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W H AT S I N S T O R E
FOR OUR FMCG
MARKET?
PREDICTING SALES OF FAST-MOVING
CONSUMER GOODS IN INDIA
Nielsen predicts that Indias FMCG industry will grow
from $37 billion in 2013 to $49 billion in 2016.
Indian FMCG industry expected to grow 7% in 2014, 10%
in 2015 and about 12% in 2016, taking the sales in 2016
to $49 billion.
Distribution growth, innovations around sachet offerings,
employment rates and index of industrial production (IIP)
are key influencers of FMCG sales in India.
22
19
20
17
23
2008
2009
12
22
2010
U+R
13
2011
URBAN
2012
2013
RURAL
MACRO
ECONOMIC INDICATORS
MEDIA
(TV)
FORCES
AT
PLAY
DEMOGRAPHIC
PATTERNS
IDENTIFYING SALES
DRIVERS
QUANTIFYING IMPACT
OF EACH
ENVIRONMENTAL
INFLUENCERS
SACHET
OFFERINGS
AWARENESS
VALUE
PACKS
33%
18%
3%
1%
EMPLOYMENT
RATE
INDEX OF
INDUSTRIAL
PRODUCTION (IIP)
GDP
20%
13%
7%
CONTROLLABLE
CRUDE OIL
PRICES
NOT DIRECTLY
CONTROLLABLE
5%
MARKETERS CAN
INCREASE THEIR
SALES THROUGH
WELL-PL ANNED
DISTRIBUTION
EXPANSION AND SALES
OF SMALLER PACKS
FMCG VALUE
GROWTH ON
DECLINE:
BREAKDOWN
Here is a closer look at how some of the drivers affect FMCG sales:
Availability: The slowdown in distribution expansion has held up
growth. The distribution expansion in 2013 has slowed down to 1.1%
from a healthy 2.3% in 2010.
Awareness: While the extent of the impact is smaller, yet, the effect of
lower television gross rating points (GRP) has affected sales.
Macro factors: Declining FMCG growth seems to be reflective of the
Indian economy as a whole. The key macroeconomic indicators have
weakened; GDP slowed from 7.9% in 2009 to 5.7% as of Nov. 12, 2013.
The Index of Industrial Production (IIP) has also plunged from 5.8% in
2009 to 1.7% in November 2013. This has affected the economy and the
consumers purchasing power.
Sachet (Low volume packs): New product launches through sachets
have fuelled growth over the years. The growth in the number of lowvolume packs hit 31.1% from 2009 to 2010. The rate then dropped to
10.5% from 2012 to 2013. This drop in sachet innovations has impacted
FMCG growth.
FMCG
-8.1%
=
AVAILABILITY
-1.6%
+
AWARENESS
-0.3%
MACRO
FACTORS
-2.4%
+
SACHET
-3.8%
WHAT TO EXPECT
The dark clouds of sales growth of the last few years appear to be
clearing. Nielsen expects a steady recovery over the next few years.
While we dont expect growth rates to touch the levels we saw in 2010,
we do expect the numbers to improve.
RISE IN EMPLOYMENT
ARE PRIMARILY
EXPECTED TO DRIVE A
SPURT IN SALES AND
EFFECT A RECOVERY
2010
2011
2012
ACTUAL GROWTH%
2013
2014
12%-13%
2009
10%-11%
7%-8%
12%
13%
17%
20%
22%
YEARS
2015
2016
FMCG VALUE
GROWTH
BREAKDOWN
FMCG
FORECASTED GROWTH%
4.8%
Source: Nielsen
=
AVAILABILITY
The primary factors expected to drive a spurt in sales are a stronger GDP
and rise in employment. An increase in the rate of availability through
distribution expansion is also expected to support sales growth.
+1.4%
+
POSITIVE GROWTH RATE OF MACRO
FACTORS AND AVAIL ABILIT Y IS EXPECTED
TO REVERSE THE TREND OF GROWTH ON
DECLINE
Nielsen expects the Indian FMCG sector to touch US$49 billion by 2016.
The early signs of revival include a recovering GDP, a strengthening
economy and higher consumer sentiment about their employment
opportunities.
AWARENESS
+0.1%
MACRO
FACTORS
+3.3%
NOT JUST
DISTRIBUTION
EXPANSION BUT THE
RIGHT DISTRIBUTION
EXPANSION CAN
MAKE ALL THE
DIFFERENCE TO
GROWTH.
WHILE DRIVING
SALES THROUGH
LOW VOLUME PACKS
Sachets come with a low outlay, and as we have seen from the drivers
of sales, they are integral in driving trial, penetration and sales. Sachets
also help in recruiting new stores as a part of distribution expansion.
This, when combined with the established importance of consumerdriven innovations, can lead to a potentially promising idea. Marketers
now need to boldly innovate and come out with appealing packs which
are affordable and can get consumers into the fold. Given the economic
environment, affordable low volume packs will play an important role in
driving consumer adoption and sales.
AND AFFORDABLE
INNOVATIONS WILL
NEED TO BE A FOCUS
AREA, MARKETERS
MUST ALSO KEEP
AN EYE ON THE
BROADER THEME OF
ASSORTMENT OF
SKU s IN THE RIGHT
STORES TO FULFIL
VARIED CONSUMER
NEEDS.
NITYA BHALLA
A J R VASU
EXECUTIVE DIRECTOR
DIRECTOR
NIELSEN INDIA
NIELSEN INDIA
ABOUT NIELSEN
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and
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and consumer information, television and other media measurement,
online intelligence and mobile measurement. Nielsen has a presence
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and Diemen, the Netherlands.
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