FAST MOVING CONSUMER GOODS (FMCG) For updated information, please visit www.ibef.org

April 2018

Table of Content

Executive Summary……………….….…….3 Advantage India…………………..….……. 4 Market Overview and Trends………..…….6 Porters Five Forces Framework…….……15 Strategies adopted……………....………...16 Growth Drivers…….………………............19 Opportunities.....…………………………...28 Case Studies……….……….......…………31 Industry Organisations……….……….......35 Useful Information……….……….......…...37

EXECUTIVE SUMMARY

FMCG market in India (US$ billion)  Favourable demographics and rise in income level to boost FMCG market  FMCG market in India is expected to grow at a CAGR of 20.6 per cent and is expected to reach US$ 103.7 billion by 2020 from US$ 49 billion in 2016

150

CAGR 20.6%

100

104

50 49 0 2016

2020F

Total consumption expenditure (US$ billion)  Total consumption expenditure is set to increase at a CAGR of 22.57 per cent from 2016-2021.

4,000

 Total consumption expenditure is expected to reach nearly US$ 3600 billion by 2020 from US$ 1,595 billion in 2016

2,000

CAGR 22.6%

3,000 3,600

1,000

1,595

0 2016

2020F

Rural FMCG market in India (US$ billion)  Rise in rural consumption to drive the FMCG market  The rural FMCG market in India is expected to grow to US$ 220 billion by 2025 from US$ 29.4 billion in 2016

250 200 150 100 50 0

220

29

100

2016

2020F

2025F

Notes: F- Forecast Source: World Bank, Emami Reports, Dabur Reports, AC Nielsen

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ADVANTAGE INDIA

ADVANTAGE INDIA

 Low penetration levels in rural market offers room for growth

 Rising incomes and growing youth population have been key growth drivers of the sector. Brand consciousness has also aided demand

 Disposable income in rural India has increased due to the direct cash transfer scheme

 India’s consumer spending is expected to increase to US$ 3.6 trillion by 2020 and India’s contribution to global consumption is expected to more than double to 5.8 per cent by 2020.*

 Exports is another growing segment  E-commerce companies like Amazon are strengthening their business in FMCG sector, by positioning their platform pantry as front line offering to drive daily products sales.

 Tier II/III cities are witnessing faster growth in modern trade

ADVANTAGE INDIA  Many players are expanding into new geographies and categories  Modern retail share is expected to triple its growth from US$60 billion in 2015 to US$180 billion in 2020  With an investment of US$ 254.50 million, Wipro is diversifying and expanding its product range in energy drinks, detergents and fabric conditioners.

 Investment approval of up to 100 per cent foreign equity in single brand retail and 51 per cent in multi-brand retail  Initiatives like Food Security Bill and direct cash transfer subsidies reach about 40 per cent of households in India  The minimum capitalisation for foreign FMCG companies to invest in India is US$100 million

 Patanjali will spend US$743.72 million in various food parks in Maharashtra, M.P. Assam, Andhra Pradesh and Uttar Pradesh. Note: E – Estimated, F – Forecast, * - as per a report by BCG and CII Source: Emami

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MARKET OVERVIEW AND TRENDS

EVOLUTION OF FMCG IN INDIA

FY00 

FMCG is the 4th largest sector in the Indian economy



Household and Personal Care is the leading segment, accounting for 50 per cent of the overall market. Hair care (23 per cent) and Food and Beverages (19 per cent) comes next in terms of market share



Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector

FY17

 Indian FMCG Industry – US$ 9 billion

 Indian FMCG Industry – US$ 49 billion

 Market size of chocolates