FMCG Sector

NIFTY 50 NIFTY FMCG Executive Summary

17,536.25 38,259.75 Fast-moving consumer goods (FMCG) are packaged goods consumed or sold in
smaller quantities at regular intervals. The fast-moving consumer goods (FMCG)
industry contributes significantly to India's GDP growth. The FMCG industry is
FMCG
categorized into four divisions, home, and personal care is the largest, accounting
for around half of the total FMCG market.
Industry P/E Market Size
The FMCG industry is distinguished by a well-connected network, low
67.02 $ 110 billion
penetration, cheap operating costs, lower per capita consumption, and fierce
competition between organized and unorganized parts.
FMCG Market Size (in USD$ billion)
Growing awareness among people, easier access to all things because of rapid
220 advancement in technology, and change in lifestyles have been the significant
growth drivers in this sector.

Rapid urbanization, rising literacy, and rising per capita income have all resulted
110 in rapid development and shifts in demand patterns, resulting in an abundance of
83.3 new opportunities.
68.4
52.8
43.1 49
31.6 33.3 35.7 38.8 Industry Description

The FMCG sector is the fourth largest sector in India as per FY 2020 and
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 contributes significantly to India's GDP with the market of worth $110 billion. This
business is expected to develop at a 14 percent compound annual growth rate
Sector Composition (CAGR) until it reaches a market size of $220 billion by 2025. In India, multiple
players in both unorganized as well as organized segments operate in the FMCG
sector. Here, each product category has several brands and varieties which has
19% low consumer switching costs which leads to intense competition among players
operating in this sector.

Sector Composition
50%

FMCG Industry
31%
Household and Personal Care Products (50%) HealthCare (31%) Food & Beverages (19%)
Oral Care, Skin Care Over the Counter (OTC) products Dairy Products
Soaps & Detergents Ethicals Tea/Coffee
Household & Personal Care Products Tooth Powder Sugar
Hair Shampoo Vegetable Oils
Health Care Hair Oil Bakery Products
Food and Beverages Creams & lotions Confectionary
Toothpastes Processed Foods
Agarbattis, Fragrances & Essential Oils Banded flour
FMCG Revenue Breakup- Region wise
Geographical Composition:
In India, more than 65 percent of the population lives in rural areas, and these
people spend more than 50% of their total income on products of FMCG. The
urban segment accounts for around 55 percent of revenue, while the rural
segment accounts for 45 percent.
45%
Rural 55%
The FMCG sector, India's fourth-largest industry, employs about three million
Urban
people. While the urban segment accounts for about 55% of total FMCG
revenues, the rural market is likely to develop at a higher rate. As India's semi-
urban and rural economies expand at a rapid pace, FMCG products now account
for half of all spending in rural areas.
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FMCG Revenue Breakup- Product Wise

The extraordinary development of the FMCG industry in India, particularly in tier
II and tier III cities, is largely attributable to an improvement in the people's
standard of living and an increase in disposable money. The FMCG industry in
Tobacco Products 9% India has grown at a rate of 21.4 percent per year over the last ten years.

Key Trends

Healthcare 27% • OTC/ Healthcare demand to sustain in FY22

• Liquor, footwear, cigarette, QSR demand most affected due to COVID
• Demand from E-Commerce channels to remain high
• The emerging ready-to-eat and frozen food segment which caters to a wide
Household and Personal Care 45% range of audiences are indicating towards trends in the food and beverage
industry
• Both urban and rural people have grown accustomed to placing online
orders, digital will continue to be a complementary buying option.
Food and Beverages 19% • The ideal strategy to drive BCPs (Business Continuity Plans) in case of
future interruptions is to use an omnichannel approach that includes both
physical and digital sales.
• FMCG sector companies have to use digital payment platforms for all their
Trends in FMCG revenues over the years billing purposes. Digital innovations would be the way forward in overcoming
(US$ billion) supply chain disruptions.
103.7 • Aside from the development in pure-play online purchases and deliveries,
83.3 there is a growing shift towards BOPIS (buy online, pick up in-store)
68.4 • Safety and the ability to browse whole product portfolios more efficiently from
49 52.8
the comfort and convenience of one's own home are the key motivators.
• The shift in consumer behaviour is attributable to increased awareness of
immunity-boosting products and those judged safe, as well as concerns
about the coronavirus. As a result, organizations’ product portfolios and
2016 2017 2018 2019 2020 distribution strategies would need to be adjusted.
• In 2021, the focus will be on customer data, behaviour patterns, and
digitalization. Demand-driven supply will be more important than supply-side
E-commerce growth by Category drivers in the months ahead.

Growth/ Demand Drivers

Food and Personal Care 55.40%
a. Increasing Population
India’s population increased by 32% from 1.04 billion to 1.37 billion during the
same period. India is the world's second most populous country after China in the
Toys, DIY and hobbies 29.60% world and rising population leads to increase in consumption for F&B, home and
personal care and healthcare products.

b. Favourable Demographics
Fashion and Beauty 39.50% In 2020, India's anticipated median age will be 28.7 years. When compared to
the predicted median age in other leading economies throughout the world like
USA and China, this is the lowest where it is 38.5 and 38.4 years respectively.
The dependence ratio (the ratio of dependent persons to working-age people, 15
to 64 years old) has decreased from 64 percent in FY2000 to 50 percent in FY19,
Consumer spending (in INR billion)
owing to the country's growing young population. This could result in more
25000 discretionary spending being allocated, as well as increased demand for
consumer items.
20000

15000
Also, the share of persons in the 15-64 age range, which is the high consumption
class, has increased from 36% in FY2000 to 50% in FY2019. All of the
10000 aforementioned factors have aided the expansion of the food service business,
home and personal care products as young people are known to be more open
5000 and adaptable to exploring new trends and embracing the advancements in
technologies. Furthermore, because the age group under 25 is one of the largest
0
spending, the current age dynamics are predicted to improve consumer goods
May-20
May-17

May-18

May-19
Sep-17

Sep-18

Sep-19

Sep-20
Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

sales.
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Internet Usage in India c. Growth in workforce of women

More women in both urban areas and rural areas are pursuing education as a
result of increased awareness among other factors, resulting in an increase in
women's employment. In CY18, 112 million women were employed, with the
proportion of working women increasing from 17% in CY2010 to 24% in CY2018.
304
251 264 The rise in the number of women in the workforce has resulted in double-income
homes and less time available to prepare home-cooked meals, which has fuelled
the food service industry's expansion. Furthermore, having a second job implies
having additional spending power, which can be used to eat out and purchase
335
semi-luxury/luxury home and personal care products.
315 310
d. Rise of Internet usage and technical breakthroughs
From a total of 331.7 million subscribers in Q3 of FY'16 to 795.2 million customers
2018 2019 2020 in Q3 of FY' 21, the number of internet/broadband subscribers increased at a
CAGR of 19.1 percent. From FY16 to FY21 in Q3, internet penetration in rural
Urban users in millions Rural users in millions
and urban areas expanded at a CAGR of 22.4 percent and 17.3 percent,
respectively. The increased usage of the internet, along with an increase in the
number of smartphone users, has led to increase in the number of smartphone
users and affordable date plans has increased the accessibility of FMCG
Internet Penetration rate in India products and online FMCG market is forecasted to grow from USD 20 billion in
60%
2017 to USD 45 billion in 2020E. Further, online grocery and retail channels have
50% gained prominence especially during Covid-19 outbreak as people became
cautious and avoided physical stores visits.
40%

30% e. Boost in FDI inflows

In India, 100% FDI is permitted in food processing and single-brand retail while
20%
51% is allowed in multi-brand retail. This is expected to generate more
10% employment, help create a more competitive business environment and provide
quality goods to consumers amongst other benefits. FMCG industry witnessed
0% FDI inflows to the tune of about USD 18 billion from April 2000 to December 2020.
2017
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

2018
2019
2020

Food processing accounted for 56.8% share of the total FDI inflows as shown in
the figure below.

f. Growth in rural consumption

Immense opportunities exist for FMCG industry players to expand in rural areas
Cumulative FDI Inflow share- from April 2000 due to low penetration levels. FMCG products posted faster growth in rural
to Sept 2020 (US$ million) markets as compared to urban ones primarily during Covid-19 outbreak in
CY2020 as urban areas were more affected. Though the trend was reversed
during the recent second wave of Covid-19. However, going forward, demand
1%
from rural areas is expected to grow at a faster rate as compared to urban areas
on the back of favourable monsoon and growth in rural income. Rural FMCG
6%
8% market is expected to grow at a CAGR of 14% from 2020 to 2025.

9% g. Other drivers

57% • Increased disposable income and per capita expenditure

19%
• Increased customer purchasing power

• Increased customer awareness of online shopping

Food Processing
• Increased brand awareness and recognition
Retail Trading
• Constant shifts in customer preferences
Saop, Cosmetic & Toilet
preparations • Government regulations and banking policies
Paper Pulp

Vegetable Oils • Increasing interest from global investors

 Page 4

GDP per capita at current prices (US$) Macro-Economic Trends

3277
3023
2791 The global economy decreased by 3.3% in 2020, the largest dip since World War
2578 II. In 2020, emerging markets shrank by 2.2 percent for the first time in 60 years.
2379
2199
2014 2036
1762 Stimulus packages (10-45 percent of GDP), policy changes (severe reduction in
policy interest rates), generating liquidity in the economy, and major asset
purchase programmes are all examples of stimulative measures.

Global economic growth will accelerate to 6.0 percent in 2021, largely due to a
low base in 2020, Vaccination and medical infrastructure
The Union Budget 2021 is projected to give additional impetus to improve India's
2016 2017 2018 2019 2020 2021 2022 2023 2024 competitiveness and promote inclusive growth. Increased capex, as well as
increased spending on agriculture and rural infrastructure development, bode
good for the economy and will help to fuel a virtuous consumption-investment-
Growth in Online Users (in million) employment cycle.
200
Trend 1: Demand in Demographics
Currently, India's FMCG industry is divided into two demographic groups: urban
and rural. The increase of FMCG revenues in India has always been dominated
90 by metropolitan areas. Semi-urban and rural consumption, on the other hand, has
recently increased significantly, with the rural FMCG market expected to reach
220 billion USD by 2025.

Furthermore, with 12. 2 percent of the population residing in villages, rural

2017 2020 consumer demand cannot be overlooked. In reality, some of the country's largest
FMCG firms, such as Dabur, Hindustan Unilever, and others, get 35 to 45 percent
Growth in Online FMCG Market (in $ billion) of their domestic income from rural India.
45
Foreign enterprises intending to expand their FMCG business in India should
conduct rigorous market research and analysis to adequately reflect the needs of
rural consumers. To produce a customised market analysis and identify the
precise addressable markets, thorough guidance from business consulting
20 organisations in India becomes essential.

Trend 2: The rising power of Digitalization

Following the COVID-19 crisis, digitalization has emerged as an emergent FMCG
trend in 2021 India, shaping the future of consumer goods commerce. To supply
items to consumers, almost all FMCG businesses teamed with major e-
2017 2020
commerce websites like Flipkart, Grofers etc., FMCG Companies should have
their digital presence through e-commerce platforms, having learned the benefits.
As a result, multinational companies who are seeking to develop in India must
Social N/W user penetration now invest in technology, develop new apps that will allow online shopping,
product launches, and smooth online payments and transactions, among other
things.
65% 67%
62%
58% As a result, the importance of current trends in the FMCG industry in India, as
55%
50% well as business consulting firms in India, has increased significantly. Acquiring
46%
qualified employees for marketing and promotional operations, as well as sectors
35% such as product launch and public relations management, is critical.
29%
23%
Trend 3: Further Development in Food and Beverages, Health and Wellness
Food and beverage industry in India is one of the most important contributors to
the FMCG sector, accounting for over 30% of total household spending. The
expansion of this industry has been fuelled by an increase in average income, an
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 increase in middle-income groups' disposable income, increased urbanization,
and a shift in consumer preferences for hygienic items.
 Page 5

While per-capita food consumption has been increasing in the rural sector,
demand for instant meals has surged in the urban market. Ready to Cook (RTC),
Ready to Eat (RTE) are some of the latest trends influencing consumer
preferences. Furthermore, following the COVID crisis, consumers' attitudes about
cleanliness and health have altered, resulting in increased demand for sanitizers,
hand soap, disinfectants, wipes, and house cleaning goods, establishing a new
trend in the FMCG sector.

Strategies
a. Strengthen rural network
• Dabur increase its rural market from 44k villages in March 2019 to around
52k villages in March 2020. The company has set target up to 60k for
FY20-21.
• Marico introduced bottom-of-the-pyramid products to its portfolio of value-
added hair oil which le d the company to reach rural markets.
• Godrej Consumer Goods Ltd planning to extend its rural presence in key
states to 80k villages

b. Mobile apps
• Companies like Dabur India and Marico Ltd. have introduced retail
telephone services and a dedicated app for online orders by kiranas.
Strategies adopted for FMCG by companies • CavinKare in Chennai introduced an app for its top retailers which was
used by 75k+ shopkeepers to get the company’s products in India.

c. New product launches

• For affordability of olive oil, Del Mante in India launched 1 litre pouch pack
at ₹250
• Parle Agro launched a new addition to its fruit plus fizz portfolio ‘B-Fizz’

India Advantage
Growing demand:
• Packaged food is expected to double to $70bn by FY2025
• India share in global consumption expected to rise more than double to
5.8% by FY 2020
• Increase in quality products by rural India supported by upgraded
distribution channels

Higher Investments:
• Investment by RP-Sanjiv Goenka Group of capital fund of $ 14.74 million
in FMCG startups
• Roots Ventures has invested in Supa Star Foods Pvt Ltd., a packaged food
and beverage company, for the second time, to help the company expand its
distribution network and add new products

Government Initiatives: Union Budget and Other Developments

Union Budget 2019-20: Full tax rebate provided by Indian government on income
up to Rs. 5 lakh (US$ 6,930) will boost disposable income in the hands of
common people and create opportunities in FMCG Sector

Farm debt exemptions, spending on rural infrastructure, and the direct benefit
transfer (DBT) system have all aided in the last few years.

Demand for FMCGs is projected to be boosted by the minimum income

guarantee scheme.
 Page 6

Key M&A Deals in the FMCG Industry

Target Name
\ Acquirer Name Merger/Acquisition Year
Eveready Industries Dabur's Burman family Acquisition (19%) 2020
GlaxoSMithKline Consumer Healthcare Limited Hindustan Unilever Ltd.(HUL) Merger 2020
Glenmark Pharmaceuticals Ltd;s Vwash Brand Hindustan Unilever Ltd.(HUL) Acquisition 2020
Eastern Condiment Orkla Acquisition (68%) 2020
Beardo Marico Acquisition (100%) 2020
Sunrise Food Private Limited ITC Ltd. Acquisition 2020

Key Market Players’ Performance

CMP Market Capitalization EPS ROCE ROE P/E Price to book FII DII
Nestle India 19,000 1,83,191 232 139 106 82 82 12 8
Britannia Inds. 3,676 88,537 71 45 47 52 25 18 12
HUL 2,393 5,62,292 36 39 29 67 12 15 10
ITC 223 2,75,018 12 29 21 19 5 11 44
Dabur 586 1,03,570 10 27 24 58 14 21 3
Godrej 957 97,825 17 20 20 55 10 26 5

We looked at the above ratios of the top six FMCG companies by market
capitalization: Nestle India, Britannia Industries, HUL, ITC, Dabur and Godrej.
Ratio Analysis These peer firms' performance will give us a good indication of how the FMCG
industry as a whole is doing.
Nestle
India The price-to-earnings ratio remains the highest for Nestle India, followed by HUL.
100
80 It shows that investor confidence is high for these companies. In contrast, ITC
60 Britannia has the lowest P/E ratio of 19.27 among its competitors.
Godrej
40 Inds.
20 The return on the capital employed ratio, which allows investors to compare
0 several companies and shows how companies use their money most efficiently
to generate profits, is highest for Nestle India with 139.29 and lowest for Godrej
Dabur HUL with 19.74 among the peer companies.

Return on equity signifies how well the company is using the stakeholder's money
ITC to generate profits. Nestle India tops this chart again pertaining to its strong
fundamentals. But, the price to book ratio, which helps in understanding how
P/E Price to book many times the stock is trading over and above the company's book value, is
highest again for Nestle India, which tells us how much the company is
overvalued compared to its peers.

Financial Ratios Opportunities

250 The Indian FMCG business is growing at a rapid pace, thanks to rising disposable
EPS ROCE ROE
income in rural India and low penetration in the rural market. A growing youth
200 population, changing lifestyles, and increased brand awareness among
customers have all contributed to India's FMCG sector's rise.
150
The rural areas are expected to see the most increase. Rural and semi-urban
100 consumers, on average, spend 50-55 percent of their discretionary income on
FMCG.
50
Any increase in household income will have a compounding effect on rural
demand. Rural consumer spends more on Food Beverages (approx. 54.7%) as
0
compared to Urban (approx. 34.8%).
Nestle Britannia HUL ITC Dabur Godrej
India Inds.
 Page 7

Market Share(%) of competitors

In practically every category, supermarkets, distributors, and aggregators are
10% now developing their own brands. They'll be able to better control margins and
brand loyalty, as well as last-mile distribution, this way.
5%

3% Challenges
34%
1%
1% Managing availability in the complex distribution Size
The Indian FMCG sector comprises of a complex distribution chain that has
7% multiple layers of numerous small retailers between the company and the end
customer. With the exponential growth of SKUs (Stock Keeping Units), simply
3% ensuring availability at the final stage of distribution has become a nightmare for
businesses. Standard solutions that work in industrialised countries do not work
3%
in developing countries like India that works with smaller pack sizes. In developed
6% countries, larger pack sizes are sold which leads to lower cost of production
whereas in a country like India, smaller pack sizes are sold to penetrate the
4% markets which increases the distribution costs that cannot be passed on to
4% 19%
consumers completely in order to create demand and make products affordable.
Companies will eventually have to come up with new solutions to balance market
penetration and logistics costs.
ITC Hindustan Unilever(HUL)
Nestle Britannia Inadequate Infrastructure
Patanjali Ayurved Dabur
Lack of proper transport system and road infrastructure especially in rural areas
leads to increase in cost of production for FMCG players. Similarly, lack of
Godrej Group Marico adequate chilling infrastructure and power shortage can significantly affect
GlaxoSmithKline Colgate-Palmolive distribution and sale of varied products like milk, ice cream etc. During the
Emami Amul summer, most Indian cities experience power outages, and ice cream
manufacturers must deal with these issues in their distribution networks. In
Parle Products general, FMCG companies must factor these concerns into their supply chain
planning.

1. Product
Master Data Highly competitive industry
The FMCG industry consists of domestic players with PAN India and regional
2. Customer
presence as well as MNCs which leads to intense competition amongst the
6. Supply chain
in a digital world
(Sales and players. The companies spend aggressively on marketing and promotional
consumer) data
activities as the switching costs for the consumer is very low.
Data Challenges for
FMCG & Retail Dealing with counterfeit goods
Counterfeit goods damage the brand reputation and also leads to loss of sales
3. Empowered
for the companies. According to a recent study conducted, counterfeit goods lead
5. Data Security
customer to sales loss of more than Rs 300 billion every year in the FMCG industry. To
prevent such losses, the industry players need to exercise greater control over
4. Government
regulation and
their distribution channels instead of just leaving to the market forces.
public
responsibilities
Risks

Maintaining quality and safety standards, counterfeit products, not beating the
market and generating negative or almost identical returns to the market during
Consumer Spending Pattern
the last 5-10 years
(Region Wise)
FMCG firms' advertisement costs are rising: FMCG companies in India have
54.70% Rural India increased their sales promotion and advertisement costs by 10-20%.

Urban India Every year, these businesses increase their advertising spending in order to build
a strong client base and to lessen market competition.
34.80%
Impact of COVID-19

FMCG is unusually affected by many factors such as labours returning to their

homelands, logistics issues, and changes in the consumer basket such as a
sudden increase in demand for sanitary products and a surge in demand for
cosmetology.
 Page 8

FMCG Porters Five Forces • Reduced discretionary advertising and other costs
• Increased visibility on e-commerce platforms
• Drove rural distribution aggressively as a major proportion of the urban
10
population has migrated to rural, which is projected to upsurge rural demand
8
in the near future
6 4
• Introduced new items in the ‘health' and ‘hygiene' categories to fulfil the
9 4
8 growing consumer needs, etc.
2
• Made significant use of E-commerce as a distribution channel, as it is one of
0 the most upcoming and most preferred among consumers

4 During June 2021, the relaxation of Covid restrictions resulted in a 15-20 percent
increase in FMCG sales across grocery stores in general trade and a 25-30
8 percent increase in supermarkets.

Porter's Five Forces for FMCG

The Threat of Substitutes (HIGH):

• Multiple brands with a significant market share are present.
548.6 • Gaining market share from Price wars
• Narrow product Differentiation
M ll • Producers of Substitutes' Profitability

Bargaining Power of Buyers (HIGH):

• Low switching costs encourage customers to switch products.
• Marketing strategies highly influence buyers
• There are plenty of similar available alternatives
Number of People Purchasing
Consumer Goods Via Internet Competitive Rivalry (HIGH):
• Retailer-owned private label brands are priced lower than mainstream
names, limiting competition for the weaker brands.
• As more multinational corporations (MNCs) enter the market, the business
is becoming increasingly fragmented.
• There are a lot of market players, which means there's a lot of competition.
• The high strategic stakes have an impact on an organization's long-term
$ 46.00 profit potential in this industry.

B ll Bargaining Power of Suppliers (LOW):

• Because there are so many substitute players in the market, bargaining
leverage is minimal.
• Big FMCG companies can influence prices through local procurement from
a fragmented set of essential commodity suppliers.
Total Value of the Consumer Goods
Ecommerce Market The threat of New Entrants (LOW):
• Setting up a distribution network requires a significant amount of initial
capital.
• Spending aggressively on marketing brands and advertisements demands
cash
• Economies of scale. Units produced of goods is in huge scale and costs
incurred for those are less
+38.5% • Access to high-end technology and SEO tools

Future Implications

Blockchain to Empower Generations and Enable True World-Changing E-

Commerce - This is something that will alter the industry's entire perception.
Blockchain is the future, and its adoption in the online FMCG category will make
a significant change in the market. More people will be empowered, and the
Annual Growth in the Total Value of sector will have a greater impact on the overall market.
the Consumer Goods Ecommerce
Market - Adoption of New Delivery System - The industry is already competing to deliver
goods as quickly as possible, and it is doing everything it can to be the fastest.
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Page
10

We may witness a special delivery system for customers in the future, and to be
more specific, we may see the use of drones for product delivery, which, once
adopted, would bring a significant change to the way the sector operates and also
increases efficiency.

Consumers' Shift to Online Stores - We're seeing a dramatic shift in consumer

behaviour, particularly in the aftermath of the pandemic. However, there are still
some consumers, particularly in India, who are hesitant to switch to online for
their everyday necessities and prefer the conventional method. However, we can
$ 84 expect this to change in the future, as well as a complete move to online
businesses. Customers will need some time to trust the online quality of products
and simultaneously adopt to this system

Maintaining a Sustainable Model - This is critical, and every sector, including

the online FMCG business, is aiming to have a sustainable model. More
environmentally friendly versions are expected to be introduced, which will alter
the segment's whole operation. A large rural market with expanding purchasing
Online Consumer Goods Purchases power.
Average Annual Spend per User
There have been a few important steps in the last couple of years that are
expected to rise in shift in the market for FMCG items. In the last two budgets,
the government has prioritised rural infrastructure and economic growth in rural
areas. Both of these characteristics increase demand in rural and semi-urban
areas.

NIFTY 50 vs NIFTY FMCG

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Page 10

FII % and DII % Way Ahead

60 Despite having one of the world's lowest per capita consumption of FMCG
products, the market in India is one of the fastest expanding in the world. As a
50 result, there are several potential opportunities in the industry. On the strength of
40 development in the e-commerce business, favourable demographics, and an
increase in disposable income, among other factors, the sector's long-term
30 outlook remains good. The share of unorganised players is likely to decrease
following higher demand for branded products from smaller towns and cities
20
through online portals. Despite the relaxing of limits, ecommerce contribution at
10 FMCG firms will surpass the double-digit mark within a year, indicating altered
buying patterns for daily-use items previously offered mostly by either large-
0 format supermarkets or tiny mom-and-pop neighbourhood stores.

India e-retail market over the next five years, expanding at 30% and reach $120-
140 billion by 2026. The noticeable change in buying behaviour is leading the
likes of Nestle, ITC, Britannia, Dabur, Emami, Marico and Tata Consumer, among
others, to push exclusive packs through ecommerce channels and increase
FII DII consumer promotion spends. Even traditional businesses are launching their own
online sales platforms to attract customers, while ecommerce corporations are
pushing for record-breaking delivery times.
Rural Consumption in India (in $ billion)
Further, a change in perception of health and hygiene following the pandemic will
ensure that the demand for immunity-boosting and hygiene products sustains
100
even after the pandemic.

Conclusion

We can infer that the FMCG business in India is one of the most stable and
growing sectors. Due to well-established distribution systems and networks in
place for many years, the FMCG sector did not plummet as other industries did
due to COVID-19's influence. Multiple market drivers, including rising
29.4
disposable incomes, increased urbanization, digitally influenced spending,
18.92 government reforms, and the growing rural market, will all contribute to the
12.3 12.1 14.8
9 10.4 FMCG sector's future growth in India.

Even though it has not provided as high returns as the NIFTY 50, this sector
2009 2010 2011 2012 2013 2015 2016 2025 can be considered by investors seeking safe and consistent returns. They are
often low-growth investments, but they are safe bets with predictable
margins, steady returns, and consistent dividends.
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Arthanaya Capital’s Exclusive Publication

Analysts:

Gajjarapu B R Venkata Durga Sai: gajjarapu.brvenkatadurgasai21@iimranchi.ac.in

Srishti: srishti1.21@iimranchi.ac.in

For any feedback/suggestion please write to us at: arthanaya.capital@iimranchi.ac.in

Disclaimer: This report is only for educational purposes neither IIM Ranchi nor Arthanaya capital should be held
responsible for any profit/loss incurred.