Industry Sessions

FMCG

October 2010 ZIGEDU Learning Solutions

 What is FMCG?
2

Fast Moving Consumer Goods (FMCG) 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, household
accessories and extends to certain electronic
goods. These items are meant for daily of
frequent consumption and have a high return.

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 The Industry
3

Indiaʹs FMCG sector is the fourth largest sector in the economy

Creates employment for more than three million people in downstream activities.

Its principal constituents are Household Care, Personal Care and Food &
Beverages.

The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing
at double digit growth rate and is expected to maintain a high growth rate.

FMCG Industry is characterized by a well established distribution network, low
penetration levels, low operating cost, lower per capita consumption and intense
competition between the organized and unorganized segments.

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 SWOT Analysis
4

Weaknesses
Strengths 1. Lower scope of investing in technology & achieving
1. Low operational costs economies of scale, especially in small sectors
2. Presence of established distribution networks in 2. Low exports levels
both urban and rural areas 3. "Me-too" products, which illegally mimic the labels
3. Presence of well-known brands in FMCG sector of the established brands. These products narrow the
scope of FMCG products in rural & semi-urban market

SWOT
Opportunities
1. Untapped rural market Threats
2. Rising income levels, i.e. increase in purchasing 1. Removal of import restrictions resulting in replacing
power of consumers of domestic brands
3. Large domestic market- a population of over one 2. Slowdown in rural demand
billion. Tax and regulatory structure
4. Export potential
5. High consumer goods spending

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 Key Drivers of Indian FMCG Sector
5

Governmental Policy - Indian Government has enacted policies aimed at attaining international
competitiveness through lifting of the quantitative restrictions, reducing excise duties, automatic foreign in-
vestment and food laws resulting in an environment that fosters growth. 100 per cent ex-port oriented units can
be set up by government approval and use of foreign brand names is now freely permitted.

Central & State Initiatives - Recently Government has announced a cut of 4 per cent in excise duty to fight with
the slowdown of the Economy. This announcement has a positive impact on the industry. But the benefit from the
4 per cent reduction in excise duty is not likely to be uniform across FMCG categories or players. The changes in
excise duty do not impact cigarettes (ITC, Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat
foods, as these products are either subject to specific duty or are exempt from excise. Even players with
manufacturing facilities located mainly in tax-free zones will also not see material excise duty savings. Only
large FMCG-makers may be the key ones to bet and gain on excise cut.

Foreign Direct Investment (FDI) - Automatic investment approval (including foreign technology agreements
within specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate
Bodies (OCBs) investment, is allowed for most of the food processing sector except malted food, alcoholic
beverages and those reserved for small scale industries (SSI). There is a continuous growth in net FDI Inflow.
There is an increase of about 150 per cent in Net Inflow for Vegetable Oils & Vanaspati for the year 2008.

Vast Rural Market - Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian
population and accounts for ~50 per cent of the total FMCG market. The working rural population is
approximately 400 Millions. And an average citizen in rural India has less then half of the purchasing power as
compare to his urban counterpart. Still there is an untapped market and most of the FMCG Companies are
taking different steps to capture rural market share. The market for FMCG products in rural India is estimated ~
52 per cent and is projected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd is the largest player in
the industry and has the widest market coverage.
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 Key Drivers (Contd.)
6

Export - “Leveraging the Cost Advantage” - Cheap labor and quality product & services have helped India to
represent as a cost ad-vantage over other Countries. Even the Government has offered zero import duty on
capital goods and raw material for 100% export oriented units. Multi National Companies out-source its
product requirements from its Indian company to have a cost advantage. India is the largest producer of
livestock, milk, sugarcane, coconut, spices and cashew apart from being the second largest producer of rice,
wheat, fruits & vegetables. It adds a cost advantage as well as easily available raw materials.

Sectoral Opportunities Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

Dairy Based Products - 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.

Packaged Food - Only about 10-12 per cent of output is processed and consumed in packaged form, thus
highlighting the huge potential for expansion of this industry.

Oral Care - The oral care industry, especially toothpastes, remains under penetrated in India with
penetration rates around 50 per cent. With rise in per capita incomes and awareness of oral hygiene, the
growth potential is huge. Lower price and smaller packs are also likely to drive potential up trading.

Beverages - Indian tea market is dominated by unorganized players. More than 50% of the market share
is capture by unorganized players highlighting high potential for organized players.

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 Top Players
7

Domestic International

ITC (Indian Tobacco Company)
Hindustan Unilever Ltd.

GCMMF (AMUL)
Nestlé India

Dabur India
GCMMF (AMUL)

Godrej Consumer Products Ltd.
Colgate Palmolive (India) Ltd.

Britannia Industries
Cadbury India

Marico Industries
Britannia Industries

Nirma Limited
Procter & Gamble Hygiene and
Health Care

HJ Heinz Ltd.

PepsiCo

Coca Cola
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 What does it take?
8

Good Team Player

Able to work under pressure and time line

Strong communication skills

Strong organization skills

Good numerical skills

Hard working

Creative

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 Hierarchy in Sales
9

Area Sales Manager - Reporting to the Sales Manager, the role of Area Sales
Manager is primarily responsible for delivering profitable sales in line with agreed
targets. Main activities include liaising with distributors, handling team of sales
officers, reporting, designing and implementing promotional activities

Sales Manager – Reports to the Category Head. Responsible for sales and
marketing activities in a particular geographical area

Category Head – Responsible for sales of a particular category of products, e.g.

Personal Care, Cosmetics, etc.

Regional Head – Most companies in India have four regional heads, one for each
of North, South, East and West. The Regional Heads are responsible for sales figure
for their particular region.

National Head – The senior-most position in the Sales and Marketing Department.
This job cam also be handled by a CMO.
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 Marketing Roles
10

Assistant Brand Manager – Reports to the Brand Manager. Responsible for 1 To

creating media plan for advertise products at relevant media, keep vigil on brand
promotional activities, whether activities are being performed accordingly or not,
conduct survey with competitor's service or product and collecting feedback and
analysis, Get information about consumer's demand and interest, Collect information
about area of consumers, display brand at target place

Corporate Communication and PR - In charge of all the communication that goes

out to the press and public from the corporate.

Brand Manager – Oversees the work of an Asst. Brand Manager and selects and
approves the media plan, in charge of product promotions and their impact, liaising
with creative agency for creating advertisements, etc.

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 Other Opportunities
11

Most Indian FMCG companies recruit from MBA colleges for a myriad of roles in
departments other than Sales and Marketing:

Human Resource

Finance and Accounts

Treasury

Strategy

Operations

Supply Chain and Distribution

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 What’s in it for you
12

1. Job security - It is a stable industry. Unlike some other industries, such as automobiles and IT, FMCG industry does not suffer from
mass layoffs, every time the economy starts to dip. One may drop the idea of buying a car but not the idea of having dinner. This
lends FMCG a level of job security unknown in other industries.

2. A high profile industry - India has 1.1 billion people and all are consumers. Therefore everyone is affected by FMCG sector.

3. Quick experience - Due to the huge volume of business in the FMCG sector, one is exposed to a lot of experience in a very short
span and get more experienced in less time working in FMCG than any other sector, no matter whether in sales, marketing,
operations, accounting, etc. In the end, one will land up learning more and gaining a firm grasp of basic business skills.

4. A wide range of experience -One can have a wide range of choices if one desires a career path in FMCG sector. Wide
availability of options for working in a large MNC or a small local company ensures that people in FMCG sector have a range of
job roles available to them. The "fast moving" part of FMCGs requires people who are flexible. Transfer from sales to marketing or
to operations is very common. In fact all three roles can be played at once in smaller firms. One will get to learn a lot, even if one
enters this sector for a short duration.

5. An industry that thrives on innovation - FMCG sector gives the opportunity to do creative work. There is a constant
requirement of innovation in production, advertising, packaging and branding.

6. Nationwide opportunities, both urban and rural - FMCG sector offers opportunities through its connection to the primary sector
in rural and urban areas. The sector is particularly attractive for those interested in working in different parts of the country, as it
has a nationwide base, unlike many other sectors confined to particular locations.

7. Offshore opportunities - The International offices of most FMCG multinationals regularly recruit staff from our country, either
for short projects or for longer stints.

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 13

Gokul Bajaj
Email: iilm@zigedu.com
Mobile No: 0 9911 48 48 11

Registered Office
94, Gagan Vihar(Main),
Vikas Marg,
Delhi -110051

Corporate Office
301, 3rd Floor, DDA Building,
Laxmi Nagar District Center,
Thank You!
Near Nirman Vihar Metro Station,
Delhi-110092

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