FMCG INDUSTRY ANALYSIS

Transcription

1 FMCG INDUSTRY ANALYSIS

2 FACTS FMCG is the 4th largest industry in India Market size expected in 2016: $49 billion Overall FMCG market is expected to grow at a CAGR of 20.6% to $103.7 billion during Total consumption expenditure in 2014 was $1411 bn and is expected to increase at a CAGR of 16.89% to $3600 bn Market size expected to grow upto $103.7 bn by 2020 The FMCG sector generated a revenue of $ 47.3 billion in From : CAGR is 11.9%

3 SEGMENTATION

4 MARKET BREAKUP BY REVENUE Hair care: 23% Food: 18% Health supplements: 16% Oral care: 16% OTC and Ethicals: 10% Home care: 7% Digestives: 6% Skin Care: 4%

5 MARKET LEADERS

6 PRODUCT PROFILES

7 COST STRUCTURE

8 REVENUE STRUCTURE

9 DISTRIBUTION NETWORK

10 RETAIL INDUSTRY Retail industry in India is expected to grow to US$ 1.3 trillion by 2020 Compound Annual Growth Rate (CAGR) of 16.7 per cent over India is the fifth largest preferred retail destination globally The government has approved 51 per cent FDI in multi-brand retail and increased FDI limit to 100 per cent (from 51 per cent) in single brand retail. The online retail market is expected to grow from US$ 6 billion to US$ 70 billion during FY15-FY20.

11 E-COMMERCE HUL- Humarashop.com Godrej- Nature basket Marico- developing online capabilities Britania- exclusively launched Goodday Chunkies online Dabur- exclusive stockist for online channels Amazon pantry- grocery and household essentials Online groceries Grofers, Big basket, ZopNow

12 TRENDS Consolidation Product innovation Premiumisation Product customisation Brand consciousness Backward integration Focus on rural markets Third-party manufacturing Expanding distribution networks Market development Rising importance of smaller-sized packs

13 GROWTH DRIVERS Rising income driving purchase Desire to experiment with brands Growing rural markets Growing modern retail channels E-commerce Strong distribution channels Urbanisation Government reforms to encourage FDI inflow and market sentiments Reduced oil prices

14 PORTER S FIVE FORCE ANALYSIS

15 GOVERNMENT REGULATIONS National Agricultural Market Model and establishment Bill GST Food Security Bill 42 Mega Food parks TRAI Ease in licensing

16 GST IMPACT FMCG sector has a long supply chain involving Manufacturers- depots- wholesale distributorssub- distributors-dealers-retailers GST would initiate faster supply chain Huge cost saving in inventory insurance cost, transport, rental, security, employee costs, local compliance etc Negatives- uncertainty

17 7 th PAY COMMISSION IMPACT 23.5% hike in salaries and pensions of 1 crore Government employees. 2.5 times hike in basic pay Out of 270 million families in India, 23% of them are salaried. Out of the salaried people 44% belong to the rural areas and the remaining from urban areas Impact- Average salaries in Rural India rise by 23.5% and in Urban areas by 27% Urban households are likely to absorb 64% of this rise Estimated to boost consumption by $9 bn

18 MONSOON IMPACT Boost to the agricultural sector Reduction in raw material cost Enhance the purchasing power of people dependent on the agricultural sector (50%) Enhancing the rural consumption (target market)

19 RURAL-URBAN SEGMENTATION Rural FMCG expected to 850 mn consumers- 70% of the population FMCG generates 30-45% sales from rural areas Direct Cash transfers Food Security Bill HUL Shakti Budget allocation of Rs 500 crores for women, SC/ST

20 Negative Working Capital Indicator of: Operational efficiency Cash conversion cycle is negative High profitability Low bargaining power for retailers Means that daily activities are funded by the customers Cannot be replicated across industries

21 Impact of Demonetisation Distribution channels including small retailers make bulk of the sales in cash Trade channels may take a few week to recover and adapt to the new currency notes Discretionary consumption will see an adverse effect FMCG will not see a lasting impact of demonetisation in the long run but will be affected with liquidity crunch in the very short run