Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Fast Moving Consumer Goods Sector Analysis Report 

[Key Points | Financial Year '19 | Prospects | Sector Do's and dont's]

One Stock Crorepati: The Biggest Money-Making Opportunity Available Right Now
  • Fast moving consumer goods (FMCG) is the 4th largest sector in the Indian economy. There are three main segments in the sector – food and beverages which accounts for 19% of the sector, healthcare which accounts for 31% and household and personal care which accounts for the remaining 50%.
  • 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. These initiatives are expected to increase the disposable income in the hands of the common people, especially in the rural area, which will be beneficial for the sector.
  • Accounting for a revenue share of around 45%, rural segment is a large contributor to the overall revenue generated by the FMCG sector in India. Demand for quality goods and services have been going up in rural areas of India, on the back of improved distribution channels of manufacturing and FMCG companies.
  • Urban segment accounted for a revenue share of 55% in the overall revenues recorded by FMCG sector in India. The Government of India has approved 100% Foreign Direct Investment (FDI) in the cash and carry segment and in single-brand retail along with 51% FDI in multi-brand retail.
  • 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 18% tax bracket against the previous 23-24% rate. Also, rates on food products and hygiene products have been reduced to 0-5% and 12-18%, respectively.

How to Research the Consumer Products Sector (Key Points)

  • Supply
  • Abundant supply through a distribution network of over 8 m stores across the country. Distribution networks are being strengthened in the rural areas.
  • Demand
  • With food and consumer products being items of frequent consumption, demand is less impacted by slowdown. Processed food and personal products are segments growing at a robust pace. Rising contribution of women to the working force and growing nuclear families led to higher demand for convenience foods, especially in urban areas. Tobacco demand being habit-forming is largely inelastic.
  • Barriers to entry
  • Huge investments in establishing brand identity and setting up distribution networks.
  • Bargaining power of suppliers
  • Suppliers being small and fragmented have limited bargaining power. Most tobacco companies have integrated backwards and have their own supply chains. Therefore, the bargaining power of suppliers is not high.
  • Bargaining power of buyers
  • Rising competition and the onslaught of the e-commerce boom does provide good bargain opportunities for customers. Tobacco consumption is more or less a habit, and thus the bargaining power of consumers is only to the extent of choice of the brand.
  • Competition
  • Domestic unorganized players pose competition. Domestic players also feel the competitive pressures from large well established MNCs. In case of tobacco, branded cigarettes, bidis and contraband compete with each other.

top ↑

Financial Year '19

  • The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern trade expected to grow at 20%- 25% per annum, which is likely to boost revenues of FMCG companies.
  • Revenues of FMCG sector reached Rs 3.4 lakh crore (US$ 52.8 billion) in FY18 and are estimated to reach US$ 103.7 billion in 2020.
  • The sector witnessed healthy FDI inflows of US$ 14.7 billion, during April 2000 to March 2019.
  • Revenue growth continued to decline from 11% in the third quarter of 2018-19 to 7% in the first quarter of current fiscal.
  • FMCG companies have been increasingly relying on rural India, home to nearly 800 million, to fuel growth. While the Indian economy grew at its slowest pace in over six years at 5% during April-June, the agriculture sector expanded a meagre 2% during the period.
  • One major factor driving the demand for food services in India is the growing youth population, primarily in the country’s urban regions. India has a large base of young consumers who form most the workforce and, due to time constraints, barely get time for cooking.

top ↑

Prospects

  • Leading players of consumer products have a strong distribution network in rural India; they also stand to gain from the contribution of technological advances like internet and e-commerce to better logistics. Rural FMCG market size is expected to touch US$ 220 billion by 2025.
  • Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a company’s reach.
  • The sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 27.9% to reach US$ 103.7 billion by 2020.
  • The initiatives for the growth of sector are expected to increase the disposable income in the hands of the common people, especially in the rural area, which will be beneficial for the sector.
  • Going forward, FMCG companies are likely to post the worst revenue growth in the last 15 years as the slowdown in the sector intensifies due to lower farm incomes, liquidity crunch, and rising unemployment.

top ↑

Related Links for Consumer Products Sector
Quarterly Results | Sector Quote | Over The Years

Views on News

BAJAJ CONSUMER CARE Surges by 5%; BSE FMCG Index Up 3.6% (Market Updates)

Apr 8, 2020 | Updated on Apr 8, 2020

BAJAJ CONSUMER CARE share price has surged by 5% and its current market price is Rs 149. The BSE FMCG is up by 3.6%. The top gainers in the BSE FMCG Index are BAJAJ CONSUMER CARE (up 5.4%) and GSK CONSUMER (up 5.4%). The top losers is GODREJ AGROVET LTD .

P&G HYGIENE Surges by 5%; BSE FMCG Index Up 0.5% (Market Updates)

Apr 8, 2020 | Updated on Apr 8, 2020

P&G HYGIENE share price has surged by 5% and its current market price is Rs 11,009. The BSE FMCG is up by 0.5%. The top gainers in the BSE FMCG Index are P&G HYGIENE (up 5.3%) and ZYDUS WELLNESS (up 8.6%). The top losers are NESTLE (down 0.2%) and GODFREY PHILLIPS (down 0.4%).

JYOTHY LABS Surges by 5%; BSE FMCG Index Up 2.5% (Market Updates)

Apr 8, 2020 | Updated on Apr 8, 2020

JYOTHY LABS share price has surged by 5% and its current market price is Rs 102. The BSE FMCG is up by 2.5%. The top gainers in the BSE FMCG Index are JYOTHY LABS (up 5.4%) and ZYDUS WELLNESS (up 11.7%). The top losers is ITC (down 1.3%).

GODREJ CONSUMER Surges by 12%; BSE FMCG Index Up 2.7% (Market Updates)

Apr 8, 2020 | Updated on Apr 8, 2020

GODREJ CONSUMER share price has surged by 12% and its current market price is Rs 627. The BSE FMCG is up by 2.7%. The top gainers in the BSE FMCG Index are GODREJ CONSUMER (up 11.6%) and ZYDUS WELLNESS (up 12.4%). The top losers is ITC (down 1.2%).

EMAMI LTD Surges by 5%; BSE FMCG Index Up 2.7% (Market Updates)

Apr 8, 2020 | Updated on Apr 8, 2020

EMAMI LTD share price has surged by 5% and its current market price is Rs 219. The BSE FMCG is up by 2.7%. The top gainers in the BSE FMCG Index are EMAMI LTD (up 5.4%) and GSK CONSUMER (up 5.2%). The top losers is ITC (down 1.2%).

More Views on News

Most Popular

Sorry Warren Buffett, I'm Following This Man Instead of You in 2020 (The 5 Minute Wrapup)

Mar 30, 2020

This man warned of an impending market correction while everyone else was celebrating the renewed optimism in early 2020...

The Biggest Trading Opportunity of 2020 is Here...

Mar 26, 2020

India's #1 trader, Vijay Bhambwani, talks about a hugely profitable trading opportunity which you must know about today!

One Stock that is All Charged Up for the Post Coronavirus Rebound (The 5 Minute Wrapup)

Apr 1, 2020

A stock with strong moat is currently trading near 5-year lows.

The Insiders See a Buying Opportunity in These Smallcaps Amid Coronavirus Outbreak (Profit Hunter)

Mar 31, 2020

The promoters are buying these smallcaps amid the coronavirus outbreak.

A Safe Stock to Lockdown Now (The 5 Minute Wrapup)

Apr 2, 2020

The market crashc has made strong, established brands attractive. Here's a stock to make the most of this opportunity...

More

How to Trade the
Coronavirus Crash

Coronavirus Crash
Get this special report, authored by Equitymaster's top analysts, now.
We will never sell or rent your email id.
Please read our Terms

S&P BSE FMCG


Apr 8, 2020 (Close)

S&P BSE FMCG 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS