INDUSTRY STRUCTURE AND DEVELOPMENT
India's fast moving consumer goods (FMCG) sector is the fourth largest sector in the economy. Its principal constituents are foods, personal care, fabric care and household products. The total FMCG market is in excess of US$ 17.36 billion and is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015.
The industry is characterized by a large unorganized sector, low penetration levels, well-established distribution network, low operating cost and lower per capita consumption.
Most products are manufactured by simple manufacturing processes that require fairly low capital investments. This has made the proliferation of localized brands and products being offered in loose form possible in small towns and rural India where brand awareness is low.
Brand building and product differentiation hence play a pivotal role in the success of a product in the FMCG sector. Consumer insighting and innovation assume great importance. Where innovation is low, smaller players are able to offer similar products at reasonable prices, making cost management another key to successful performance in the sector.
While the penetration of some product categories is high, there are several product segments in which the consumer spends as a proportion of disposable income appears very low when compared to other emerging Asian economies. Improvement in incomes is likely to steadily drive increased consumption in packaged foods, personal care and household products.
Most large FMCG comp ...