Industry Awareness (IA)

Indian Institute of Management, Indore

FMCG
Group 1
Section C

Rimleena Boro | 2020FPM15

Bijit Kumar Sarkar | 2020PGP098
Nithya R | 2020PGP280
R Adhithya | 2020PGP322
Ripin Yadav | 2017IPM092

1
EXECUTIVE SUMMARY

The FMCG industry is India's 4th largest sector. With robust delivery channels, variety of products,
luring advertisements and lucrative pricing, FMCG is a major contributor to the Indian economy. Both
durable and non-durable goods form a huge part of individuals disposable income. The industry caters
to all segments of the society with varied demand in terms of product quality, product variants, price,
availability, durability, etc. The industry keeps working on identifying new markets and expands
existing markets continuously.

Growing population numbers is a major driver of growth in this sector. This, in conjunction with the
growing middle class has led to an ever growing market and demand.The increase in the income levels
has contributed greatly to growing nature and volume of needs. The distribution channels too are
changing.More and more people, especially in urban pockets are opting for home deliveries. Growing
trends of online shopping and research both in terms of the product and the consumer behaviour has
led to understanding customer purchase patterns. This trend is only expected to increase post the
COVID-19 pandemic, which has pushed many people to put their trust in online ordering for the very
first time. Behavioural scientists are continuously developing new insights into consumer mindset
allowing FMCG giants to increase market every day.

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TABLE OF CONTENTS

1. Industry profile
a. Overview
b. Growth over years
c. Present and future trends
d. Importance to the economy

2. Technological trends and major innovations

3. Mergers and acquisitions

4. Major players’ profiles

5. Macroeconomic impact
a. Impact of GST
b. Impact of Union budget

6. Analyst view/Impact of COVID-19

7. References

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INDUSTRY PROFILE

OVERVIEW

The turnover of this industry is USD 1.5 billion dollars and it employs 13 million people in India.
Turning Kirana stores as major sources of livelihood, the FMCGs turn a lot of rural unskilled and semi-
skilled people into salesmen of your last unit product. FMCG industry is a direct consumer of the
agricultural sector of India which constitutes around 9% share of the agricultural sector and INR 10,500
crores in terms of turnover. Supply chain and logistics industry in India is intricately coupled with the
FMCG sector. The potential of the industry remains untapped in Tier-II, Tier-III cities and the rural
regions of India.

The elevation in individual expenditure of health and home care products post the COVID-19 pandemic
is estimated to be 4.3%. Purchases from stores has plummeted from 34.3% in March to 30.5% in May,
2020. Primarily, this is due to the spread of disease and the lockdown imposed by various central and
state governments at the time. The sector rapidly bounced back and acclimatized to the pandemic times
thanks to its resilient delivery partners and the agricultural sector. The days of boom in retail stores were
long gone even before the COVID-19 pandemic. Even if several physical stores do return to growth, it
is clear that their potential is mostly saturated. Retailers have come to see that conventional methods of
cutting expenditure are not going to boost the health of their business. Most have come to realize the
radical and fundamental winds of change blowing here. The way many consumers are opting to purchase
FMCG products is changing and this can be pointed to as the great transformation of this sector in the
current times.

GROWTH OVER YEARS

➢ FMCG is the 4th biggest contributor to the economy

➢ The market share of this sector is Healthcare-31%, Food and Beverages-19% and Household &
personal care- 50%
➢ The urban segment (revenue share 55 %) forms the largest market of the FMCG industry.
However recently, rural and semi urban segments have seen more growth. Rural Indian consumers
spend more than 50% of their disposable income on consumption and this is mostly FMCG goods.

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 ➢ The market in India is predicted to touch USD 1.1 trillion by 2020 from USD 840 billion in
2017, assuming that the new generation trade practices revolving around e-commerce will
constantly increase in the range of 20-25 %.
➢ Turnover of the FMCG industry reached Rs 3.4 lakh crore in 2018 and is predicted to be at
USD 103.7 billion in 2020. Even assuming the impact of the Covid induced lockdown and a
decrease in the sales by 20%, the industry will still grow due to market expansion.
➢ The FMCG market is predicted to grow at a rate of 9-10 % in 2020.
➢ The migration of labour from urban to rural areas during the pandemic will push up sales in
rural areas.
➢ Rural segment comprises about 36 % to the FMCG sector’s total expenditure. The FMCG
urban segment grew at 8% and the rural segment grew at 5% at the end of September 2019.

PRESENT AND FUTURE TRENDS

❖ Rising income and growing youth population have been the industry’s principal growth drivers.
Brand consciousness has boosted demand as well.
❖ The portion of global consumption contributed by India is predicted to reach 5.8 % by 2020.
❖ FMCG companies’ stress on increasing their distribution edge in rural areas has led to better
accessibility and increasing demand from this segment, whose potential has barely been tapped.
❖ The recovery shown by the rural and semi rural segments of this country has been much
quicker post the lockdown imposed in lieu of the pandemic according to a Nielsen report. This has
led to FMCG companies racing to capture the market in these segments and harness the increasing
demand.
❖ The market of Tier I cities is saturated. The race is now to capture markets in Tier II and Tier
III cities as well as rural pockets. Many FMCG companies are trying to strengthen their
distribution channels to these segments.
❖ 11% of overall FMCG sales is expected to be via e-commerce. The introduction of many new
players like Reliance as well as the delivery services offered by Zomato and Swiggy can make
this share even larger. The pandemic too has quickened the pace of change.

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MAJOR EVENTS

a. The contribution of grocery outlets to sales has declined from 34.3% in March to 30.5% in
May, 2020.
b. Disposable income in rural India has increased because of the direct cash transfer scheme. The
old unit price and sachet selling isn't as effective anymore.
c. The movement of migrant labour to rural areas has increased consumption there.
d. Exports is another burgeoning revenue stream. Emerging markets in South East Asia can
become markets for Indian FMCG goods.
e. The exemption of food items from the necessary goods list will ensure more players to enter
the market.
f. Recently passed farm bills have opened up the possibility of profits if the FMCG companies
can partner directly with farmers to sell their produce leading to better quality and home
delivery for almost all groceries.

IMPORTANCE TO ECONOMY

a. The FMCG industry in India employs about 13 million people in India and contributes about US
$ 1.5 billion of revenue
b. FMCG industry is a direct customer of the Indian agriculture sector which makes up around 9%
share of the agricultural sector and INR 10,500 crores of revenue.
c. The FMCG drives the supply chain and logistics industry of our country and there is a continuous
growth in this sector as so many Tier II and III cities still remain untapped in so many regions of
the country.
d. Hindustan Unilever Foundation works the 'Water for Public Good' program, educating local
farmers and people regarding sustainable and maintainable water use. All executing accomplices
have made a water sparing capability of 700 billion liters, creating over 0.80 million tons of extra
farming creation and over 7.5 million man person days of employment till money 2017-18. In
2018-19, HUF's water protection limit remained at 900 billion liters.

6
e. HUL’s project Ankur provides special education for differently-abled children at
DoomDooma, Assam and touches about 350+ children.
f. HUL runs a mobile van for health check-ups in Doomdooma, Assam (Team has one male and
one female doctor with basic treatment equipment) More than 3.3 lac patients have been treated
in these administration camps since its commencement in 2003. In 2018, almost 16,297
patients were treated.
g. Asha Daan is a refuge home in Mumbai for destitute people and special children, HIV-positive
patients and old aged people. HUL ensures the annual maintenance of this project. (HUL
Official website)
h. ‘Swachh Aadat, Swachh Bharat' (SASB) program is in accordance with the Government of
India's Swachh Bharat Abhiyan (Clean India Mission) to advance great wellbeing and
cleanliness rehearsals. 'Suvidha' an urban water, cleanliness and sterilization public centre in
one of the biggest slums in Mumbai giving clean drinking water to the slums of Mumbai.
(HUL Official website)
i. Project Shakti has 1,09,100 Shakti Entrepreneurs whom they call ‘Shakti Ammas’, (Rural
female women who are empowered HUL sales personnel) Shakti has a reach to 18 states in
India. Not only does it provide an excellent sales pitch, but it employs millions of female
entrepreneurs. Shakti Ammas were employed as direct salesmen of the company and they are
so loyal to HUL that they only serve those products in their store. Shakti Ammas are provided
learning opportunities and initial investment to start their own business.
j. Desert Bloom by Dabur was planned in accordance with the Mukhya Mantri Jal
Swavalamban Abhiyaan. This venture has helped 765 families in 3 towns in Newai (Tonk
locale) tide over the water emergency in the district during droughts. This has expanded the
ground water level by 8-10 feet.
k. ITC has set up village internet kiosks - e-Choupals - which provided real time data on
weather, price discovery, agri knowhow and best practices, etc. These kiosks are managed by
trained local farmers who help the local agricultural community to access the information in
their local language. (ITC Official Website)
l. ITC's Skilling & Vocational Training Programme provides young boys and girls
opportunities to access high quality but affordable market-linked skills closer to their homes in
rural India. They have touched more than 81,000 young people.
m. Through its stationary division, Classmate, ITC uses a share of its revenue in the promotion of

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 schooling in rural India by providing school fees for underprivileged kids and motivates them
to stay in school.

TECHNOLOGICAL TRENDS

● Penetration is low in rural markets. This means there is massive potential for growth. With the
increasing focus on e-commerce and stronger distribution channels, rural markets are the new
expansion area for the sector.
● Experience centers by IKEA, Godrej has led to great modifications in promotional models for
some products.
● Dabur is increasing product launches to be sold exclusively on E-commerce platforms. Dabur
modified its supply chain to reach wider markets. Not focusing on the shelf positioning, Dabur
focuses on inbound marketing and digital strategies.
● Single chain companies exclusively offering FMCG goods may have to scale up for the
nationwide demand of daily supplies and if some of them vanish, there will be creation of more
vertically integrated companies.
● E-commerce potential is immense and pace of change has increased post the pandemic.

MERGERS AND ACQUISITIONS

a. RP-Sanjiv Goenka Group invested US$ 14.74 million in startups of this industry.
b. Supa Star Foods Pvt Ltd, a packaged F&B maker will be supported by Roots Ventures.
c. Tata Consumer Products Limited acquired a stake in NourishCo Beverages Ltd. from Pepsico
in May 2020.
d. HUL acquired Glenmark Pharmaceuticals Ltd’s intimate wash Vwash (March, 2020).
e. Venture Catalysts invested in OM Bhakti, who produces puja cotton-wicks. (March, 2020)
f. ITC Ltd acquired 33.42 % stake in Delectable Technologies, a vending machine start-up (Nov,
2019).

8
 g. Nestle will make an investment of Rs 700 cr. (US$ 100.16 million) to construct a new plant for
Maggi in Sanand.
h. ITC is going to invest Rs 700 crores in Madhya Pradesh to develop a food park.
i. Patanjali plans expenses of US$743.72 million on various food parks in the following states -
Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh and Uttar Pradesh.
j. As part of the Rs 24,713 crore deal, Reliance Industries Limited through its wholly-owned
subsidiary Reliance Retail Ventures Ltd (RRVL) will acquire the grocery, apparel and supply
chain businesses of the Future Group.

PLAYER’S PROFILE

1. KEY PRODUCTS

FABRIC HUL WHEEL, SURF EXCEL, SUNLIGHT, RIN

CARE
P&G – ARIEL, TIDE, NIRMA

DISH HUL – VIM BAR,

WASHING
RECKITT BENKISER – NIRMA
HOME
CARE SURFACE RECKIT BENKISER – DETTOL COLIN LIZOL
CARE

TOILET RECKIT BENKISER – HARPIC,

CARE
HUL – DORMEX,

DABUR – SANI FRESH

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 HOME GODREJ – GOODNIGHT, HIT,
INSECTICID
RECKIT BENKISER - MORTEIN
ES

AIR CARE DABUR – ODONIL,

P&G – AMBIPURE,

GODREJ - AER

HAIR CARE HUL – SUNSILK, CLINIC PLUS,

MARICO – PARACHUTE,

DABUR – EMAMI,

PATANJALI

SOAP AND HUL – DOVE, LUX, HAMAM, LIFEBUOY, AXE,

BATH
GODREJ – CINTHOL,

RECKIT BENKISER – DETTOL, PATANJALI,

PERSON
GILETTE – SHAVING GEL CREAM
AL
CARE
SKIN CARE HUL – GLOW AND LOVELY, LAKME, PONDS,

LOREAL – GARNIER,

EMAMI – BOROPLUS, REVLON,

PATANJALI

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 ORAL CARE COLGATE

HUL – PEPSODENT, CLOSE UP

PATANJALI

BABY CARE JOHNSON & JOHNSONS, HIMALAYA

FOOD - HUL – ANNAPURNA, ITC – ASHIRVAD, DAWAT –

STAPLES BASMATI. ORGANIC INDIA , PATANJALI

FOOD & F-BAKED BRITANNIA, PARLE, ITC SUNFEAST

BEVERA
GE F- NESTLE – MAGGI, HUL – KISSAN, MOTHER
CONVENIEN DAIRY – SAFAL, DABUR – HONEY, KELLOGGS
CE

F - SNACKS PEPSICO – LAYS, KURKURE, HALDIRAMS,

CORNITOS

F – DAIRY AMUL, MOTHER DAIRY, NESTLE, HUL –

KWALITY WALLS

F- MONDELEZ – CADBURYS, PERFETTI

CONFECTIO VANMELLE – ALPENLIBE, CENTRE FRESH
NARY

B – SOFT COCA COLA, PEPSI, THUMBS UP

DRINKS

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 B – FRUIT DABUR – REAL, PEPSICO – TROPICANA, ITC – B
DRINKS/JUIC NATURAL
ES

B– COCA COLA – KINSLEY, PEPSICO – AQUAFINA,

MINERAL PARLE AGRO – BISLERI
WATER

B– HUL LIPTON, BROOKE BOND, TATA TETLEY,

TEA/COFFEE NESTLE – NESCAFE

B – HEALTH GSK – HORLICKS, BOOST, MONDELEZ -

BEV BOURNVITA

CIGARE CIGARETTES ITC, VST, GODREJ PHILLIP

TTES &
ALCOH
OL

ALCOHOL UNITED SPIRITS, UNITED BREWERIES, GM

BREWERIES, GLOBUS SPIRITS

OTC GSK, DABUR, CIPLA, HIMALAYA, EMAMI

MARKET SHARES (PLAYERS IN MARKET)

- In Indian Market

COMPANY PROFILE AND KEY FINANCIAL INDICATORS

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2.1.1 Company: Hindustan Unilever Limited (HUL)

Overview:

HUL being one of the subsidiaries of Unilever, is the largest FMCG firm in the country.
Established in 1931, as Hindustan Vanaspati Manufacturing Co., it is a British-Dutch consumer
goods manufacturing company having its headquarters in Mumbai. It was later renamed in 1956 as
Hindustan Lever Limited after a merger. Again, in June 2007, it was renamed as Hindustan
Unilever Limited. It primarily consists of four major business segments: home care, foods,
personal care, and refreshments. In 1991 after removing the regulatory framework, the company
saw great inflation and permitted the company to explore every segment and product. The
organization additionally has subsidiary in Nepal called Unilever Nepal Limited (UNL), making its
plant the biggest manufacturing investment in the Himalayan realm. The organization likewise has
two R&D focuses, one in Mumbai and the other one in Bangalore in India. HUL has revenue of
Rs.38,785Cr. Also, it has around 35 brands spread over more than 20 distinct classifications. The
firm has about 6.4 million retail outlets and has roughly 700 million Indian shoppers. Its essential
rivals incorporate Dabur and ITC, Nestle, Britannia, and GSK.

Mission Statement: "We meet everyday needs for nutrition, hygiene and personal care with brands

that help people feel good, look good, and get more out of life."

Key Products:

Frozen Foods: Kwality Wall's rolled out global products such as Magnum Hazelnut as well as local
products

Beverages: BRU, Lipton, Brooke Bond (delivered robust and volume led growth and strengthened
the franchise)

Food Products: Knorr and Kissan.

Household Care: Surf Excel, Rin, Vim , Wheel, Domex

Personal Care: Rexona, Ayush, Lifebuoy, Fair & Lovely, Lux, Dove, Sunsilk

Production Facilities: It has around 49 factories spread across the country

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Market Share: HUL is the most valued company among the FMCG firms with a market at Rs.4.5
lakh crore

Financial indicators:

• Net Profit Margin:17.37%

• Dividend Yield: 1.65 %

• Return on Networth: 85.89 %

• Current ratio:1.14

• Debt to equity: 0.00

• Market Cap: 492243.78 Cr

Future outlook and plans:

Analysts believe in long term prospects even though muted demand will weigh on HUL's
performance in the near future.

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2.1.2 Company: Marico Limited

Overview:

Marico Limited is a firm operating in consumer products, especially in the beauty and wellness
space. It was founded on 2 April 1990 in Mumbai, Maharashtra. The major products include edible
oils and other value-added oils. It also does its business at an International level other than India.
Some significant countries include Egypt, Malaysia, South Africa, Middle East, and the South
Asian Association for Regional Cooperation (SAARC). Its subsidiaries are Marico Consumer
Care Limited, Marico Bangladesh Limited, Marico Middle East FZE, and Marico South Africa

15
(Pty) Limited. It has its headquarters in Mumbai. Marico is present in over 25 countries. It has a
revenue of Rs.7,334 crore and has a count of 1665 employees.

Key Products:

Edible Oil: Saffola

Hair Nourishment: Parachute, Parachute Advanced, Livon, Nihar Naturals Uttam, Hair & Care
Fruit Oils, Mediker, Nihar Naturals

Skincare: Parachute Advanced Body Lotion

Healthy foods: Saffola Masala Oats & Saffola Fittify

Male grooming: Set Wet

Production Facilities:

Marico has eight factories in India namely in Pondicherry, Kanjikode, Paldhi, Perundurai, Jalgaon,
Dehradun, Paonta Sahib, and Baddi

Market Share:

Marico holds around 73% of the super-premium refined edible oil segment with its Saffola brand

Financial indicators:

• Net Profit Margin:17.19%

• Dividend Yield: 1.87 %

• Return on net worth: 28.77 %

• Current ratio:2.02

• Debt to equity: 0.03

• Market Cap: 46723.19 Cr

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Future outlook and plans:

Many cost transformation exercises have been started but they plan to continue passing a value to
the customers.

2.1.3 Company: Dabur

Overview:

Dabur was started in 1884 by S.K.Burman manufactures Ayurvedic medicine and natural products
for the consumers. Being one of India's fast-moving consumer goods companies, it has a revenue
of Rs.88.29 billion and has a count of 7,243 employees. It serves geographically across the world
while it has its headquarters at Ghaziabad, Uttar Pradesh. The firm has a vast distribution network
covering around 6 million retail outlets and has a high penetration rate in both urban and rural
markets. The company's products are available in about 120 countries, and the overseas revenue
accounts for around 30% of the total turnover. The company has also set up subsidiaries worldwide
to manage the business more effectively and increase its reach.

Key Products:

Dental care: Dabur Toothpaste

17
Health products: Dabur Chyawanprash

Food products: Dabur Honey, Ginger garlic paste, Coconut milk, Tomato puree, Real Fruit Power

Household products: Odomos, Odonil

Production Facilities:

The firm has around 20 manufacturing facilities spread across the globe, out of which 12 are
present in India and have 7 factories.

Market Share:

Dabur has around 84,315 Cr Market capitalization in Domestic FMCG players

Financial indicators:

• Net Profit Margin:18.55%

• Dividend Yield: 0.58%

• Return On Networth: 27.40 %

• Current ratio:1.10

• Debt to equity: 0.05

• Market Cap: 90783.17 Cr

Future outlook and plans:

The company is in plans to shift its focus back on its core strength, which is Ayurveda. It also
plans to focus on nine power brands from its product categories that almost contribute to 65%-70%
of its sales. With the focus of the government on home grown brands, we can see that there is an
influx of several small and mid sized firms who are entering in the market of Ayurvedic products.
Consumer awareness of vegan, vegetarian and parabens has led to conglomerates changing their
product quality over the years.

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2.1.4 Company: ITC Limited

Overview:

Established in the year 1910, as the Imperial Tobacco Company of India Ltd., it is an Indian
multinational conglomerate company. ITC's headquarters are in Kolkata, West Bengal.ITC has its
presence across a diverse portfolio of products, and it also completed 100 years in 2010. It has a
revenue of Rs.52,035 crore, with 27,279 employees. It has around 60 locations across the nation
and was also a part of the Forbes 2000 list. The first six decades since its inception, the company
primarily focused on the cigarette and tobacco business. It has a retail network that covers around 2
million retailers in the country.

Key Products:

Consumer goods:

Cigarettes: Wills Navy Cut, Gold Flake Kings, Gold Flake Premium lights, Gold Flake Super Star,
Insignia, India Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Citric Twist, Ice Burst,
Mild & Ultra Mild), 555, Silk Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players,
Flake and Duke & Royal, wave. (sells 81% of cigarettes)

Education: Classmate, PaperKraft, and Colour Crew

Apparel: John Players

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Hotels & Resorts: ITC's Hotels division is the country's second-largest hotel chain having around
90 hotels across the nation.

Foods: Aashirvaad, Sunrise Foods, Sunfeast, Bingo!, Kitchens of India, Sunfeast YiPPee!

Production Facilities:

The firm has its manufacturing facility for cigarettes at Bangalore (Karnataka), Kolkata (West
Bengal), Munger (Bihar), Saharanpur (Uttar Pradesh). It has its Packaging & Printing Factories at
Chennai (Tamil Nadu), Munger (Bihar). It has it's Paper & Paperboard Mills in Bollaram (Andhra
Pradesh), Coimbatore (Tamil Nadu), Sarapaka (Andhra Pradesh), Tribeni (West Bengal).

Market Share:

ITC has an 80% market share in the cigarettes category and has a constant high demand. Almost
running a monopoly, they have few competitors like VST selling Charminar and a few
international players. However, due to excise duty and customs, ITC still has an advantage over
them.

Financial indicators:

• Net Profit Margin:32.34%

• Dividend Yield: 5.94 %

• Return On Networth: 24.82 %

• Current ratio:1.61

• Debt to equity: 0.00

• Market Cap: 210,231.55 Cr

Future outlook and plans:

ITC will relook at the investment plans but has no plan of altering dramatically at the current
scenario.

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MACROECONOMIC FACTORS

1. Government Regulations and Policy Changes

a. Investment was approved to 100% foreign equity in single brand retail (Companies who
sell all their products under one single brand name) and 51% in multi-brand retail (Who
have different brands under single company) We can see foreign brands like Ikea, Zara
coming into Indian Market for the same reason. However, with the entry of Walmart we
can expect more stores like Macy’s, TESCO coming in too.
b. Initiatives like the Food Security Bill and direct cash transfer subsidies reach about 40
% of households in India.
c. The minimum capitalization for foreign FMCG companies to invest in India is US$ 100
million.
d. 100% FDI in food processing and single-brand retail brought inflows of US$16.28
billion during FY2000-FY2020.
e. A new Consumer Protection Bill was drafted by the Government with emphasis on
bringing a possible mechanism to ensure speedy and affordable justice.
f. The Essential Commodities Bill 2020, will deregulate several previous laws related to
warehousing and hoarding, insurance, movement and production of essential

21
 commodities such as pulses, edible oil, onion to become open for direct selling to
conglomerates during extraordinary circumstances. Private investment in agricultural
commodities, marketing and processing, farming and poultry infrastructure will change
the course of both sectors.
g. Without government intervention, there may be exploitative practices by conglomerates
leading to unethical practices by some parties and creating competitive pricing and
without the minimum support prices, there may be more social implications.

2. Impact of GST
Pros:

• Reduction in logistics cost

• More efficient supply-chain management
• Increase in consumption

Cons:

• Transitional credits
• Frequently changing rates
• Anti-profiteering issues

3. Impact of Union Budget

• The consumption in the FMCG side can see a boost with the proposed reduction in personal
taxes.
• Focus on agriculture, irrigation and rural development can help in reviving demand from the
rural economy.
• Creation of more disposable income in both rural and urban areas can provide a thrust to
FMCG sector.
• Overall, the budget partially delivered the expectations of FMCG sector.

22
ANALYST VIEW/IMPACT OF COVID-19

COVID-19 has affected our sectors to varied degrees.

In the short and medium run, companies will be forced to change their customer targeting and
retention strategies. The demanded goods basket has also shifted over the course of multiple
lockdowns. Some of these changes will be more permanent and prominent as compared to others.
Hygiene and health products have seen a surge in demand. Other products are expected to see a slow
and steady rise in demand.

Products in demand;

● Handwashes, soaps, masks, sanitizers, wipes, home cleaning products - kitchen, floor and toilet
cleaners.
● Food (convenience) - Biscuits, instant noodles, frozen food etc.
● Immunity builders - e.g. Chayawanprash.

Non-essentials - skincare and beauty products, in the FMCG are going to face a sluggish demand. It
will take atleast a year to return back to pre-COVID levels. Firms need to manage their inventory well
to avoid losses on these products.

Change in consumer behaviour:

● Customers are avoiding regular visits to supermarkets by piling up requirements.

● Consumers have decreased their expenditure on non-essentials.
● E-commerce is going to be the next big thing in FMCG sector. Initiatives taken by e-commerce
companies (e.g. No contact delivery) could boost the demand for FMCG products in the
economy.

The recent trend has seen a surge in demand from rural areas, which can be attributed to the migration
of labour to rural areas. Schemes like MGNREGA have maintained the demand for FMCG essentials.
Businesses must recognize their potential sources of revenue and should start focusing on them, rather
than focusing on the customer segment which is going to curtail its spending anyways.

Overall, the profitability of the industry is expected to remain intact (~20% in the fiscal year 2020) due
to reduced ad expenses and softer input prices.

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