Changing Trends in FMCG Industry in India

Fast moving consumer goods (FMCGs)  are the products that are consumed in short span of time and are consumed daily. Examples are packed food items, soft drinks, soaps, toiletries etc.  The FMCG industry can be broadly divided into 3 segments :

• Household care : fabric wash and household cleaners
• Personal Care : oral care, health care, skin care, cosmetics, hygiene and paper products
• Food and Beverages: bakery, chocolates, snacks, tea/coffee, diary products etc

The FMCG industry is the fourth sector is the fourth largest constituent of Indian economy and has a market size of about 130,000 crore. In the early ninties, FMCG marketers figured out two things:

• the rural markets are price-sensitive
• the rural markets are really important since the urban markets are getting saturated.

This led to a number of companies in following strategies for launching package sizes and prices to suit the purchasing sizes of the Indian consumer markets. This led to the introduction of small sachets in all segments from oil,shampoo to beverages. Sachets led to the concept of trial consumption.

FMCG growth is a function of

• create brand and product awareness
• increasing consumer demand
• growth of modern trade
• launching new products
• availability of online channel to shop
• rise incomes led to purchases
• desire to experiments with brands
• evolving consumer lifestyles

Main characteristics of FMCG are:

From the consumers’ perspective :

• frequent purchase
• low involvement and price

From the marketers’ angle:

• high volume
• low contribution margins
• high stock turnover
• extensive distribution networks