Consumer Goods in India

Introduction:

Consumer goods are those articles of any commodity that is produced, distributed or consumed for satisfaction of daily wants or needs of ultimate consumer. Consumer goods are final goods which are eventually consumed, rather than used in production of other goods.

Final goods or consumer goods can be further divided into two categories:

  • Durable goods: Durable goods have significant life time i.e. 1 year or 2 year based on the guarantee or warranty. Durable goods can be tangible in nature such as capital goods, machinery, textiles which are used in manufacturing of final goods.
  • Non-durable goods: Non-durable goods also known as Fast Moving Consumable Goods (FMCG) which is consumed by the ultimate consumer. FMCG goods have a short life. Example of FMCG goods meats, fruits, vegetables, dairy products, and baked goods etc.

 

Regulator/ Necessary Registration:

A Company dealing in consumer goods shall mandatorily get itself registered under Food Safety and Standards Authority of India (FSSAI), it is an autonomous body established under the Ministry of Health & Family Welfare, Government of India. The FSSAI has been established under the Food Safety and Standards Act, 2006.

An Act to consolidate the laws relating to food and to establish the Food Safety andStandards Authority of India for laying down science based standards for articles of food andto regulate their manufacture, storage, distribution, sale and import, to ensure availability ofsafe and wholesome food for human consumption and for matters connected therewith orincidental thereto.

To run FMCG businesses smoothly in India according to The Food Safety and Standards Act, 2006 has to mandatorily required FSSAI License according to its turnover.

Growth trends over the last 3 years

Financial Year

Amount (in million USD)

2017-18

904.90

2016-17

727.22

2015-16

505.88

2014-15

515.86

 

About the FMCG sector:

Fast Moving Consumer Goods (FMCG) Industry in India is one of the fastest developing sectors in the Indian economy. These products have very fast turnaround rate, i.e. the time from production to the revenue from the sale of the product is very less.

Fast Moving Consumer Goods (FMCG) Industry in India - Major Players

  • Britannia India ltd
  • Dabur India ltd.
  • Marico
  • Nirma ltd.
  • Cadbury India ltd
  • Nestle
  • Cargill
  • Coca-cola
  • Colgate-Palmolive India
  • Heinz co.
  • Unilever
  • Nestle
  • Pepsi co.
  • Jyothy Laboratories
  • Procter & Gamble
  • Samsung
  • LG
  • Haier
  • Sony
  • Whirlpool
  • IFB
  • TCL
  • Electrolux
  • Videocon

 

Some useful numbers of the FMCG industry:

Particulars

Year

Amount (in USD)

Remark

Market size in retail market

2020

1.1 trillion

Expected Market Size (with an expected growth rate of 20%-25% per annum

Revenue

2018

52.75 billion

Actual numbers

Revenue

2020

103.7 billion

Estimated numbers

 

FDI in FMCG sector:

  • The Government of India has approved 100 per cent Foreign Direct Investment (FDI) in the cash and carry segment and in single-brand retail along with 51 per cent FDI in multi-brand retail.
  • With a view to protect the interest of consumer, The Government of India has drafted a new Consumer Protection Bill which will ensure speedy justice to the consumers.

Note: The sector witnessed healthy FDI inflows of US$ 13.63 billion, during April 2000 to June 2018.

FDI already in FMCG sector:

Amazon, Bigbasket and Grofers are major companies which are operating in India after obtaining DIPP and Government approvals

Prospects in rural area:

Particulars

Year

Amount (in USD)

Market size (actual)

2018

23.6 billion

Market size (estimated)

2020

220 billion

 

Note: The major reason of increase in market in rural area is on account of increasing income levels and aspiration among that class.

Online market

Online portals are expected to play a key role for companies trying to enter into this highly competitive market. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a company's reach. It is estimated that approximately 40 per cent of all FMCG consumption in India will be online by 2020. The online FMCG market is forecasted 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 the Goods and Services Tax. GST and demonetisation are expected to drive demand, both in the rural and urban areas, and economic growth in a structured manner in the long term and improve performance of companies within the sector.