare with a market share of ~12 per cent and Godrej with a market share of ~3 per cent. The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL occupies second position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur are the major players. Food and Beverages This segment comprises of the food processing industry, health beverage industry, bread and biscuits, chocolates & confectionery, Mineral Water and ice creams. The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks. Indian hot beverage market is a tea dominant market. The major share of tea market is dominated by unorganized players. Leading branded tea players are HUL and Tata Tea. Mjaor players in food segment are HUL, ITC, Godrej, Nestle and Amul. INDIAN CONSUMERS SPENDING PATTERN INDIA OCCUPIES 17% OF THE WORLD’S POPULATION THAT HALF OF THESE PEOPLE ARE BELOW THE AGE OF 25 Grocery 40% Personal care 8% Home Textiles 2% Saving and Investments 4% Clothing 7% Consumer Durables 7% Vacation 4% Eating Out 10% Footwear 2% Music & Theatre 5% Entertainment 2% Accessories 1% Books and Music 8% China 19% India 17% United States 5% Indonesia 4% Mexico 2% Pakistan 3% Bangladesh 2% Nigeria 2% Russia 2% Japan 2% Philippines 2% Ethiopia 1% Vietnam 1% Egypt 1% Germany 1% Turkey 1% Iran 1% Congo 1% Thailand 1% France 1% Others 31% SWOT ANALYSIS: Strengths: • Low operational costs • Presence of established distribution networks in both urban and rural areas • Presence of well-known brands in FMCG sector • Favorable governmental Policy: o Indian Government has passed the policies aimed at attaining international competitiveness through lifting of the quantitative restrictions, reducing excise duties, 100 per cent export oriented units can be set up by government approval and use of foreign brand names etc. • Foreign Direct Investment (FDI): Automatic investment approval up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies investment is allowed for most of the food processing sector except malted food, alcoholic beverages and those reserved for small scale industries (SSI). Weaknesses: • Lower scope of investing in technology and achieving economies of scale, especially in small sectors • Low exports levels Opportunities: • Untapped rural market, changing life style • Rising income levels, i.e. increase in purchasing power of consumers • Large domestic market with more population of median age 25 • High consumer goods spending • India is the largest milk producer in the world, yet only around 15 per cent of the milk is processed. The organized liquid milk business is in its infancy and also has large long-term growth potential. Even investment opportunities exist in value-added products like desserts, puddings etc. • Only about 10-12 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential. • India is under penetrated in many FMCG categories as shown in below diagram. With rise in per capita incomes and awareness, the growth potential is huge. • Lower price and smaller packs are also likely to drive potential up trading for major FMCG products • Rural demand etc. Threats: • Removal of import restrictions resulting in replacing of domestic brands • Tax and regulatory structure • Rural demand is cyclical in nature and also depends upon monsoon. THE TOP 10 COMPANIES IN FMCG SECTOR 1. Hindustan Unilever Ltd. 6. Asian Paints (India) 2. ITC (Indian Tobacco Company) 7. Cadbury India 3. Nestlé India 8. Britannia Industries 4. GCMMF (AMUL) 9. Procter & Gamble Hygiene and Health Care 5. Dabur India 10. Marico Industries LOW PER CAPITA CONSUMPTION IN INDIA COMPARED TO WORLD’S OTHER COUNTRIES :: HUGE UNTAPPED OPPRTUNITY (Data for the year 2001) Source: AC Nielsen OUTLOOK: India has 17% of the world's population and that half of these people are below the age of 25. With a median age of 25 years, increasing numbers are joining the Indian workforce. India's share in world consumer spending is set to enlarge from 1.9% in 2005 to 3.1% in 2020. (Source: Technopak) Income in the hands of younger consumers with a higher propensity to spend, is providing optimism to the economy while opening up new categories in the FMCG space. India is under changing phase as more women are joining India's workforce, FMCG players are finding opportunities to introduce products in the convenience and health foods segments. While spending on women's personal care products is also becoming far more acceptable. Distribution of smaller pack sizes, innovations like single use sachets to reach out to the rural and lower section of the economy is gaining demand. Innovative products to cater to regional or local tastes and the needs of niche consumers is also benefiting in growth of the industry. Key growth drivers to the Industry are as follows: Robust growth in India’s GDP Growing urbanization Evolving consumer life style Increased income in rural areas Spending Pattern Changing Profile and Mind Set of Consumer Growth of modern retail The FMCG sector has a great opportunity for growth in the country, with the growing population, the rising disposable incomes, education, urbanization, the advent of modern retail, and a consumption-driven society. There is a potential for all the FMCG companies as the per capita consumption of almost all products in the country is very low compared to world standards, thee exists there huge untapped opportunities. Research Team Mr. Amit Gupta amitg@iseindia.com Ms. Binal Vora binalv@iseindia.com Ms. Sandhya Tungatkar Sandhyat@iseindia.com DISCLAIMER: This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. 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