FMCG industry – the size and the structure
The top-performing sectors of the Indian economy are Agriculture, Industry, Services, Food Processing and Manufacturing. The Personal Care Products industry is a leader in the manufacturing sector. As India strives to be a $5tn economy by 2025, the FMCG industry is poised to lead from the front. Enablers to this growth include…
- Rise in rural consumption due to increase in disposable income of people and so far low penetration in this market.
- In rural areas, government support schemes like loan waiver and farm package gives a fillip to sales growth
- Changing lifestyle of people in all markets
- Growing awareness about fashion and health
- Easy access to latest products
- Constant innovation by organisations
Urban consumption accounts for 55% of the total FMCG sales. The balance is shared between semi-urban and rural India. Growth in rural areas can be gauged from the fact that now 50% of the total spends in rural India is on FMCG products.
The retail market in India will reach about $1100Bn in the year 2020 and the share of the FMCG industry is expected to be $104Bn. This industry is growing at CAGR 8-9%. The year 2018 was particularly very good on the back of good monsoon and people & government coming out of the initial hiccups of GST. In certain years value growth has remained stagnant but volume growth has increased over the last few years on the back of increasing demand for these products. Reasons for this growth have been put forth in earlier paragraphs.
The share of the unorganized market in FMCG space is reducing. Likewise, the organized market is growing because of the increasing level of brand consciousness. This growth is also fueled by the expansion of modern retail.
Investment in these FMCG companies is lucrative as this industry is ever-green and recession-proof. Therefore, it witnessed FDI inflows of about $16Bn in the period 2000-2019. Household and Personal Care products account for 50% of FMCG sales.
|A||Evolution of the FMCG Sector|
|B||Top Personal Care Products being sold in India|
|C||Top FMCG companies in India in terms of revenues and popularity|
|D||The renowned individuals in Personal Care Products Industry|
Evolution of the FMCG sector
Due to the big population of our country, the market for FMCG products was always huge. But in the earlier days (say after independence up to 1980s) there were very very few products and lesser options to chose from. This was due to the low purchasing power of people. Also, at that time under “License Raj” permission was not given to increase the quantity of production. This restricted innovations that companies can undertake in order to roll out new products. HUL was a market leader at that time also (then, it was known as HLL (Hindustan Lever Limited)). Tata was present in this sphere through its company TOMCO. These companies were manufacturing very few products and lesser variants of these. Their market was more urbane where people had aspirations and money to buy these products. Incidentally, these products were considered more desirable products rather than basic needs.
However, in the year 1984 the entry of Nirma changed the whole FMCG scene. The company focused on ‘value for money’ plank and made FMCG products like detergents very affordable even to the lower strata of society.
In the year 1991, the Indian economy was opened to start globalization. And rules were relaxed to facilitate expansion of operations for companies in India. Companies from across the globe started to invest and started their operations in India.
Nestle which was mainly focused on urban population started to focus elsewhere also.
Regional players started to establish their operations – Ghadi detergent started competing with HUL and Nirma. Jyothi laboratories gave sleepless nights to Reckitt Benckiser. Anchor toothpaste rose against HUL and Colgate.
The biggest innovation came with the advent of “sachet”. Everything from shampoo, tea, detergent, toothpaste, hair oil and what not started to be made in sachet to sell at minimal price points. The whole strategy of supply chain started to be rewritten.
Since then the time has been good for companies as well as consumers. Companies are constantly growing by exploring the untapped potential. The consumers are happy with the variety of options that he has now.
Top Personal Care Products being sold in India
Here, we talk about what are the big selling Personal Care Products in India.
|B||Shampoo & Conditioner|
A. Skin Cream
From the aspirational fair and smooth skin a decade ago, new-age consumers and brands are redefining beautiful skin as healthy and naturally glowing. The Indian skincare market stood at $1.6Bn in 2017 and is projected to grow at CAGR 9% to reach $2.7Bn by 2023. This can be attributed to several factors including innovations in skincare products, the rise in awareness about healthy skin routines and the need for a real, long term solution to skin problems that go beyond cosmetics fixes.
The traditional skincare products have expanded its range to include newer products. These are hydrating cream, separate day and night creams and specialized anti-ageing creams that offer more than anti-wrinkle solutions. Some more such niche products include sunscreens in SPF from 15 to 150 and also the bacteria-rich skincare products. These are gaining popularity simultaneously amongst the niche and the masses. Today, some of the major brands for skin cream in the Indian market include Lakme, Ponds, Olay, Nivea, Neutrogena, L’Oreal, Lotus Herbal, Vatika, Avon, etc.
B. Shampoo & Conditioner
In the earlier days, Shampoo was considered a luxury product that was to be used only occasionally. Later on, various socio-economic factors led to the mass adoption of shampoo and now it has become a basic need in the Indian bathroom. The top brands in this category include to Pantene, Sunsilk, Clinic All Clear, Vatika, Patanjali, Dove, L’Oreal, Rejoice, Tresemme, Biotique, etc. Shampoo is available in multiple variants like 2-in-1, Anti-dandruff, Kids, Medicated, Standard and others. These variants serve the specific needs of the user.
C. Hair Oil
The size of the market for personal care products is about $24Bn. In this market, the share of the hair care segment is about $2Bn and Hair oil commands about 50% of the total haircare market in India. Coconut based oil commands 46% of this market. Major manufacturers of hair oil are Marico, Dabur, HUL, Emami, P&G and Bajaj. The main types of hair oil include Coconut oil, Almond oil, Light hair oils and cooling oil. As per Neilson’s retail report of 2013, the hair oil market grew by CAGR 19% and the light hair oil category grew by 25%. At this moment it is interesting to note that hair oil is facing competition from other products of the hair care segment. That product is a shampoo that is also promising to give clean, healthy and nourishing inputs to hair.
D. Bathing Soap
Bathing Soap was introduced to Indians around 1935 but it took them a lot to accept this product as they were used to use besan for the same purpose. Lifebuoy was one of the first brands in the market. Initially, Tata was also in this market with their company called TOMCO that was later acquired by HUL. Currently, the top-selling soap brands in the Indian market include Lux, Santoor, Dove, Liril, Pears, Dettol, Fiama-Di-Wills, Mysore sandal, Hamam, etc.
Toothpaste along with tooth-powder and mouthwash forms the Oral Care category of personal care products. In the year 2019, oral care accounted for 16% of the total FMCG market in India and its value was $1.57Bn (Rs.10,000Cr). The toothpaste market is growing at a CAGR of 18.6% in recent years. Within this segment in the year 2018, Colgate had 49% market share, HUL 16%, Dabur 13%, Patanjali 9%, GSK 3% and others 9%. A fourth of India’s oral care market is herbal now. Although HUL & Colgate are adapting to the changing tastes, Patanjali and Dabur still sell four out of five herbal and ayurvedic products in the oral care market. The growth in the urban market has been largely in Gel toothpaste. Major brands of toothpaste include Pepsodent, Colgate, Dabur, Dantkanti, Sensodyne, Maxgel, Close-up, Aquafresh and many more.
F. Sanitary Pads
In the year 2018, the Indian sanitary market size was $0.51Bn and it is projected to reach $0.93Bn by 2024. The increasing awareness about menstrual hygiene is supporting the increasing demand for this product. Moreover, the impetus of high quality and environment-friendly raw materials to produce these pads is further providing an impetus to the growth of the market. Over the past few years, the government of India has partnered with several private entities and non-governmental organizations to take various initiatives to popularize the use of sanitary napkins. Some of these initiatives include the Reproductive and Child Health Program, Eco Femme and My Pad. Now, other varieties like organic and chemical-free napkins are being introduced. Maharashtra is the biggest market for sanitary pads. Major brands include Whisper, Stayfree, Sofy, VWash, etc.
G. Liquid Handwash
Liquid hand wash along with hand sanitizer forms the category of Hand Hygiene. It contains a mix of water, triclosan, detergent, fragrance, and moisturizers. It removes dirt as well as micro-organism from hands performing the dual duty of cleaning as well as sanitizing. Liquid hand wash is available in herbal and non-herbal forms with varying colors and perfumes. The Indian Hygiene market is expected to reach about $0.3Bn by the year 2025 at CAGR of 9%+. Market leaders in the segment are Reckitt Benkiser with its flagship brand Dettol and HUL with its product Lifebuoy. Of late Amway has also entered into this category with its brand Persona. Other brands in the market are ITC’s Savlon, Medimix, Palmolive, Dabur’s Fem and Godrej’s Protekt.
Top FMCG companies in India in terms of revenues and popularity
Below is a list of top FMCG companies in India. They have a high standard of production, product quality, packaging and constant innovation.
|9||Godrej Consumer Products Ltd|
Hindustan Unilever Limited
It is the leading supplier of food, home-care, and personal care products in the country. It has 35brands across 20categories such as Soap (Dove, Lifebuoy, Lux), Detergent (Rin, Surf, Wheel, ), Skincare (Ponds, Vaseline), Cosmetics (Lakme, Fair & Lovely)), Hair Care (Clinic Plus, Sunsilk), Tea (Red Label, Taza, Taj Mahal), and Toothpaste (Pepsodent, CloseUp), Food (Knorr, Kissan), Ice Cream (Kwality). Its annual turnover for the year 2018-19 was Rs.39,310Cr, an increase of 10.6% over the previous year. Its net profit was Rs.6,000Cr, an increase of 16%. It employs 18,000 employees. In December-2018 HUL acquired GSK Consumer Health business in India for $3.8Bn.
It started in the 19th century as a small toothpaste and candle manufacturing unit in New York and now more than 200 years later, it is a global leader in personal care products. Popular brands of the company include Colgate toothpaste, Palmolive naturals and Protex soap. Its annual turnover for the year 2018-19 was Rs.4,500Cr and net profit Rs.775Cr. Its factories are located in Baddi (Himachal), Lundaim (Goa), Chitoor (Andhra Pradesh) and Sanand (Gujarat).
Started in 1910, ITC has flourished with a multi-business portfolio that includes FMCG, Hospitality, Paper board, Agri-business and Information Technology. The FMCG space includes soap(Fiama-di-wills, Vivel), Snacks/ Biscuit (Bingo, Sunfeast)), Food (Aashirvad) and beverages, Incense stick (Mangaldeep), Stationery material (Classmate), Apparel (Wills Lifestyle) and Cigarettes (Gold Flake, Navy cut). ITC’s turnover for the year 2018-19 was Rs.48,268Cr and net profit was Rs.12,464Cr. Its employee strength at the end of the financial year 2019 was 27,279.
Nestle India is a food and beverage company based in Switzerland. It is a subsidiary of Nestle SA of Switzerland. It started its India operations in 1912 as Nestle Anglo-Swiss Condensed Milk Company. They cater to the nutritional and wellness requirements of Indian consumers. Its brands include Maggi, Nescafe, Milky Bar, Kit Kat, Milkmaid, Nestea, etc. It has 8manufacturing facilities in India and the list in the chronological order of their establishment is as – Moga (Punjab), Choladi (Tamilnadu), Nanjangud (Karnataka), Samalkha (Haryana), Ponda (Goa), Bicholim (Goa), Pantnagar (Uttarakhand) and Tahliwal (Himachal). For the year ended March-2018, the annual turnover of Nestle India was Rs.11,216Cr and net profit was Rs,1,607Cr. It employed 7,604 people.
Parle Agro Private Limited
Parle Agro is into the market of beverages and is a truly Indian company from its roots. The flagship brand of Parle Agro is Frooti launched in the year 1985. This is the largest selling mango flavored drink in India. It is exported to various countries worldwide. Parle Agro’s portfolio comprises of popular brands namely, Frooti, Appy Fizz, Bailey, etc . Its headquarter is in Mumbai. It has many of its factories and contract manufacturing units across India.
Britannia Industries Limited
Britannia is one of the oldest food manufacturing companies in India. It is into the market of Bread, Biscuit, Cake and Yoghurt. Its popular brands include Good Day, Tiger, Milk Bikis, Marie Gold, etc. Turnover for the year 2018-19 was Rs.10,672Cr and net profit was Rs.1,122Cr. As of March-2019, its employee strength was 4,480.
Marico is an Indian company with operations in multiple countries of Asia and Africa. It is into the market of Men’s grooming, Fabric Care, Edible Oils, Skin Care, Hair Care and Health foods. Its household brands include Parachute Hair Oil, Saffola Refined Oil, Hair & Care, Nihar, Livon, Mediker. There are many other brands for the international market. Its employee strength as of March-2018 was 1,665. Its turnover for the year 2017-18 was Rs.7,334Cr and profit Rs.1,135Cr.
Proctor & Gamble Hygiene and Healthcare Ltd.
Proctor & Gamble is one of the most admired names in the FMCG industry. Its products serve grooming, personal hygiene, child care, health and wellbeing and household use. Some of the popular brands of the company include Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head & Shoulder, and Duracell. Its factories are located in Baddi, Bhiwadi, Mandideep, Goa, Hyderabad and Ahmedabad. Annual turnover of P&G India for the year 2017-18 was Rs.2,479Cr. And net profit Rs.374Cr. Its total employee strength is 2500+.
Godrej Consumer Products Ltd
This company is part of the Godrej group. It has a significant amount of international presence. It is into the market of household items, personal wash, and hair care products. Some of the biggest brands include Good night, Cinthol, Hit, Protekt, Godrej Aer, Soft & Gentle and Ezee. As of Jan-2018, its employee strength was 12,099. Annual turnover of GCPL for the year ended March-2019 was Rs.5,773Cr and net profit for the same period was Rs.1,755Cr.
Amul Dairy was founded in 1946. It is an integral part of Indian Heritage. It started as a co-operative society from Anand, Gujarat. Amul Dairy collected milk from people in the region and processed it to sell in a wider area. This strengthened the lively of villagers. It was run by Dr. Varghese Kurien from 1950 to 2006. It is into the business of milk, curd, cheese, butter, beverage, milk powder and chocolates. All its products are with brands Amul & Amulya. It is jointly owned by 3.6million milk producers of Gujarat. The turnover of Amul for the year 2018-19 was Rs.6,966Cr and net profit Rs.2652Cr. Its employee strength as on date, i.e. end-March-2020 is about 825.
The renowned individuals in Personal Care Products Industry
Sanjiv Mehta (CMD, HUL)
Sanjiv is the Chairman and Managing Director of HUL since June-2018. He was appointed President, Unilever, South Asia and member of Unilever Leadership Executive effective May-2019. He has been with Unilever since 1993 and since 2002 he has led businesses in different parts of the world. Sanjiv chairs the FMCG committee of FICCI and also the national committee on MNC of CII. Sanjiv is a member of the advisory board of Harvard Business School. He is a director on the board of Indian Business School. By qualification, he is a CA. He has also completed Advanced Management Program from Harvard Business School.
Harsh Mariwala (Chairman, Marico)
Harsh is the founder chairman of FMCG conglomerate Marico, a Fortune 500 company. He began his career with Bombay Oil Company which was controlled by his family. In 1990 he founded Marico that now has operations in 25coountries across Asia and Africa. He is also the founder of the Kaya Clinic. He led from the front to take his flagship brands Parachute Coconut Oil and Saffola Refined Oil to the next level. His other brainchild are innovations like smaller pack size and use of plastic bottles to replace metal tins. He started Marico from a crowded place called Masjid Bunder in Mumbai and later relocated the head-office to Bandra. He took Marico public with IPO in 2006 and bought several brands of HUL & Reckitt Benckiser. In 2014 he stepped down from the role of Managing Director and since then as Chairman, he has been giving strategic direction to the company.
Adi Godrej (Chairman, GCPL)
– Adi Godrej is chairman of Godrej Consumer Products Ltd which is into the domain of Soap, various skincare, and hair care products. Under the stewardship of Adi, GCPL has grown into a strong emerging FMCG player based on a 3×3 approach to international expansion – building a presence in 3 emerging markets (Asia, Africa & Latin America) across 3categories (home care, personal wash, and hair care). Adi is the chairman of the Indian School of Business since 2011. He was president of CII for the year 2012-13. He has been a member of the dean’s advisory council of the MIT Solan School of Management, Chairman of the board of Governors of the Narsee Monjee Institute of Management Studies. Adi has received several awards and recognition, highest being Padma Bhushan in the year 2012.
Government interventions to support this sector
- An initiative in this direction is that Investment approval of up to 100% foreign direct investment in single-brand retail and 51% in multi-brand retail.
- 100% FDI allowed in B2B e-commerce, 100% FDI under automatic route in marketplace model of eCommerce.
- The GST rates of products in FMCG spaces are gradually being reduced thereby making the products more affordable.
- With the implementation of GST, all major companies are remodeling their operations into larger logistics and warehousing.
- The government is fast initiating policies to support growth in the manufacturing sector. Initiatives like food security bill and direct cash transfer subsidies reaching to about 40percent of households in India is one such initiative.
- The government of India has drafted a new consumer bill with emphasis on setting up an extensive mechanism to ensure simple and speedy delivery of justice to consumers.
Trends and Challenges for Personal Care Products Industry
Online shopping and Supermarkets
Online shopping has fancied everyone. And this will continue, rather it will increase dramatically in the coming times. This will be fueled by wide reach of internet coupled with low rates of connectivity. Habits of GenX to GenZ people are more inclined towards convenience. This is very well served by online shopping. Another enabler for this growth is the regular discounts, cashback and other loyalty programs being laid down by e-commerce companies. These promos ensure repeat customers and this converts into volume.
With the development of e-commerce, FMCG companies have to realign their entire supply chain. Relevance of depots and stockists has reduced significantly as people are not flocking to brick and mortar shops to purchase their daily needs. People place their orders online from the comfort of their homes. The goods are dispatched from big warehouses of eCommerce companies directly to the hands of consumers. Secondly, supermarkets are lifting stocks directly from the factory of manufacturers. Another aspect of this new dynamics is that small manufacturers and their brands have come into prominence. Earlier, they could not think of competing with the behemoths like HUL. But now they have to only list their product on the eCommerce website and the consumer will find him out.
Sustainability is about care for the environment and for the society in which the company is operating. Due to an increase in commercial activities, the environment is fast deteriorating. To counter this problem, the regulators at the national and international levels are strengthening norms to take counter-actions of polluting activities. This is for industrial as well as domestic set-ups. So, companies are acting speedily to reassess their operations and plug all gaps. This has implications on the financial status of organizations because creating the right infrastructure costs money. Nevertheless, all corporate houses are committed to this cause and are allocating all resources to make it happen.
Change of demography in shops
With the increase in the purchasing power of people, the demography of shoppers has widened. That means, now shoppers comprise of a young child to an octogenarian. This calls on behalf of shopkeepers to house that bigger a variety of their niche. Manufacturers have to design products keeping in mind all types of shoppers. This increases pressure on its complete supply chain. More variety of products is to be produced, supplied and be taken back if not liquidated in time. Here, flexibility of the organizations will be tested, how nimble they are with respect to their manufacturing and distribution capabilities.
In modern organizations, a good amount of data is enabling the process of decision making. There is huge amount of data already available and then technology is available to capture the data that is still not in the repository of companies. The whole world is talking about ML, AI & Big data. Now, it is up to the organizations how fast want to they get on to this path. The ones that take a faster leap will move ahead in the race.
Till very recently, organizations worked with data collected manually from its field people whether in market-place or in factories. So, there was a significant amount of delay between the time when the data was generated and when it was presented for discussion and taking decisions. Also, during this transfer of data, there could be some distortion of data. On top of that there was a limitation to the type of data that could be logged. Gone are the days. Now, with Artificial Intelligence establishing its foothold, the generation of data, its transfer and interpretation is happening in real-time. With IoT (internet of things), machines are talking to each other thereby reducing the deployment of people and also this is increasing the rate of production. Similarly in the marketplace, capturing of order to its delivery is happening at a lightning pace that was unimaginable earlier.
Information is moving at lightning speed because people are crazy about receiving and disseminating information. It is happening the way of social media tools like Facebook, Twitter, Instagram and all others. So, it is very easy to share information about any new project or idea and collect feedback about it. A whole new channel of marketing has emerged, called Digital Marketing. It has completely changed the way earlier marketing fraternity was communicating with people. At no cost as compared to conventional marketing, a more effective exchange of ideas is happening. As compared to the earlier monologue, now is the time of dialogue.