Last Updated: September 05, 2018
Last Updated: October, 2018
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 per cent of the sector, healthcare which accounts for 31 per cent and household and personal care which accounts for the remaining 50 per cent.
The FMCG sector has grown from US$ 31.6 billion in 2011 to US$ 52.75 billion in 2017-18. The sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 27.86 per cent to reach US$ 103.7 billion by 2020. The sector witnessed growth of 11 per cent in value terms between April – June 2018, supported by rate cuts due to Goods and Services Tax along with better consumer off-take. It is forecasted to grow 12-13 per cent between July – December 2018.^ FMCG’s urban segment is expected to have a steady revenue growth at 8 per cent in FY19 and the rural segment is forecasted to contribute 15-16 per cent of total income in FY19.* Post GST and demonetisation, modern trade share grew to 10 per cent of the overall FMCG revenue, as of August 2018.
Accounting for a revenue share of around 45 per cent, 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 per cent in the overall revenues recorded by FMCG sector in India.
FMCG Companies are looking to invest in energy efficient plants to benefit the society and lower costs in the long term. Patanjali will spend US$ 743.72 million in various food parks in Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh and Uttar Pradesh. Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) in FY19 for capacity expansion and is also looking for acquisitions in the domestic market.
Growing awareness, easier access, and changing lifestyles are the key growth drivers for the consumer market. The focus on agriculture, MSMEs, education, healthcare, infrastructure and employment under the Union Budget 2018-19 is expected to directly impact the FMCG sector. 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.
Note: * - according to CRISIL report, ^ - according to Nielsen India, GST: Goods and Services Tax
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Last Updated: September 05, 2018
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