FMCG Sector History

FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a
lot of thought, time and financial investment to purchase. Everything from toothpaste to
processed foods and health drinks to body care products comes from FMCG or alternatively
called as consumer packed goods. Three of the largest and best known examples of Fast
Moving Consumer Goods companies are Nestle, Unilever and Procter & Gamble.

The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth
largest sector in the economy and is responsible for 5% of the total factory employment in
India and captures a market capitalization of around 60,000 crore rupees .This has been due
to liberalization, urbanization and increase in the disposable incomes and altered lifestyle of
the people. The lower-middle income group accounts for over 60% of the sector's sales and
rural markets account for 56% of the total domestic FMCG demand. FMCG sector is
expected to grow by over 60% by 2011 and by 2015, the sector is predicted to scale up to
US$33.4 billion.

In India, companies like ITC, HLL, Colgate, Cadbury and Nestle have
been a dominant force in the FMCG sector well supported by relatively less
competition and high entry barriers as import duty was high. SO these companies
were able to charge a premium for their products. In this context, the
margins were also on the higher side. With the gradual opening up of the
economy over the last decade, FMCG companies have been forced to fight for a
market share. In the process, margins have been compromised, more so in the
last six years and therefore, FMCG sector witnessed decline in demand.

The companies which play an important role in the history of FMCG sector are Godrej and
Reckitt - Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's
Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk made it to the
top 100, whereas P&G's, Head and Shoulders and Pantene are not far behind. Clinic is nearly
double the size of Sunsilk. Dabur is among the top five FMCG companies in India and is a
herbal specialist. Asian Paints is enjoying a formidable presence in the Indian sub-continent,
Southeast Asia, Far East, Middle East, South Pacific, Caribbean, Africa and Europe.
Cadbury India is the market leader in the chocolate confectionery market with a 70% market
share and is ranked number two in the total food drinks market. Its popular brands include
Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion and Marico is a leading
Indian group in consumer products and services in the Global Beauty and Wellness space.

There is a huge growth potential for all the FMCG companies as the per capita consumption
of almost all products in the country is amongst the lowest in the world. Again the demand or
prospect could be increased further if these companies can change the consumer's mindset
and offer new generation products. Earlier, Indian consumers were using non-branded
apparel, but today, clothes of different brands are available and the same consumers are
willing to pay more for branded quality clothes. It's the quality, promotion and innovation of
products, which can drive many sectors.