PROJECT REPORT

ON
“SWOT ANALYSIS ON FMCG INDUSTRY IN INDIA”
Mini Project- II

Submitted
In Partial Fulfillment of the Requirements
For the Degree of
MASTERS OF BUSINESS ADMINISTRATION
(Batch 2023-24)

Submitted by
Jaya Singh

Roll No.: 2307560700053

Under the Guidance

of
Prof. Shilpika Pandey

Institute of Management Research & Technology

Vipul Khand - 6 Gomti Nagar, Lucknow-226026
 CERTIFICATE

This is to certify that I JAYA SINGH have carried out the research work presented in the project titled
“SWOT ANALYSIS ON FMCG INDUSTRY IN INDIA” Submitted for partial fulfillment for the award
of the Degree of Masters in Business Administration from IMRT Business School, Lucknow under my
supervision.
It is also certified that:
i. This thesis embodies the original work of the candidate and has not been earlier submitted elsewhere
for the award of any degree/diploma/certificate.
ii. The candidate has worked under my supervision for the prescribed period.

Therefore, I deem this work fit and recommend submission for the award of the aforesaid degree.

Signature of Supervisor

Name: Prof. Shilpika Pandey

Address: IMRT Business School, Vipul Khand
Gomti Nagar, Lucknow-226010
Date:
Place: Lucknow

Name – Jaya Singh | Roll no – 2307560700053 2

 DECLARATION

I hereby declare that the project report entitled “SWOT ANALYSIS ON FMCG INDUSTRY IN INDIA”

submitted by me to the Institute of Management Research & Technology, Lucknow in partial fulfillment of

the requirement for the award of the degree of Masters in Business Administration is a record of Bonafede

project work carried out by me under the guidance of Prof. Shilpika Pandey I further declare that the work

reported in this project has not been submitted and will not be submitted, either in part or in full, for the award

of any other degree or diploma in this institute or any other institute or university.

PLACE: LUCKNOW JAYA SINGH

DATE: MBA 1st Year
IMRT

Name – Jaya Singh | Roll no – 2307560700053 3

 ACKNOWLEDGEMENT

I would like to express my deep sense of gratitude to all those people who have helped me with their guidance
and assistance during the research project without which this would not have been possible.

I would like to convey our deep regards to our CHAIRMAN D.R. BANSAL, IFS who has equipped me with
the requisite knowledge and helped me to complete this project.

I would like to express my gratitude to my coordinator PROF. SHILPIKA PANDEY who gave me the
opportunity to do this wonderful project.

I would also like to thank my friend who helped me complete this project.

I am extremely grateful to my parents for their eternal love and their sacrifices for educating and preparing
me for my future. They have been my source of inspiration and had a very important role in the completion
of this project work.

JAYA SINGH
MBA 1st Year
(IMRT)

Name – Jaya Singh | Roll no – 2307560700053 4

 Table of Contents

CHAPTER 1...................................................................................................................................................... 6
FMCG SECTOR ................................................................................................................................... 7
FMCG SECTOR IN INDIA ................................................................................................................. 7
MARKET SIZE .................................................................................................................................... 8
INVESTMENTS .................................................................................................................................. 9
GOVERNMENT INITIATIVES ........................................................................................................ 10
ROAD AHEAD .................................................................................................................................. 11
TYPES OF FMCGs ………………………………………………………………………………………………………………………………… 12
CHAPTER 2.................................................................................................................................................... 16
INDUSTRY ANALYSIS .....................................................................................................................17
PORTER FIVE FORCES MODEL .................................................................................................... 17
FACTOR ANALYSIS (PEST Analysis) ............................................................................................. 18
SWOT ANALYSIS ............................................................................................................................. 20
CHAPTER 3 ................................................................................................................................................... 22
EMERGING TECHNOLOGIES IN THE SELECTED INDUSTRY ................................................ 23
FINDINGS ......................................................................................................................................... 27
CONCLUSION .................................................................................................................................. 28
BIBLIOGRAPHY .............................................................................................................................. 29

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 Chapter-1

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 FMCG SECTOR

Fast-moving consumer goods (FMCG) are consumer products designed for frequent use, usually consumed
quickly, and have high demand and low cost. This definition of FMCG can be broken into four key parts.
• Designed for frequent use: FMCG products are typically used often, even daily. These include
products like bread, soap and shampoo.
• Consumed quickly: FMCG products are consumed quite speedily. For example, a consumer might
purchase bread from a local bakery or bakery chain and eat it on the same day it is purchased.
• Have high demand: The demand for FMCGs is usually very high. This can be due to their
affordability or practicality, among other reasons. An example of an FMCG product with high demand
would be soap – people tend to buy soap frequently due to the need for cleanliness.
• Low cost: FMCGs are usually inexpensive or at least cheaper than other types of goods on the market.
An example would be bread – it is often much more affordable than a luxury handbag.
These goods are called fast-moving as they move from the sales area to the point of consumption within a
short time span.

FMCG SECTOR IN INDIA

Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and personal
care accounting for 50% of FMCG sales in India. Growing awareness, easier, access and changing lifestyles
have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around
55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in
the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India.
Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50% of the
total rural spending.

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Market Size

The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion by 2025,
from US$ 110 billion in 2020. The Indian FMCG industry grew by 16% in CY21 a 9-year high, despite
nationwide lockdowns, supported by consumption-led growth and value expansion from higher product
prices, particularly for staples. The rural market registered an increase of 14.6% in the same quarter and metro
markets recorded positive growth after two quarters. Final consumption expenditure increased at a CAGR of
5.2% during 2015-20. According to Fitch Solutions, real household spending is projected to increase 9.1%
YoY in 2021, after contracting >9.3% in 2020 due to economic impact of the pandemic. The FMCG sector's
revenue growth will double from 5-6% in FY21 to 10-12% in FY22, according to CRISIL Ratings. Price
increases across product categories will offset the impact of rising raw material prices, along with volume
growth and resurgence in demand for discretionary items, are driving growth. The FMCG sector grew by
36.9% in the April-June quarter of 2021 despite lockdowns in various parts of the country. Number of
households shopping on modern-trade channel grew 29.15% YoY in the September quarter and shopping
volume on the channel went up by 19.2% YoY. In September 2021, rural consumption of FMCG increased
58.2% YoY; this is 2x more than the urban consumption (27.7%).
In the third quarter of FY20 in rural India, FMCG witnessed a double-digit growth recovery of 10.6% due to
various government initiatives (such as packaged staples and hygiene categories); high agricultural produce,
reverse migration, and a lower unemployment rate. Rise in rural consumption will drive the FMCG market.
The Indian processed food market is projected to expand to US$ 470 billion by 2025, up from US$ 263 billion
in 2019-20 FMCG giants such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakme and other
companies (that have dominated the Indian market for decades) are now competing with D2C-focused start-
ups such as Mama earth, The Moms Co., Bey Bee, Azah, Nua and Pee Safe. Market giants such as Revlon
and Lotus took ~20 years to reach the Rs. 100 crore (US$ 13.4 million) revenue mark, while new-age D2C
brands such as Mama earth and Sugar took four and eight years, respectively, to achieve that milestone.
Companies with dedicated websites recorded an 88% YoY rise in consumer demand in 2020. Since then, more
businesses have begun to adopt the D2C model, and India is now home to >800 D2C brands looking at a US$
101 billion opportunity by 2025. E-commerce companies reported sales worth US$ 9.2 billion across
platforms in October and November (2021), driven by increased shopping during the festive season. With
festive season sales, Flipkart Group emerged as the leader with a 62% market share. Advertising volumes on
television recorded healthy growth in the July-September quarter, registering 461 million seconds of
advertising, which is the highest in 2021. FMCG continued to maintain its leadership position with 29%

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growth in ad volumes against the same period in 2019. Even the e-commerce sector showed a healthy 26%
jump over 2020.

Investments

The Government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand
retail and 51% in multi-brand retail. This would bolster employment, supply chain and high visibility for
FMCG brands across organized retail markets thereby bolstering consumer spending and encouraging more
product launches. The sector witnessed healthy FDI inflows of US$ 20.01 billion from April 2000-December
2021.
Some of the recent developments in the FMCG sector are as follows:
• In February 2022, Dabur India formed an exclusive partnership with energy provider Indian Oil, which
will give Dabur's products direct access to around 140 million Indane LPG consumer households
across India.
• Become, a startup in India is revolutionizing the FMCG market with low-cost, environmentally-
friendly consumer goods.
• In February 2022, Dabur India achieved its goal to collect, process, and recycle approximately
22,000MT of post-consumer plastic three months early.
• In February 2022, Marico Ltd announced it aims to achieve net-zero emissions by 2040 in its global
operations.
• In November 2021, Tata Consumer Products (TCPL) signed definitive agreements to acquire 100%
equity shares of Tata Smartfood Limited (TSFL) from Tata Industries Limited for a cash consideration
of Rs. 395 crore (US$ 53.13 million). This move was in line with TCPL's strategic intent to expand
into the value-added categories.
• In November 2021, Unilever Plc agreed to sell its global tea business to CVC Capital Partners for EUR
4.5 billion (US$ 5.1 billion. The business being sold—Ektara— hosts a portfolio of 34 tea brands,
including Lipton, PG Tips, Pukka Herbs and TAZO.
• In November 2021, McDonald's India partnered with an FMCG company ITC to add a differentiated
fruit beverage, B Natural, to its Happy Meal, which will be available across all McDonald's restaurants
in South and West India, primarily catering to children aged 3–12 years.
• In October 2021, Procter & Gamble announced an investment of Rs. 500 crore (US$ 66.8 million) in
rural India.
• In September 2021, PepsiCo commissioned its Rs. 814 crore (US$ 109.56 million) Kosi Kalan foods
facility in Mathura, Uttar Pradesh; it is the company's largest green field manufacturing investment in
India.
• In September 2021, Vah dam India, an Indian tea brand, raised Rs. 174 crore (US$ 24 million) as part
of its Series D round led by IIFL AMC's Private Equity Fund.
• In September 2021, RP-Sanjiv Goenka Group entered the personal-care segment by launching skin
and haircare products, aiming at a revenue of Rs. 400-500 crore (US$ 53.84-67.30 million) in the next
4-5 years.
• In September 2021, Adani Wilmar announced the opening of physical stores under the name 'Fortune
Mart' that will exclusively sell Fortune and other Adani Wilmar brand products.
• In August 2021, Apna Klub, a Bengaluru-based B2B wholesale marketplace for consumer goods,
raised US$ 3.5 million in a seed round from Sequoia Capital India's Surge, increasing the total funds
to US$ 5 million.
• In August 2021, Soothe Healthcare, an Indian personal hygiene products brand, raised Rs. 130 crore
(US$ 17.54 million) in a Series-C round of funding from A91 Partner Partners.
• In August, Adani Wilmar, a 50/50 joint venture between Adani Group and Singapore-based Wilmar,
filed for initial public offering (IPO) to raise up to Rs. 4,500 crore (US$ 607.13 million) for expansion.

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 • In the fourth quarter of FY21, e-commerce sales of Marico Ltd., Hindustan Unilever Ltd., Dabur India,
ITC and Godrej Consumer Products Ltd. were 8%, 6%, 5%, 5%, and 4%, respectively, of the total
FMCG sales.
• In July 2021, Emami Ltd. increased its stake (by 15% to 46%) in Helios Lifestyle, which sells male-
grooming products under The Man Company brand in line with its ambition to tap emerging online
opportunities.
• In July 2021, Tata Consumer Products Ltd. introduced 'Eight o’clock', America's Original Gourmet
Coffee, under D2C, besides Tata Coffee 1868 and Sonnets, as a part of its strategy to enhance its D2C
approach for select coffee brands and their specific websites. The company plans to add more brands
in the D2C space as these three coffee brands stabilize.
• In July 2021, HUL launched in-store vending machine model, Smart Fill machine, for its home care
products with the aim to reuse and recycle plastic. Smart Fill machine will allow consumers to reuse
plastic bottles by refilling products from its brands like Surf Excel, Comfort and Vim.
• As of June 2021, e-commerce share has already touched 7-8% for some of the largest FMCG
companies in the country, according to Accenture India.
• In June 2021, Dabur India announced its Rs. 550 crore (US$ 75.6 million) investment to set up a new
plant in Madhya Pradesh for manufacturing of food products, ayurvedic medicines and health
supplements.
• In May 2021, Tata Digital Ltd., a 100% subsidiary of Tata Sons, acquired a 64.3% stake in supermarket
grocery supplies, the business-to-business arm of BigBasket in tandem with Tata Group's strategy to
build a digital consumer ecosystem. According to the Economic Times, the deal is worth U$ 1.8-2
billion.
• In May 2021, Nepal-based CG Corp Global, known for its popular noodles brand Wai, announced its
plan to invest Rs. 200 crore (27.42 million) to set up two new manufacturing plants in West Bengal
and Uttar Pradesh.
Government Initiatives

Some of the major initiatives taken by the Government to promote the FMCG sector in India are as follows:
In November 2021, Flipkart signed a MoU with the Ministry of Rural Development of the Government of
India (MoRD) for their ambitious Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-
NRLM) programmed to empower local businesses and self-help groups (SHGs) by bringing them into the e-
commerce fold.
Companies are counting on recent budget announcements like direct transfer of Rs. 2.37 lakh crore (US$ 30.93
billion) in minimum support payment (MSP) to wheat and paddy farmers and the integration of 150,000 post
offices into the core banking system to expand their reach in rural India.
On November 11, 2020, Union Cabinet approved the production-linked incentive (PLI) scheme in 10 key
sectors (including electronics and white goods) to boost India's manufacturing capabilities, exports and
promote the 'Atmanirbhar Bharat' initiative.
Developments in the packaged food sector will contribute to increased prices for farmer and reduce the high
levels of waste. In order to provide support through the PLI scheme, unique product lines—with high-growth
potential and capabilities to generate medium- to large-scale jobs—have been established.
The Government of India has approved 100% FDI in the cash and carry segment and in single-brand retail
along with 51% FDI in multi-brand retail.
The Government has drafted a new Consumer Protection Bill with special emphasis on setting up an extensive
mechanism to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers. The
Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG products such as
soap, toothpaste and hair oil now come under the 18% tax bracket against the previous rate of 23-24%. Also,
GST on food products and hygiene products has been reduced to 0-5% and 12-18% respectively. GST is
expected to transform logistics in the FMCG sector into a modern and efficient model as all major corporations
are remodeling their operations into larger logistics and warehousing.
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Road Ahead
Rural consumption has increased, led by a combination of increasing income and higher aspiration levels.
There is an increased demand for branded products in rural India.
On the other hand, with the share of unorganized market in the FMCG sector falling, the organized sector
growth is expected to rise with increased level of brand consciousness, augmented by the growth in modern
retail.
Another major factor propelling the demand for food services in India is the growing youth population,
primarily in urban regions. India has a large base of young consumers who form majority of the workforce,
and due to time constraints, barely get time for cooking.
Online portals are expected to play a key role for companies trying to enter the hinterlands. Internet has
contributed in a big way, facilitating a cheaper and more convenient mode to increase a company’s reach. The
number of internet users in India is likely to reach 1 billion by 2025. It is estimated that 40% of all FMCG
consumption in India will be made online by 2020. The online FMCG market is forecast to reach US$ 45
billion in 2020 from US$ 20 billion in 2017.It is estimated that India will gain US$ 15 billion a year by
implementing GST. GST and demonetization are expected to drive demand, both in the rural and urban areas,
and economic growth in a structured manner in the long term and improved performance of companies within
the sector.

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Types of FMCGs

FMCG products are usually broken up into different types depending on the industry they are sold in.
These include:
• Food and Beverages
• Personal Care
• Healthcare Care
• Home Care
• Food And Beverage
Food and beverage products usually fall into the FMCG category due to their short life span and
high turnover rates.
Types of food and beverage products that are usually classed as FMCGs include but are not limited to:
• Processed food, such as bread, pasta and potato chips.
• Ready to eat food, such as packets of nuts or crisps.
• Beverages, such as bottled water, coffee cups and cans of soda.
Personal Care Products Personal care products, such as shampoo and toothpaste, can also be classed as
FMCGs because they are needed frequently by most consumers, usually bought at a low cost and not built
to last. These include lotions, hair dyes, lipsticks, cosmetics, deodorants, bath soap, dental care products,
etc.
Healthcare Care Products
Healthcare care products are also classed as FMCGs because they are usually highly demanded, not built to
last and very distributed. These include products like plasters, bandages, syringes, condoms, etc.
Home Care Products
Products that are used for household purposes also fall into this category because they are usually
standardized, low durability goods that are highly distributed and sold at a usually low unit price. They
include cleaning products, kitchen towels, toilet rolls, bleach, dusters, etc.

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FMCG Companies Examples
Some of the largest FMCGs companies in the world include but are not limited to:
➢ Coca-Cola
Coca-Cola is an American multinational corporation that is currently among the world’s largest beverage
companies. The Coca-Cola Company manufactures, distributes and sells non-alcoholic beverages. The
company operates in over 200 countries and focuses its product range on sparkling soft drinks such as Coca-
Cola and Diet Coke, still drinks such as Minute Maid, and energy drinks such as Powerade.
➢ Nestle S.A.
Nestlé S.A., often styled as NESTLÉ, is a Swiss transnational FMCG company headquartered in Vevey, Vaud,
Switzerland. It is the largest food company in the world measured by sales. The company deals in baby food,
medical food, bottled water, coffee and tea, confectionery, dairy products, frozen food, pet foods, ice cream,
breakfast cereals, and snacks.
➢ Unilever PLC
Unilever is a British-Dutch multinational consumer goods company co-headquartered in London, United
Kingdom and Rotterdam, Netherlands. Its products include food, beverages.

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Trends and Development

Here are a few trends and developments that will govern the FMCG sector:
1. Health & Wellness will be a growing domain
There is a growing awareness amongst people regarding their wellbeing. As people realize that good health
needs proactive attention, they are rapidly growing closer to healthy eating habits. A lot has been said and
written about the immunity boosting foods and supplements during this time. In fact, the online search on
immunity boosting ‘topped amongst Indian users in April. People are becoming more watchful of what they
buy and what goes into their bodies, internally and topically. Organic, superfood-based, nutritious, natural
products are going to be a hit amongst the masses, no matter what the category. There is a clear need for
embracing healthy ingredients in the product DNA, for FMCG companies to stand out, make an impact.
2. Personal care industry will take off with a spotlight on sanitizers and handwashes
By now, it is no rocket science to draw that the personal care industry is inclining towards articles endorsing
hygiene. The market saw it all, from an uptick in sales and prices of hand sanitizers and handwashes to a
supply deficit in both offline and online stores. Google searches for face masks and hand wash swelled up
during the outbreak. The industry, valued at USD 2.7 billion in 2019, is pegged to excel at a CAGR of 22.6%
from 2020 to 2027.
3. Online and Digital Marketing will lead the way
Social media has 3.81 billion users worldwide. The OTT sector in India saw a 30% rise in paid subscriptions
from 22.2 million to 29 million between March and July 2020. Needless to say, you cannot turn a blind eye
towards the reach and opportunities that the new-age socializing and entertainment platforms offer. Today,
uploading an engaging post on Instagram, a tweet on Twitter, or sharing user testimony on skincare products,
unboxing an assortment of healthy foods, etc. on YouTube can create a larger impact for FMCG brands than
the traditional me-too marketing tools. When customer experience is the epitome, customer patience is too
low, and time is money, FMCG players may not want to stick to newspapers, radio, and television to change
their world. With an average monthly data usage surpassing 11GBs and deep smartphone penetration, online
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and digital marketing will be the frontrunners in converting passive consumers into active ones. After all, a
motivated user is much better than a hundred others who just know about the brand or the product.

4. Emphasis on eCommerce and a connected supply chain management

ECommerce players can help the brands with last mile deliveries, covering the nook and corner of the country
and helping extend the brand's reach to rural areas - one of the biggest contributors to the overall revenue
generated by FMCG in India. DTC brands are having a gala time getting direct insight into consumer
preferences, more importantly under the current COVID scenario, as every article sold allows FMCG brands
to interact with an engaged audience. Feedbacks are quick, which used to take months earlier, if not years.
Moreover, this eliminates the need for distributors, reducing product distribution cost from the business
ecosystem. Learning that FMCGs must reflect agility and resilience amidst adversities, moving away from the
traditional approaches that have worked until now Talking about distribution, the supply chain is expected to
change its course from a linear to a connected one. Brands have until now relied upon distributors and stockiest
to sufficiently dispense the product at the retailer's end. With retailers automating their inventory journey with
intuitive apps and intelligent PoS, it would become cost- and time-effective for brands to directly connect with
former for stock ups, ensuring uninterrupted supply.

5. Products designed and targeted at Millennials and Gen Zs

Gen Y and Z display unique sets of demands. For them, the product itself must be a key differentiator. Clear
brand identity and what it stands for attracts these two generations the most. Additionally, with a handsome
disposable income and a good exposure to the digital world, these generations have access to possibly the best
in the world. The most sure-shot way of their inclusion is offering customization and personalization, which
comes with the deployment of new-age technologies. Artificial intelligence and Machine Learning-powered
hyper-marketing can extract and combine crucial data on a customer from various sources to understand their
requirements, preferences, spending potential, and so on for a highly personalized experience. As we move
forward, FMCG players will have to create a niche in their segments. The sector which was mostly defined
by political, cultural, and social factors is currently being driven by the healthcare condition of the nation.
Hence, it would be only Advisable to swivel along the lines of health and technology for smooth sailing amidst
choppy waters.

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 Chapter-2

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INDUSTRY ANALYSIS
The 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.The growth in sales of major FMCG companies like Dabur, HUL, Marico, is signaling
the revival of consumer demand in India. As the market continues to grow at a rapid pace, Indian Retailer
takes a look at Porter’s five force threats that may affect the FMCG industry.
PORTER FIVE FORCES MODEL

• Threat of substitutes
With high presence of multiple brands in the market, it is not a challenge for consumers to switch from one
product to another. Strategic decisions like price point and quality play key roles in attracting consumers. With
narrow product differentiation under many brands, it‘s rather easy for a consumer to switch to another brand.
The threat of substitutes is informed by switching costs, both immediate and long-term, as well as a buyer's
inclination to change.
• Competitive rivalry
Many players are expanding into new geographies and categories and modern retail share is expected to be
valued $180 billion in 2020. The FMCG industry has been a highly fragmented industry as more companies
enter the market. If Wipro is diversifying and expanding its product range in energy drinks, detergents and
fabric conditioners, Patanjali will spend US$743.72 million in various food parks across the country. Also,
launch of private label brands by big retailers, which are competitively priced with offers and discounts, will
limit competition for weak brands.
• Bargaining power of buyers
While rising incomes and growing youth population have been key growth drivers of the sector, brand
consciousness has also aided demand. With low switching cost inducing customers to shift to other products,
there will only be more demand for new products. Also, the availability of same or similar Alternatives, backed
by strong influence of marketing strategies will help the sector. India’s consumer spending is expected to
increase to US$ 3.6 trillion by 2020.
• Threat of new entrants
Any new competition in the market poses threat to the existing players in the industry. With investment
approvals of up to 100 per cent foreign equity in single brand retail and 51 per cent in multi-brand retail, the
market is expected to be crowded. Also, companies will be forced to spend aggressively on advertisement,
which will only hurt the business in the long run.
• Bargaining power of suppliers
Big FMCG companies are often in a position to dictate prices through local sourcing from a fragmented group
or key commodity suppliers. Suppliers can exert pressure on businesses and even buyers by raising prices,
lowering quality or reducing product availability. Such decisions mostly affect the buyers.

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AND
FACTOR ANALYSIS (PEST Analysis)

i. Political
• Tax Structure: Complicated tax structure, high in direct tax and changing tax policies are
challenges for this sector.
• Infrastructure Issues: Performance of FMCG sector is very much dependent on government
spending on Agricultural, Power, and Transportation Infrastructure.
• Regulatory Constraints: Multiplicity permits and licenses for various states, prevailing outdated
labor laws, and cumbersome and lengthy export procedures are major constraints.
• Policy framework: FDI into Retail sector (single-brand & multi-brand retail), License rules in
setting up of Industry, Changes in Statutory Minimum Price of commodities are barriers for growth
of this sector.

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 ii. Economical
• GDP Growth: Growth of FMCG industry is consistent with the Indian economy. It has grown by
15 % over past 5 years. It shows good scope for this sector in near future.
• Inflation: Inflationary pressures alter the purchasing power of consumer which Indian economy is
facing in recent years. But it has not affected much to Indian FMCG sector.
• Consumer Income: Over the past few years, India has seen increased economic growth. The GDP
per capita income of India increased from 797.26 US dollars in 2006 to 1262.4 US dollars in 2014.
It resulted in increase of consumer expenditure
• Private Consumption: The Indian economy, unlike other economies, has a very high rate of private
consumption (61%).

iii. Social
• Change in consumer Profile: Rapid urbanization, increased literacy, increase in nuclear families and
rising per capita income, have all caused rapid growth and change in demand patterns, leading to an
explosion of new opportunities. Around 45 per cent of the population in India is below 20 years of
age and the young population is set to rise further.
• Change in Lifestyle: In past decade changes are taking place in consumption pattern of Indian
consumer with more spending on discretionary (52%) than necessities (e.g. food, clothing’s). In last
decade the apparel, footwear and healthcare segments have registered highest growth whereas
essentials such as cereals, edible oil, fruits and vegetables shown.
• Rural focus: As market is getting saturated, companies are focusing on rural area for penetration by
providing consumers with small sized or single-use packs such as sachets.

iv. Technology
• Effective use of technology is seen only in leading companies like HUL, ITC etc.
• E- Commerce will boost FMCG sales in future. More than 150 million consumers would be
influenced by digital by 2020 and they will spend more than $45 billion on FMCG categories.

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 SWOT Analysis

1. Strengths
• Low operational costs: One of the important strengths of this sector is low operational cost.
• Presence of established distribution networks in both urban and rural areas. A well established and
wide distribution network of both MNC and Indian FMCG companies increased an access for
consumers.
• Presence of well-known FMCG brands: The Presence of strong brands in Indian FMCG sector not
only results in increased sales but also provides an opportunity in future.

2. Weakness
• Low scope for investing in technologies and achieving economies of scale, especially in small
sectors.
• Me- too products, which illegally mimic the labels of established brands. These products narrow the
scope of FMCG products in rural and semi- urban markets.
• Less innovative abilities and systems: Indian FMCG sector, especially small players are lagging
behind in adopting innovative approaches for fulfilling needs of the consumers.

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 3. Opportunities
• Untapped rural market, changing life style: An untapped, huge and fragmented rural market is an
opportunity for FMCG players. The Penetration level for many FMCG product categories is very
low especially in rural area.
• Rising income levels, i.e. increase in purchasing power of consumers: According Mc Kinsey Global
Institute report, in next two decades income level of Indian consumer will almost triple and India
will become world’s fifth – largest consumer market by 202510.India‘s middle class size will
increase to 583 million, or 41% of the population. Extremely rural poverty has declined from 94% in
1985 to 61% in 2005 and is projected to drop to 26% by 2025. This will result into increased
purchasing power of Indian consumer.
• Large domestic market with more population of median age 25 years: India has large young
population, 54 % of Indians are under 25 years of age. A rising productive population fuels growth
and drives personal consumption
• High consumer goods spending: The rising income is resulting into high spending into consumer
goods. According to a Nielsen report, the spending on consumer goods set to triple to $ 5 billion by
201511.
• Export potential to neighboring countries like Bangladesh, Pakistan, and Silence.

4. Threats
• Entry of MNCs with liberalization: In the post liberalization era Indian market has become highly
competitive. Many multinational companies have entered in to the Indian market.
• The removal of import restrictions resulted in replacement of domestic brands.
• Rural demand is cyclical in nature and also depends upon monsoon to large extent.
• Complicated, changing and uneven tax structure is one of the major threats for FMCG sector.
• New packaging norms made mandatory for all companies to sell products in standard size packs.

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 Chapter-3

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 EMERGING TECHNOLOGIES IN THE SELECTED INDUSTRY

Technology ages like milk. Simply put, they don’t age well. That’s why the fast-moving consumer goods
(FMCG) industry is at the forefront of innovation by discovering new solutions and applying them in business.
All across the market, we can see examples of digital transformation aiming to optimize business and
outmaneuver the competition.
You can benefit from applying new technologies on multiple levels in your organization. Modern software
solutions solve not only issues with keeping ―fast relevant in the FMCG acronym but also improve logistics,
optimize processes, and drive sales.
Looking for new technologies, your ears will be filled with buzzwords like Blockchain, artificial intelligence
(AI), and big data. While some of them are just that, others can provide you with real benefits. Here are a few
examples of trends. Let’s give them a quick reality check.

Connecting the dots and data with technology

Efficiency is the key to a profitable FMCG business. We fight not only against the expiration dates of products
but also the complexity of production and administration processes. Proper automation is an investment that
will result in optimizing costs and increasing your margin. There are a couple of things you need to know to
get started on the right foot.

Unifying the tech stack within the group

Being in FMCG, you’re likely a part of a bigger group or have subsidiaries that use their own range of
solutions. While you can probably connect them to keep the group working together for a time, in the long
run, you’ll be looking to unify the technological stack to cut costs and improve transparency. It’s crucial to get
it right since the costs of a failed implementation can go into millions of dollars.
It’s difficult to generalize this issue because the needs are unique for every company. You need precisely
chosen, specific tech, elaborate architecture, proper methodology, and a sound transition plan. At the business
and technological pace, we experience today, we know one thing for sure: your architecture has to be agile.

What makes a modern FMCG IT architecture good?

The issues we usually see FMCG companies struggling with are the lack of process automation within their
enterprise resource planning (ERP) and e-commerce systems. Employees have to click through all the digital
paperwork. Orders aren’t automatically handed over to the warehouse management system. Customer service
is manual when it can be automated through chatbots with benefits for both customer and producer.
To allow your company to automate those processes, you’ll need solutions that can be connected behind the
scene. They need flexible APIs to let them communicate with each other without human help. The new
approach to business software architecture leverages this approach to build solutions that are: split into micro
services to easily manage all the features.
1. Focused on API interactions.
2. Cloud-based to keep your solution safe and scalable.
3. Decoupled from the front end that presents data to the users.

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In short, it’s micro services-based, API-first, cloud-native, and headless. We call it MACH architecture. With
this approach in mind, you get a constellation of independent software pieces that can be easily adjusted to
your current needs, quickly rearranged, and seamlessly replaced if needed. To learn more about composable
commerce and headless architecture, check out our headless toolkit.

Trends and technologies in FMCG

➢ Omnichannel
In B2C, Omnichannel means the approach of allowing users to buy through any medium they want. They
can access your products through voice assistants, mobile, desktop, marketplaces, and so on. In general,
it’s an agile approach to sales channels and building architecture can be easily extended to the new touch
points. In the near future, even a fridge might be able to restock on cheese if it runs out.

While Omnichannel is praised in retail, there are no reasons not to use it in wholesale, too. In B2B, this
means a flexible API that’ll allows your partners to plug in their systems and automatically place orders
to control their stock. There might be new channels coming into play, and ones that we wouldn’t think of
right now. With an Omnichannel approach, you’ll be ready for that.

➢ Marketplaces
Marketplaces are important for the industry because they can solve one of the most common issues. That’s
the low diversification of sales channels. Solving this issue helps to scale your sales channels while
keeping costs low.

If you put up your products online, you must take extra care for integrations with platforms such as
Amazon. With modern e-commerce platforms, you can easily integrate with any external marketplace or
build one for yourself. You can read more about it in our eBook about online marketplaces, this blog post
about different types of marketplaces, or in this article listing great marketplace features.

➢ Direct distribution/direct to consumer

Avoiding intermediaries in selling your products makes a lot of sense. It allows you to:

a) Connect with customers directly.

b) Build customer loyalty.
c) Engage with customers.
d) Increase your profit margin.
In the age of e-commerce, this trend for producers is even easier to jump on. You need to build your own
online shop. That takes us directly to the next point.

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➢ E-Commerce systems
Some modern solutions still struggle to adapt in many FMCG companies. Many eCommerce platforms
lack basic e-commerce features, such as quick price updates on the website. It’s a crucial moment to get it
right because the competition that already did it properly may start to further distance them soon.
It’s forecasted that, by 2040, 95% of retail purchases are likely to be made online and traditional retail may
hardly matter. Since using eCommerce has become a daily practice around the world, it's not surprising
that consumers are now expecting a similar level of experience in B2B. Retailers who don’t transform to
meet these demands are facing the risk of losing relevance with their customers.
E-Commerce systems are a vast topic because they come in all shapes and sizes. We usually recommend
Magneto Commerce if your budget is smaller and commerce tools if it’s bigger. There are many more
rules, vendors, and hacks to make your system fit your company like a glove.
➢ Optimizing supply chain management
When we’re talking about the supply chain in FMCG, we often mean third-party logistics (3PL). It’s not
uncommon to see IT systems poorly integrated with 3PL. It may cause multiple issues, including:
a) No possibility of canceling an order before it has been processed.
b) No ability to quickly identify products that often break during shipment.
c) Difficulties with providing special packaging or specific warehousing and shipping
conditions.
All these issues tend to be a nightmare without flexible tech to support your 3PL and might require custom
integrations. Still, it’s good to get it right since it might open the way to a smooth international expansion.
Fulfillment and logistics are make-or-break factors in international expansion. (...) The best way to provide
low-cost, fast shipping to a consistent international customer base is to keep portions of your inventory in
local fulfillment centers near them. Look for 3PL based in your country that has an international warehouse
network.
➢ AI
One of the most misunderstood innovations in modern technology, AI can provide you multiple benefits
ranging from automating customer service to improving process automation. Within the FMCG industry,
the most interesting area will be big data analysis. It Can analyze a database to find patterns, discover
interesting dependencies, optimize budgeting, and predict trends.

➢ Blockchain solutions
Blockchain has been a big buzzword for the last decade. Except for crypto payments, there are two
particularly interesting use cases for the FMCG industry: Bringing transparency to the supply chain and
certifying products, as in the Walmart case study.

➢ Custom or out-of-box
They say that with modern technologies, the possibilities are endless, but in fact, we‘re all limited by
budgets and timelines. Time is the trade-off for FMCG companies whenever we build IT systems to last.
When picking the right technology in a big FMCG company, you face the build vs. buy dilemma. You can
develop solutions from scratch, or you can apply out-of-box applications to solve your problems. In
practice, usually, the most efficient project will be combining both approaches: you build custom features
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 over a set of integrated out-of- box solutions. If you want to dig deeper into the possibilities and
technologies used in modern FMCG businesses, feel free to contact us or simply continue to discover our
comprehensive library of eBooks, webinars, and podcasts.

➢ Big Data & Analytics

FMCG companies actively leverage big data to innovate and compete in the industry. As data is
becoming more and more accessible with consumers shopping online, brands explore new ways to
increase relationships with their customers and gain insights from their behavior. Data analytics explores
customer preferences and behavior to provide FMCG companies with a deeper understanding of their
purchase habits. Big data solutions allow brands to optimize communication with their customers and
offer more personalized experiences.

➢ Internet of Things
As IOT evolves, its applications gain popularity in the FMCG sector. IoT devices are automated and
affordable, enabling FMCG companies to employ them in brick-and-mortar stores, warehouses, and
manufacturing facilities. One example of IoT device implementation is to provide targeted messaging to
consumers while they are shopping. Another one is inventory management, both in stores and in
warehouses, for which IoT is widely used. In combination with related emerging technologies, including
ambient intelligence and smart objects, IoT creates new consumer interaction channels and revenue
streams for FMCG brands.

➢ 3D Printing
Additive manufacturing and its applications create disruptive solutions for the FMCG industry. The vast
amount of waste generated by use-and-throw consumer products, from personal care to food packaging,
prompts FMCG industry stakeholders to find sustainable alternatives. 3D printing allows FMCG brands
and manufacturers to design and develop products that use eco-friendly materials and reduce plastic use.
To this end, FMCG companies leverage 3D printing for prototyping, designing, tooling, and scaling
production in a sustainable manner. Further, food companies are able to offer extra nutritional value in
their products by utilizing 3D food printing.

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 FINDINGS
• Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and personal
care accounting for 50% of FMCG sales in India.
• The FMCG sector grew by 36.9% in the April-June quarter of 2021 despite lockdowns in various parts
of the country.
• India is the most alluring FMCG market on the planet.
• FMCG market developed in India throughout the years yet it is profoundly fragmented.
• There are 12-15 million outlets in the nation making it US$ 327 billion years.
• In the third quarter of FY20 in rural India, FMCG witnessed a double-digit growth recovery of 10.6%
due to various government initiatives (such as packaged staples and hygiene categories); high agricultural
produce, reverse migration, and a lower unemployment rate.
• On November 11, 2020, Union Cabinet approved the production-linked incentive
• (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India's manufacturing
capabilities, exports and promote the 'Atmanirbhar Bharat' initiative.
• The Government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand
retail and 51% in multi-brand retail. This would bolster employment, supply chain and high visibility for
FMCG brands across organized retail markets thereby bolstering consumer spending and encouraging
more product launches.
• GST and demonetization are expected to drive demand, both in the rural and urban areas, and economic
growth in a structured manner in the long term and improved performance of companies within the sector.
• The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall
revenue generated by the FMCG sector in India. However, in the last few years, the FMCG market has
grown at a faster pace in rural India compared to urban India. Semi-urban and rural segments are growing
at a rapid pace and FMCG products account for 50% of the total rural spending.
• The Government has drafted a new Consumer Protection Bill with special emphasis on setting
up an extensive mechanism to ensure simple, speedy, accessible, affordable and timely delivery
of justice to consumers.
• The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion
by 2025, from US$ 110 billion in 2020. The Indian FMCG industry grew by 16% in CY21 a 9-
year high, despite nationwide lockdowns, supported by consumption-led growth and value
expansion from higher product prices, particularly for staples.

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 CONCLUSION

Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and personal care
accounting for 50% of FMCG sales in India. Growing awareness, easier access and changing lifestyles have
been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%)
is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in the last
few years, the FMCG market has grown at a faster pace in rural India compared to urban India. Semi-urban
and rural segments are growing at a rapid pace and FMCG products account for 50% of the total rural
spending.
The FMCG sector is a beast with market size is a beast with market size contacting about Rs. 1.7 Lakh crore
in India. 98% of the market is as yet overwhelmed by the little stores inspite of the Big (Bazaars/ Baskets) on
advancing with hotshots.
FMCG Industry in India not at all like other developing economy is still exceptionally customary in nature
and is to a great extent constrained by Cooperatives and Independent FMCG organizations. Road market
assumes a significant part in the FMCG business of India as the majority of the population does the shopping
here. The FMCG sector is loaded with circumstances and difficulties.
The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion by 2025,
from US$ 110 billion in 2020. The Indian FMCG industry grew by 16% in CY21 a 9-year high, despite
nationwide lockdowns, supported by consumption-led growth and value expansion from higher product
prices, particularly for staples. The rural market registered an increase of 14.6% in the same quarter and metro
markets recorded positive growth after two quarters.

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 BIBLIOGRAPHY
➢ https://www.ibef.org/industry/fmcg
➢ https://www.feedough.com/fast-moving-consumer-goods-fmcg/
➢ https://www.ceoinsightsindia.com/industry-insider/trends-and-developments-in-the-indian-fmcg-
industry-nwid-4332.html
➢ https://www.indianretailer.com/article/launch-pad/fmcg/These-5-potential-threats-may-affect-the-
FMCG-sector.a5925/
➢ https://freepestelanalysis.com/pestpestel-analysis-of-fmcg-industry-in-india/
➢ https://www.worldwidejournals.com/paripex/recent_issues_pdf/2016/February/an-overview-of-
indian-fmcg-sector_February_2016_9050651554_8505908.pdf

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