What Are Fast-Moving Consumer Goods (FMCG)?

Fast-moving consumer goods (FMCG) are also known as consumer-packaged goods and these products can be bought at a low cost. These products are also called non-durable products.

FMCGs have a short shelf life span, as they are either high in demand (e.g., soft drinks and confections) or perishable (e.g., meat, dairy products, and baked goods). These goods are purchased frequently, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover when they're on the shelf at the store.

FMCG Market Overview

The global FMCG market is projected to reach USD 15,361.8 Billion by 2025, according to Allied Market Research.

The Indian FMCG sector is the fourth largest sector in India and expected to reach USD 103.7 Billion in 2020. Food and Beverages have more than 50 per cent share of the FMCG sector in India.

The scope of the FMCG sector in India is growing, especially in the rural area. 70% of the population lives in a rural area. Hence, it is vivid that FMCG has a huge scope in rural India.

About The Sector

FMCG segment is more worthwhile because of low penetration levels, well-established distribution network, low working cost, lower per capita consumption, large consumer base and simple manufacturing processes of most of the products bringing about genuinely low capital investments.

It is also highly competitive due to the presence of multi-national companies, domestic companies, and unorganized sectors. A major portion of the market is captured by unorganized players selling unbranded, unpackaged products and local alternatives in similar categories.

The FMCG sector can be classified into three categories:

  1. Personal Care: oral care, health care, skin care, cosmetics, hygiene, and paper products etcetera.
  2. Household Care: fabric wash and household cleaners etcetera
  3. Branded and Packaged food and Beverages: chocolates, snacks, tea, coffee, dairy products, etcetera.

Future of FMCG Sector in India

  • India has a rapidly growing demand for daily use of goods and services.
  • In the FMCG sector, new production facilities are equipped with machinery to decrease the wastage during production.
  • The transportation facility and infrastructure development are improving the methods of distribution in many areas including remote areas of India.
  • There are economical packages and one-time use packs for the general population who have less spending capacity or need the simplicity of unit packs.
  • With the most recent packaging technologies, FMCG companies are able to innovate and manufacture long-lasting products with minimum damage to packages during transportation.

Indian Start-ups in FMCG Sector

  1. Mama Earth: Incredible toxin-free, the natural product range for mother and baby.
  2. Epigamia: The flavoured yoghurt
  3. Bombay shaving company: An Authentic brand for men’s personal care product
  4. Vahdam Tea’s: The world’s first vertically integrated online-first tea brand
  5. Sattviko: The Sattvik way of life focuses on living in harmony with nature and eating food with simple nutritious.
  6. Sleepy Owl Coffee: A cold brew coffee company that is catering to raise demand for specially brewed, gourmet coffee.
  7. Moonshine Meadery: The world’s oldest alcoholic beverages

Government Initiatives to Promote FMCG Sector

  • The government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand retail and 51% in multi-brand retail.
  • Consumer Protection Bill came with a special focus to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers.
  • The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG products are under 18% tax bracket against the previous 23-24% rate.
  • The GST is expected to transform logistics in the FMCG sector into a modern and efficient model as all major corporations are remodelling their operations into larger logistics and warehousing facilities.