What are fast-moving consumer goods (FMCG)? About FMCG

Why in news? India’s fast-moving consumer goods (FMCG) sector witnessed growth in rural consumption in volume terms outpace urban consumption for the first time in five quarters, in the January-March period 2024.

According to a report from consumer intelligence firm NIQ, rural consumption grew at a rate of 7.6 per cent year-on-year (Y-o-Y) in Q1CY24, overtaking that in urban areas which stood at 5.7 per cent.

This is a notable change from Q4CY23, when rural volume growth was at 5.8 per cent, and the urban consumption rate was higher at 6.9 per cent

About India’s fast-moving consumer goods (FMCG):

India’s fast-moving consumer goods (FMCG) market is a major player in the Indian economy, ranking as the fourth largest sector.

• Size and Growth Potential: The FMCG industry in India is estimated to be around $110 billion, and experts predict it could double in size within the next five years. This is according to a report by GLG Insights .
• Product Categories: FMCG encompasses a wide range of everyday essentials, including:

Food and Beverages: This includes dairy products, packaged foods, snacks, soft drinks, and alcoholic beverages.

Household Care: Soaps, detergents, cleaners, and disinfectants.

Personal Care: Cosmetics, toiletries, hair care products, and hygiene products.

Healthcare: Over-the-counter medicines, vitamins, and basic healthcare products.

• Market Share: Household and personal care products dominate the FMCG market in India, accounting for roughly 50% of sales. Healthcare comes in second at around 31-32%, while food and beverages make up the remaining 18-19%.

Distribution Network: FMCG products reach consumers through a vast network, including:

Modern Trade: Supermarkets, hypermarkets, and convenience stores.

Traditional Trade: Kirana stores (small family-run shops) and rural markets.

E-commerce: Online marketplaces are gaining traction for FMCG products.

• Unique Characteristics: The Indian FMCG market has some distinct features:

Strong Rural Presence: Around 45% of FMCG consumption happens in rural areas, highlighting the importance of catering to diverse needs.

Value Consciousness: Price sensitivity is high among Indian consumers, making affordability a key factor for FMCG companies.

Overall, India’s FMCG market is a vibrant and growing sector with significant potential. Its ability to cater to the evolving needs of a large and diverse population will be crucial for its continued success.