Consumer Psyche

THE 86,000 crore FMCG (fast moving consumer goods) sector in India is running full throttle and is expected to have a lot of action in 2010. As the fourth largest sector in the Indian economy, it is distinguished by a good distribution network and a strong competition between organised and unorganised segment. According to Financial Express, the sector will witness a growth of 15 per cent in 2010, compared to last year.

Present and the future

While the global economic ire consumed everyone in its fire, FMCG happened to be one area that stood tall and strong by overcoming its impact. Although the input costs were high, the sector didn’t witness any price rise in fairness/anti ageing creams, soaps and the likes. The Indian consumer continued to enjoy royalty and hence the sales saw a hike. The issue was balanced by downsising packaging. “The sector has coped well with recent challenges and grew by 15 per cent over the last year,” says industry chamber FICCI.

According to AC Nielson as reported by The Mint, the year 2009, also saw modern retail format stores and aggressive marketing which helped home-grown FMCG firms wrest market share from leader Hindustan Unilever Ltd (HUL). HUL’s share in the estimated Rs 8,000 crore personal care market fell to 44.5 per cent from about half last year, as others like ITC, Godrej and Wipro fought for space in markets like Uttar Pradesh, Bihar and Gujarat with a rural push, says AC Nielsen.

The sector saw rarely any merger and acquisition except for Wipro’s Rs 210 crore acquisition of United Kingdom’s Yardley. The optimism in Indian market was shown when PepsiCo, for the first time held its board meeting here. Its investments are up by another 100 million dollar from 500 million dollar that was announced last year.

Overall, the prospects of the FMCG sector remain good. According to FICCI, it has grown consistently during the last three to four years. The sector is expected to grow at 12 to 15 per cent over the next three to four years.