PROJECT REPORT

On the topic of

‘‘ECONOMICS PROBLEM FACED BY FMCG

COMPANIES’’WITH
GUIDED BY: THE LIKEKY SOLUTIONS
SUBMITTED BY: AND
BUSINESS STRATEGY TO OVERCOME
MR. AJAY KUMAR
THIS
VIBHA MATHUR
PROBLEM nd
DHAROLIYA MBA 2 SEM

GUIDED BY SUBMITTED BY
VIBHA MATHUR
Mr. AJAY KUMAR
DHAROLIYA
 ACKNOWLEDGEMENT

I wish to express my profound gratitude to Mr. AJAY

KUMAR DHAROLIYA for his kind support and valuable
guidance for the completion of this project.

I would also like to acknowledge the assistance and

encouragement of the various professionals and persons
whom I visited for sharing their insight and experience with
me and also sincere thanks to my family and friends for
supporting me throughout the completion of this project.

VIBHA MATHUR
 INDEX
INTRODUCTION
1FAST MOVING CONSUMER GOODS (FMCG)
HISTORY OF FMCG COMPANIES IN INDIA
CURENT SITUATION
OVER VIEW OF INDIAN FMCG MARKET
PROBLEM OF FMCG COMPANIS
ANALYSIS OF FMCG SECTORS
1 STRENGTHS
2 WEAKNESSES
3 OPPORTUNITIES
4 THREATS
STRUCTURAL ANALYSIS OF FMCG INDUSTRY
1DESIGN AND MANUFACTURING
2MARKETING AND DISTRIBUTION
FORCOSTING OF FMCG COMPANIES
STRATEGY OF FMCG COMPANIES
1COMPETITIVE STRATEGIES ALLOWED BY
FMCG COMPANIS IN INDIA
2POWER BRANDS THE NEW FMCG MANTRA
TOP 10 FMCG COMPANIES IN INDIA
SOLUTION OF FMCG COMPANIES
1WHAT SHOULD THE FMCG PLAYERS DO NOW
2DISTRIBUTION BRAND MANAGERS TO BUSINESS
MANAGERS

REFRENCE
 INTRODUCTION

Fast Moving Consumer Goods (FMCG)

FMCG are products that have a quick shelf turnover, at

relatively low cost and don't require a lot of thought, time and
financial investment to purchase. The margin of profit on
every individual FMCG product is less. However the huge
number of goods sold is what makes the difference. Hence
profit in FMCG goods always translates to number of goods
sold. Fast Moving Consumer Goods is a classification that
refers to a wide range of frequently purchased consumer
products including: toiletries, soaps, cosmetics, teeth cleaning
products, shaving products, detergents, and other non-
durables such as glassware, bulbs, batteries, paper products
and plastic goods, such as buckets.’ Fast Moving’ is in
opposition to consumer durables such as kitchen appliances
that are generally replaced less than once a year. The category
may include pharmaceuticals, consumer electronics and
packaged food products and drinks, although these are often
categorized separately. The term Consumer Packaged Goods
(CPG) is used interchangeably with Fast Moving Consumer
Goods (FMCG).Three of the largest and best known examples
of Fast Moving Consumer Goods companies are NESTLÉ,
UNILEVER AND PROCTER & GAMBLE. Examples of
FMCGs are soft drinks, tissue paper, and chocolate bars.
Examples of FMCG brands are Coca-Cola, Kleenex, Pepsi and
Believe. The FMCG sector represents consumer goods
required for daily or frequent use. The main segments of this
sector are personal care (oral care, hair care, soaps, cosmetics,
and toiletries), household care (fabric wash and household
cleaners), branded and packaged food, beverages (health
beverages, soft drinks, staples, cereals, dairy products,
chocolates, bakery products) and tobacco.
The Indian FMCG sector is an important contributor to the
country's GDP. It is the fourth largest sector in the economy
and is responsible for 5% of the total factory employment in
India. The industry also creates employment for 3 m people in
downstream activities, much of which is disbursed in small
towns and rural India. This industry has witnessed strong
growth in the past decade. This has been due to liberalization,
urbanization, increase in the disposable incomes and altered
lifestyle. Furthermore, the boom has also been fuelled by the
reduction in excise duties, de-reservation from the small-scale
sector and the concerted efforts of personal care companies to
attract the burgeoning affluent segment in the middle-class
through product and packaging innovations.
Unlike the perception that the FMCG sector is a producer of
luxury items targeted at the elite, in reality, the sector meets
the every day needs of the masses. The lower-middle income
group accounts for over 60% of the sector's sales. Rural
markets account for 56% of the total domestic FMCG demand.
Many of the global FMCG majors have been present in the
country for many decades. But in the last ten years, many of
the smaller rung Indian FMCG companies have gained in
scale. As a result, the unorganized and regional players have
witnessed erosion in market share.

HISTORY OF FMCG COMPANIES IN INDIA

In India, companies like ITC, HLL, Colgate, Cadbury and

Nestle have been a dominant force in the FMCG sector well
supported by relatively less competition and high entry
barriers (import duty was high). These companies were,
therefore, able to charge a premium for their products. In this
context, the margins were also on the higher side. With the
gradual opening up of the economy over the last decade,
FMCG companies have been forced to fight for a market
share. In the process, margins have been compromised, more
so in the last six years (FMCG sector witnessed decline in
demand).

CURRENT SITUATION

The growth potential for FMCG companies looks promising

over the long-term horizon, as the per-capita consumption of
almost all products in the country is amongst the lowest in the
world. As per the Consumer Survey by KSA-Technopak, of the
total consumption expenditure, almost 40% and 8% was
accounted by groceries and personal care products
respectively. Rapid urbanization, increased literacy and rising
per capita income are the key growth drivers for the sector.
Around 45% of the population in India is below 20 years of age
and the proportion of the young population is expected to
increase in the next five years. Aspiration levels in this age
group have been fuelled by greater media exposure, unleashing
a latent demand with more money and a new mindset. In this
backdrop, industry estimates suggest that the industry could
triple in value by 2015 .

In our view, testing times for the FMCG sector are over and
driving rural penetration will be the key going forward. Due to
infrastructure constraints (this influences the cost-effectiveness
of the supply chain), companies were unable to grow faster.
Although companies like HLL and ITC have dedicated
initiatives targeted at the rural market, these are still at a
relatively nascent stage. The bottlenecks of the conventional
distribution system are likely to be removed once organized
retailing gains in scale. Currently, organized retailing accounts
for just 3% of total retail sales and is likely to touch 10% over
the next 3-5 years. In our view, organized retailing results in
discounted prices, forced-buying by offering many choices and
also opens up new avenues for growth for the FMCG sector.
Given the aggressive expansion plans of players like Pantaloon,
Trent, Shopper’s Stop and Shoprite, we are confident that the
FMCG sector has a bright future.
 APR-SEP 2010 A&P/SALES%

COMPANY SALE A&P APR 3YR

S RS SPENDRSC -SEP S
CR R 2009 AGO
HINDUSTANUNILEVE 8703 1132 13.0 8.9
R 1591 234 14.7 11.9
DABUR INDIA 1389 176 12.7 12.1
MARICO 964 156 16.2 13.1
GLAXOSMITHKLINE
CONSUMER 955 141 14.7 17.5
COLGATE
POLMOLIVE INDIA 1014 94 9.3 10.3
GODREJCONSUMER 400 75 18.7 2.5
EMAMI 305 31 10.1 1.3
ARGO TECH FOODS 250 14 5.5 8.0
JYOTHY LABS
 OVER VIEW OF INDIAN FMCG MARKET

India offers a large and growing market of 1 billion people of

which 300 million are middle class consumers. India offers a
vibrant market of youth and vigor with 54% of population
below the age of 25 years. These young people work harder,
earn more, spend more and demand more from the market,
making India a dynamic and inspirational society. Domestic
demand is expected to double over the ten-year period from
1998 to 2007. The number of households with "high income" is
expected to increase by 60% in the next four years to 44
million households. India is rated as the fifth most attractive
emerging retail market. It has been ranked second in a Global
Retail Development Index of 30 developing countries drawn up
by A T Kearney. A.T. Kearney has estimated India's total
retail market at $202.6 billion, is expected to grow at a
compounded 30 per cent over the next five years. The share of
modern retail is likely to grow from its current 2 per cent to
15-20 percent over the next decade, analysts feel.
The Indian FMCG sector is the fourth largest sector in the
economy with a total market size in excess of US$ 13.1 billion.
The FMCG market is set to treble from US$ 11.6 billion in
2003 to US$ 33.4 billion in 2015. Penetration level as well as
per capita consumption in most product categories like jams,
toothpaste, skin care, hair wash etc in India is low indicating
the untapped market potential. Burgeoning Indian population,
particularly the middle class and the rural segments, presents
an opportunity to makers of branded products to convert
consumers to branded products. India is one of the world’s
largest producers for a number of FMCG products but its
FMCG exports are languishing at around Rs 1,000 crore only.
There is significant potential for increasing exports but there
are certain factors inhibiting this. Small-scale sector
reservations limit ability to invest in technology and quality up
gradation to achieve economies of scale. Moreover, lower
volume of higher value added products reduce scope for export
to developing countries.
The FMCG sector has traditionally grown at a very fast rate
and has generally out performed the rest of the industry. Over
the last one year, however the rate of growth has slowed down
and the sector has recorded sales growth of just five per cent in
the last four quarters. The outlook in the short term does not
appear to be very positive for the sector. Rural demand is on
the decline and the Centre for Monitoring Indian Economy
(CMIE) has already downs called its projection for agriculture
growth in the current fiscal. Poor monsoon in some states, too,
is unlikely to help matters. Moreover, the general slowdown in
the economy is also likely to have an adverse impact on
disposable income and purchasing power as a whole. The
growth of imports constitutes another problem area and while
so far imports in this sector have been confined to the premium
segment, FMCG companies estimate they have already
cornered a four to six per cent market share. The high burden
of local taxes is another reason attributed for the slowdown in
the industry At the same time, the long term outlook for
revenue growth is positive. Give the large market and the
requirement for continuous repurchase of these products,
FMCG companies should continue to do well in the long run.
Moreover, most of the companies are concentrating on cost
reduction and supply chain management. This should yield
positive results for them.

PROBLEM OF FMCG COMPANIES

The fast-moving consumer goods (FMCG) companies are faced
with a peculiar challenge of maintaining profitable growths in
the backdrop of a low inflation rate. As against the high
inflation of the early 90s — the peak growth season for all
FMCG companies — the ensuing period of a lower inflation
rate dares companies to now play the volume game. As against
a growth in profitability, which came with price increase in
line with the rising inflation, the FMCG industry will now have
to do without this critical factor which has been contributing to
almost half of the industry’s growth. “Volumes will play a
critical role now. The number of units sold will be an
important metric, as there is very little avenue to drive price
growth,” said MS Banga, chairman, Hindustan Lever Ltd
(HLL), in his keynote address at the 2nd National FMCG
Conclave organized by the Confederation of Indian Industry
(CII). Since volume will be the key determinant of growth, the
industry will be forced to push volume growth. Hence, for
those companies which hitherto relied on price increase as an
easy way to enhance profitability, there could be a pressure on
margins. To tackle the problem there needs to be a relentless
focus on cost-cutting. “Many companies, which have
understood that volumes will be critical, will benefit,” added
Mr. Banga. According to Mahesh Vyas, executive director, the
Centre for Monitoring Indian Economy (CMIE), the year
holds a lot of promise, if growth is good and inflation is lower.
“Volume growth and no price reduction is good for FMCG,”
said Mr. Vyas. He, however, said fresh investments were
critical for sustained growth in the economy. Another serious
challenge which the industry is faced with, said Mr. Banga, is
consumer promotions where freebies are threatening to lead to
the commoditization of the industry. “I believe that the
industry must take a serious note of it. It is threatening the
very premise on which the FMCG industry stands today (i.e.
branding),” Mr. Banga added. As to how HLL, which is a
leading FMCG company, would boost its volumes and
maintain its margins, Mr. Banga said the only way out was
branding. He denied that HLL was cutting down upon its
advertising spends, which he said, was only on a quarter-on-
quarter basis. The total advertising expenditure for HLL
declined to Rs 182.74 crore during the third quarter ended
September 30, 2003, from Rs 217.80 crore.

One of the reasons is the fact that the Conditional Cash

Transfer scheme (CCT) is gathering support as a replacement
for myriad welfare schemes. Along with the rural employment
guarantee scheme, loan waivers and increase in prices at which
agricultural products are bought, the CCT could solve the
FMCG’s problem of unpredictability of agricultural income
and the associated fall in market demand. The mainstay of the
rural thrust of FMCG companies is based on the hope that there
are ‘disposable incomes’ lying untapped in the hinterland: if
the rural population spends some of this, it will certainly boost
demand in the current recession. With urban consumption in
decline or stagnating because of the economic slowdown,
FMCG companies have been hit hard. The idea is to give a
‘choice’ to the rural customer to shift to branded products,
from traditional, unbranded merchandise from the
nonorganised sector. “The growth is in rural,” says India’s top
marketing head, Rama Bijapurkar. Rural India constitutes
over 60 percent of the country’s total consumer base. It’s
estimated that rural markets hold 55 percent of total LIC
policies, 50 percent of the market for televisions, fans, bicycles
and wristwatches — and a massive 70 percent of the market
for toilet soap consumption. The Rs 65,000 crore debt waivers
announced last year helped 3.6 million farmers and made them
eligible to fund the next crop. The Centre continued to provide
short-term crop loans at 7 percent interest up to Rs 3 lakh. An
upturn in agriculture was seen in the UPA’s interim budget of
2009-10, where the annual growth rate of agriculture was
posted at 3.7 percent. Added to this was the election-inspired
increase in minimum support prices (MSP) in 2008-09.
Announced in the season ahead of the general election, the
MSP for paddy (Rs 550 per quintal in 2003-04) rose to Rs 900;
for wheat, the MSP, which was Rs 630 per quintal, rose to Rs
1,080. It also led to massive procurement of food grains this
year.

Factors like this, according to analysts, have created

‘disposable incomes’ which the rural consumers should be,
ideally, keen on spending on consumer goods. THE
ECONOMIC SURVEY 2007-08 says rural India spends, on
average, 55 percent on food and 45 percent on non-food items
like clothing, consumer durables, education and health. And its
spend on urban costs of living such as electricity, commuting,
fuel and rent is negligible. That level of spending on regular
consumables is good news for FMCG manufacturers. Add to
that the fact that, unlike their urban counterparts, rural
citizens’ incomes are relatively better preserved from market
fluctuations and real estate shocks. For corporate, the rural
hinterland had earlier meant high investment because of poor
infrastructure, absence of storage services, no electricity, water
or finance facilities. In times of recession, the problems appear
surmountable. It’s expected that catching the villages’ fancy
should be far easier than that of the info-fatigued urban buyer.
The rural market already accounts for 50 percent of FMCG
products like pressure cookers, tea, branded salt and tooth
powder. Companies expect to increase market share and to
add products to the rural portfolio. According to
ASSOCHAM, which announced early this year that the FMCG
sector is pegged to grow at 40 percent in the rural market,
“rising rural incomes, healthy agricultural growth, boost in
demand, rising consumerism and better penetration of FMCG
products,’’ are the reasons for this projection. Agrees Deepak
Jolly, a director with Coca-Cola India: “The rural thrust in
India today is huge. In many ways, I would say it is the main
driver for the markets.” Among the few things that the FMCG
companies are seeking from this budget is that the taxes and
duties that have been reduced by the government to promote
the sector should not be revoked. If only they could have the
same impact on the monsoon: any weakening or failure there
will considerably affect the purchasing power of villagers and
volumes of FMCG products. It’s in this context that the
gathering support for the conditional cash transfers (CCT)
scheme should be seen — it proposes that the government
deposit an amount in the account of beneficiaries identified
according to poverty criteria. The amount is deposited in the
name of the woman member of the household and accessed
only if children go to school or attend the health centre.
Farmers are spending more than ever to cultivate; villagers are
spending more than ever to buy food. The government hopes to
bring the National Food Security Bill that provides monthly
25kg to BPL families at Rs 3 per kg. It would be interesting to
watch if the ‘disposable income’ left after such subsidies will be
used for consumption.
 SWOT ANALYSIS OF FMCG SECTOR

STRENGTHS:
1. Low operational costs
2. Presence of established distribution networks in both urban
and rural areas
3. Presence of well-known brands in FMCG sector
WEAKNESSES:
1. Lower scope of investing in technology and achieving
economies of scale, especially in small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the
established brands, narrow the scope of FMCG products in
rural and semi-urban market.
OPPORTUNITIES:
1. Untapped rural market
2. Rising income levels i.e. increase in purchasing power of
consumers
3. Large domestic market - a population of over one billion
4. Export potential 5. High consumer goods spending
THREATS:
1. Removal of import restrictions resulting in replacing of
domestic brands
2. Slowdown in rural demand.
3. Tax and regulatory structure

STRUCTURAL ANALYSIS OF FMCG

Typically, a consumer buys these goods at least once a month.

The sector covers a wide gamut of products such as detergents,
toilet soaps, toothpaste, shampoos, creams, powders, food
products, confectioneries, beverages, and cigarettes. Typical
characteristics of FMCG products are: -

1. The products often cater to 3 very distinct but usually

wanted for aspects - necessity, comfort, luxury. They meet
the demands of the entire cross section of population. Price
and income elasticity of demand varies across products and
consumers.
2. Individual items are of small value (small SKU's) although
all FMCG products put together account for a significant
part of the consumer's budget.
3. The consumer spends little time on the purchase decision.
He seldom ever looks at the technical specifications. Brand
loyalties or recommendations of reliable retailer/ dealer
drive purchase decisions.
4. Limited inventory of these products (many of which are
perishable) are kept by consumer and prefers to purchase
them frequently, as and when required.
5. Brand switching is often induced by heavy advertisement,
recommendation of the retailer or word of mouth.

DESIGN AND MANUFACTURING

1. Low Capital Intensity - Most product categories in

FMCG require relatively minor investment in plan and
machinery and other fixed assets. Also, the business has
low working capital intensity as bulk of sales from
manufacturing take place on a cash basis.
2. Technology - Basic technology for manufacturing is easily
available. Also, technology for most products has been
fairly stable. Modifications and improvements rarely
change the basic process.
3. Third-party Manufacturing - Manufacturing of products
by third party vendors is quite common. Benefits
associated with third party manufacturing include (1)
flexibility in production and inventory planning; (2)
flexibility in controlling labor costs; and (3) logistics -
sometimes it’s essential to get certain products
manufactured near the market.

MARKETING AND DISTRIBUTION

Marketing function is sacrosanct in case of FMCG

companies. Major features of the marketing function
include the following: -

1. High Initial Launch Cost - New products require a large

front-ended investment in product development, market
research, test marketing and launch. Creating awareness
and develop franchise for a new brand requires enormous
initial expenditure on launch advertisements, free
samples and product promotions. Launch costs are as
high as 50-100% of revenue in the first year. For
 established brands, advertisement expenditure varies
from 5 - 12% depending on the categories.
2. Limited Mass Media Options - The challenge associated
with the launch and/or brand-building initiatives is that
few no mass media options. TV reaches 67% of urban
consumers and 35% of rural consumers. Alternatives like
wall paintings, theatres, video vehicles, special packaging
and consumer promotions become an expensive but
required activity associated with a successful FMCG.
3. Huge Distribution Network - India is home to six million
retail outlets, including 2 million in 5,160 towns and four
million in 627,000 villages. Super markets virtually do not
exist in India. This makes logistics particularly for new
players extremely difficult.

FORCOSTING OF FMCG COMPANIES

Markets all over the world have been on a roll in 2003 and the
Indian bourses are no exception having gained almost 60% in
2003. During this period, while there are sectors that have
outperformed this benchmark index, there are also sectors that
have under performed. FMCG registered gains of just 33% on
the BSE FMCG Index last year. At the macro level, Indian
economy is poised to remained buoyant and grow at more than
7%. The economic growth would impact large proportions of
the population thus leading to more money in the hands of the
consumer. Changes in demographic composition of the
population and thus the market would also continue to impact
the FMCG industry. Recent survey conducted by a leading
business weekly, approximately 47 per cent of India's 1 +
billion people were under the age of 20, and teenagers among
them numbered about 160 million. Together, they wielded INR
14000 Cr worth of discretionary income, and their families
spent an additional INR 18500 Cr on them every year. By
2015, Indians under 20 are estimated to make up 55% of the
population - and wield proportionately higher spending power.
Means, companies that are able to influence and excite such
consumers would be those that win in the market place. The
Indian FMCG market has been divided for a long time
between the organized sector and the unorganized sector.
While the latter has been crowded by a large number of local
players, competing on margins, the former has varied between
a two-player-scenario to a multi-player one.
Unlike the U.S. market for fast moving consumer goods
(FMCG), which is dominated by a handful of global players,
India's Rs.460 billion FMCG market remains highly
fragmented with roughly half the market going to unbranded,
unpackaged home made products. This presents a tremendous
opportunity for makers of branded products who can convert
consumers to branded products. However, successfully
launching and growing market share around a branded
product in India presents tremendous challenges. Take
distribution as an example. India is home to six million retail
outlets and super markets virtually do not exist. This makes
logistics particularly for new players extremely difficult. Other
challenges of similar magnitude exist across the FMCG supply
chain. The fact is that FMCG is a structurally unattractive
industry in which to participate. Even so, the opportunity
keeps FMCG makers trying.

STRATEGY OF FMCG COMPANIES

COMPETITIVE STRATEGIES FOLLOWED BY

FMCG COMPANIES IN INDIA
Competitive Strategy consists of move of companies in order to
attract customers. With stand competitive pressures and
strengthen an organization’s market position. The main
objective of Competitive Strategy is to generate a competitive
advantage, increase the loyalty of customers and to beat
competitors.

Five main competitive strategies are:

• Overall low cost leadership strategy

• Best cost provider’s strategy
• Broad differentiation strategy
• Focused low cost strategy
• Focused differentiation strategy
Here competitive strategy varies from sector to sector and
company to company. Thus, it is not easy to predict a single
or to find a single strategy for the whole sector. When we
come on to FMCG Sector main strategies lay behind market
strategies, cost, and quality strategies. Here in this report
you are going to get information about such type of
strategies of FMCG giants.
TOP 10 FMCG COMPANIES IN INDIA

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

 1. HUL (Hindustan Unilever Ltd.)

This Company is
earlier known as Hindustan Lever Ltd. This is India’s largest
FMCG sector company with all type of household products
available with it. It has Home & Personal Care products, and
also food and Water Purifier available with it. According to
Brand Equity, HUL has largest no of brands in most trusted
brands list. 16 of HUL’s brands featured in AC-Nielson Brand
Equity list of 100 most trusted brands in 2008 in an annual
survey. For the entire year ending March - 2009 net turnover
of company is Rs. 20’239.33 Crore which is 47.99% higher
than 31st December 2007’s Rs. 13675.43 Crore driven mainly
by dom estic FMCG’s with net profit stood at Rs. 2’496.45
Crore.
Products of HUL are: Annapurna; Ayush; Axe; Breeze; Bru;
Brooke bond; Clinic; Dove; Fair & Lovely; Hamam; Liril;
Lux; Pears; Ponds; Pepsodent; Pureit; Rexona; Rin; Sunlight;
Surfexcel; Vaseline; Wheel.
ITC Limited

This Company was earlier known as Imperial

Tobacco Company of India Ltd. It is Currently
headed by Yogesh Chander Deveshwar.
Company mainly operates in the industry like
Tobacco, Foods, Hotels, Stationary and Greeting Cards with
the major products constitutes Cigarettes, packed foods, hotels,
and apparels. For the entire year ending Mar-2009 the
turnover of company is at Rs. 15388 Crore which is 10.3%
higher than previous year’s Rs. 13947.53 Crore, driven mainly
by robust 20% growth in non cigarette FMCG business with
net profit stood at Rs. 3324 Crore

ANALYSIS OF BOTH COMPANIES

HUL & ITC are major companies in FMCG market in India.

When we compare both companies on the basis of their
strategies i.e. , their competitive strategies in the present
market. When we look at the present segment breakup for
both of the companies then we came to know that their
different products vary too much in the market.

HUL ITC
Hindustan Unilever (HUL) is the
largest pure-play FMCG company
ITC is not a pure-play FMCG
in the country and has one of the
company, since cigarettes is its
widest portfolios of products sold
primary business. It is diversifying
via a strong distribution channel. It
into non-tobacco. FMCG segments
owns and markets some of the most
like foods, personal care, paper
popular brands in the country across
products, hotels and agri-business to
various categories, including soaps,
reduce its exposure to cigarettes.
detergents, shampoos, tea and face
creams.
Performance Performance
Despite diversification, ITC’s
After stagnating between 1999 and reliance on cigarettes is still huge.
’04, the company is back on the The tobacco business contributes
growth track. In the past three years, 40% to its revenues, and accounts
till 2008 HUL’s net sales have for over 80% of its profit. This cash-
witnessed a CAGR of 11%, while generating business has enabled it to
net profit has posted a CAGR of take ambitious, but expensive bets
17%. in new segments and deliver modest
profit growth.
ITC Segment Breakup
HUL SEGMENT BREAKUP

3.NESTLE INDIA
Nestlé India is a subsidiary of Nestlé S.A. of
Switzerland. With six factories and a
large number of co-packers, Nestlé India is a
vibrant Company that provides
consumers in India with products of global
standards and is committed to longterm
sustainable growth and shareholder
satisfaction.
The Company insists on honesty, integrity and
fairness in all aspects of its
business and expects the same in its
relationships. This has earned it the trust
and respect of every strata of society that it
comes in contact with and is
acknowledged amongst India's 'Most
Respected Companies' and amongst the
'Top Wealth Creators of India'.
Nestlé’s relationship with India dates back to
1912, when it began trading as The
Nestlé Anglo-Swiss Condensed Milk Company
(Export) Limited, importing and
selling finished products in the Indian market.

Products

Product Category Brands

Milk Products
NESTLÉ EVERYDAY Dairy Whitener
NESTLÉ EVERYDAY Ghee
NESTLÉ Curds
NESTLÉ CEREMEAL
NESTLÉ Jeera Raita
NESTLÉ Fresh 'n' Natural Dahi
NESTLÉ Fruit 'N Dahi

Beverages

NESCAFÉ CLASSIC
NESCAFÉ SUNRISE
NESTLÉ MILO
NESCAFÉ 3 in 1
NESCAFÉ Koolerz
Prepared Dishes MAGGI 2-MINUTE, Noodles
Chocolates & Confectionaries

MAGGI Healthy Soups

MAGGI Dal Atta Noodles
MAGGI MAGIC Cubes
NESTLÉ Milk Chocolate
NESTLÉ KIT KAT
NESTLÉ MUNCH
NESTLÉ MILKYBAR
NESTLÉ MILKYBAR CHOO
NESTLÉ BAR-ONE
POLO
NESTLÉ Eclairs
NESTLÉ ACTI-V
POLO Powermint

4.GCMMF (AMUL)

Gujarat cooperative milk marketing federation

is India’s largest food products marketing
organization. It is a state level apex body of
milk cooperatives in Gujarat which aims to
provide remunerative returns to the farms and
also serve the interest consumers by providing
quality products which are good value for
money.

MEMBERS 13 DISTRICT
COOPERATIVE MILK
PRODUCT
NUMBER OF 2.9 MILLION
PRODUCERS MEN
NUMBER OF VILLAGES 15,322
SOCIETIES
TOTAL MILK HANDLING 13.07 MILLION LITRE
CAPACITY PER DAY
MILK COLLECTION 3.32 BILLION LITRE
(TOTAL 2009-10)
MILK COLLECTION 9.10 MILLION LITRE
(DAILY AVERAGE 2009-
2010)
MILK DRYING 647 MTS PER DAY
CAPACITY

LIST OF PRODUCTS

BREAD SPREADS
AMUL BUTTER
AMUL COOKING FAT

CHEESE RANG
AMUL GAUDA CHEESE
UTTERLY DELICIOUS PIZZA
MITHAEE RANGE
AMUL SHRIKHAND

AMUL AMRAKHAND

PURE GHEE
AMUL PURE GHEE
SAGAR PURE GHEE

CURD PRODUCTS

FRESH MILK AMUL ICECREAM

MILK DRINK
AMUL KOOL FLAVOURED MILK
AMUL KOOL CAFÉ
5.DABUR INDIA

Dabur India Limited is a leading Indian

consumer goods company with interests
in health care, Personal care and foods. Over
more than 100 years we have
been dedicated to providing nature-based
solutions for a healthy and holistic
lifestyle.
Through our comprehensive range of products
we touch the lives of all
consumers, in all age groups, across all social
boundaries. And this legacy has
helped us develop a bond of trust with us.
1979 Sahibabad factory / Dabur Research
Foundation
1986 Public Limited Company
1992 Joint venture with Agrolimen of Spain
1993 Cancer treatment
1994 Public issues
1995 Joint Ventures
1996 3 separate divisions
1997 Foods Division / Project STARS
1998 Professionals to manage the Company
2000 Turnover of Rs.1,000 crores
2003 Dabur demerges Pharma Business
2005 Dabur aquires Balsara
2006 Dabur announces Bonus after 12 years
2006 Dabur crosses $2 Bin market Cap, adopts
US GAAP

Dabur Health Care Product Range

Dabur
Chyawanshakti-
Glucose D -

Dabur Baby olive

oil-
Dabur Janma
Ghunti-
Hajmola Yumstick -
Masala -
Anardana -
Hajmola candy -
Hajmola Candy
Fun2 -
Pudin hara -
(Liquid and
pearls)
Pudin hara G -
Dabur Hingoli -
Shilajit Gold -
Nature Care -
Sat Isabgol -
Shilajit -
Ring Ring -
Itch Care -
Back-aid -
Shankha Pushpi -
Dabur Balm -
Sarbyna Strong -
Dabur Personal Care Product Range-
Amla Lite Hair Oil
- Anmol Silky Black Shampoo
Anmol Sarson
Amla -
- Anmol Natural Shine Shampoo
Gulabari -
- Dabur Red Gel
- Babool Toothpaste
- Meswakl Toothpaste
- Promise Toothpaste
- Dabur Lal Dant Manjan
- Dabur Binaca Toothbrush
Dabur Foods Product Range
Tastes like eating a
fruit
100% Natural Fruit Juice
Pure natural Honey
Hommade - a range
of
culinary ingredients
giving you 'The taste
of Indian Kitchen'.
Lemoneez is a Natural Lemon
Juice
Capsico - a fiery red-pepper
sauce.
6.ASIAN PAINTS

Asian paints is the india’s largest paint company and ranked

among the top ten decorative coating company in the world
with a turnover of INR 66-80 billons .Asian Paints among with
it subsidiaries have operations in 17 countriesacross the world
with 23 paints manufacturing facilities servicing consumers in
65 countries through berger,international SCUB paints –
Egypt, Asian Paints Np Co,Coatings and Taubans.

7.CADBURY INDIA
 CADBURY INDIA
is a fully owned subsidy of kraft foods Inc. The combination of
kraft foods and Cadbury creates a global powerhouse in
snacks , confectionaries and quick meals.

With annual revenue of approximately $50 billion . The

combined company is the world’s 2nd largest food company ,
making delicious products for billions of consumers in more
than 160 countries.

In India Cadbury begans its operations in 1948 by importing

chocolates . After 60 yrs of existence it todsy have 5 company-
owned manufacturing facilities at Thane, Induri (Pune) and
Malanpur(Gwalior),Bangluru, and Baddi(Himachal Pradesh).

The corporate office is in Mumbai. Cadbury has maintained

its undisputed leadership over the years.

Currently , Cadbury India operates in 4 categories viz.

chocolates , confectionary , milk food drinks ,candy and gum
category.
8.BRITANNIA INDUSTRIES

The story of one of India's favorite brands

reads almost like a fairy tale. Once
upon a time, in 1892 to be precise, a biscuit
company was started in a
nondescript house in Calcutta (now Kolkata)
with an initial investment of Rs. 295.
The company we all know as Britannia today.
The beginnings might have been humble-the
dreams were anything but. By
1910, with the advent of electricity, Britannia
mechanized its operations, and in
1921, it became the first company east of the
Suez Canal to use imported gas
ovens. Britannia's business was flourishing.
But, more importantly, Britannia was
acquiring a reputation for quality and value. As
a result, during the tragic World
War II, the Government reposed its trust in
Britannia by contracting it to supply
large quantities of "service biscuits" to the
armed forces.
As time moved on, the biscuit market
continued to grow and Britannia grew along
with it. In 1975, the Britannia Biscuit Company
took over the distribution of
biscuits from Parry's who till now distributed
Britannia biscuits in India. In the
subsequent public issue of 1978, Indian
shareholding crossed 60%, firmly
establishing the Indianness of the firm. The
following year, Britannia Biscuit
Company was re-christened Britannia
Industries Limited (BIL). Four years later in
1983, it crossed the Rs. 100 crores revenue
mark.
On the operations front, the company was
making equally dynamic strides. In
1992, it celebrated its Platinum Jubilee. The
Wadia Group acquired a stake in the
company and became an equal partner with
Groupe Danone in Britannia. The
subsequent year saw sales cross landmark
100,000 tones of biscuits or 1 billion
packs of 100g.
Britannia strode into the 21st Century as one
of India's biggest brands and the
pre-eminent food brand of the country. It was
equally recognized for its innovative
approach to products and marketing: the
Lagaan Match was voted India's most
successful promotional activity of the year
2001 while the delicious Britannia 50-
50 Maska-Chaska became India's most
successful product launch. In 2002,
Britannia's New Business Division formed a
joint venture with Fonterra, the
world's second largest Dairy Company, and
Britannia New Zealand Foods Pvt.
Ltd. was born. In recognition of its vision and
accelerating graph, Forbes Global
rated Britannia 'One amongst the Top 200
Small Companies of the World', and
The Economic Times pegged Britannia India's
2nd Most Trusted Brand.
Today, more than a century after those
tentative first steps, Britannia's fairy tale is
not only going strong but blazing new
standards, and that miniscule initial
investment has grown by leaps and bounds to
crores of rupees in wealth for
Britannia's shareholders. The company's
offerings are spread across the
spectrum with products ranging from the
healthy and economical Tiger biscuits to
the more lifestyle-oriented Milkman Cheese.
Having succeeded in garnering the
trust of almost one-third of India's one billion
population and a strong
management at the helm means Britannia will
continue to dream big on its path
of innovation and quality. And millions of
consumers will savour the results,
happily ever after.

.
.

9.PROCTER AND GAMBLE HYGIENE AND

HEALTH CARE

P&G HYGIENE AND HEALTH CARE limited is one of the

India fastest growing FMCG companies that has in its
portfolio P&G billion dollor brands such as Vicks and Whisper
with a turnover of Rs.500+ crore.
P&G hygiene and healthcare limited takes pride in being
voted India’s best employer 2003 in a survey of 200 companies
conducted by international HR consultancy Hewitt Associates
in association with business today magzene.

10.MARICO INDUSTRIES

MARICO is a leading group in consumer production and

services in the global beauty and wellness space . Marico’s
products and service in hair care, skin care and healthy foods
generated a turnover of about Rs. 26.6 billion during 2009-
2010.
Marico’s market well known brands are Parachute,Saffola ,
Sweekar, hair& care ,Nihar ,Shanti etc.

Marico’s brand’s &their extensions occupy leadership position

with significant market share in most categories→ coconut oil ,
hair oil , post wash hair care , premium refined edible oil etc.

Marico is also present in the skin care solution segment

through Kaya Clinics in India , Middle east & Bangladesh.

Marico’s brand products are present in Bangladesh , other

SAARC countries, the Middle east, Egyupt, Malaysia and
South Africa .
 SOLUTION OF FMCG COMPANIES

WHAT SHOULD THE FMCG PLAYERS DO NOW?

They should not only price their products competitively, but
also offer their rural prospects maximum value for money
spent. Certainly, reaching out to 3.33 million retail outlets is an
uphill task. The only way out for Indian FMCG players: put in
place an aggressive cost structure that would enable them to
offer low-price and value-for-money products. But then,
FMCG is a low-margin business with a high cost of raw
materials. Consider the case of Marico: its material cost works
out to a high of 59 per cent on sales. Therein lays the rural
marketing paradox.
However, customer-centric and market-savvy FMCG
companies have always chased prospects when they perceive
there is a latent demand. For instance, Hindustan Lever's Rin,
Surf and Lux are available even in India's most obscure
villages. Hindustan Lever had given shape to its rural strategy
a few years ago when it perceived that its urban market was
shrinking due to an industrial slowdown. It’s Operation
Bharat that focused on personal care products made the most
out of surging rural incomes. The result was there for all to see.
The company has been able to clock in double-digit profits
every three years and log in double-digit revenues every four
years. Britannia with its Tiger brand of biscuits and Colgate-
Palmolive with its low-priced and conveniently-packaged
products designed for the rural masses have been other
pioneers in rural marketing.

DISTRIBUTION

One of the age-old problems that FMCG has been facing not
only in India but globally is that of distribution. Integrating
operations with your distributors and channel partners is a
Herculean task. Few ways to reduce pain involved in this link:

• Reducing supply chain costs by reducing intermediaries -

Organized retail chains have set up systems for inventory
 management and quick servicing, thereby offering the
opportunity for a company/supplier to reduce
distribution cost by reducing intermediaries such as
wholesalers/distributors and supplying directly to the
warehouse of retail chain.
• Increasing sales by driving channel width - The relative
share of grocers to FMCG sales has dropped from over
50% in the early 90's to 35% in the late 90's. On the other
hand the contribution of chemist outlets and paan outlets
has been increasing. This has been a result of both SKU's
(sachets) and hardware (mini dispensers) being
specifically designed to facilitate entry to these outlets and
increase consumer interface.

BRAND MANAGERS TO BUSINESS

MANAGERS

Tough market situations and a more aware and savvier

demanding consumer have necessitated that yesterday's Brand
Managers be transformed into Business Managers who
understand consumers and can innovate and be flexible to
move with the consumer. Gone are the days when brands could
be made to gallop with a big budget media plan, a generous
dose of below-the-line and above-the-line activities and
constant promotions and schemes in the market. Consumers
who have become demanding yet inscrutable in terms of
attitudes, outlook, moods and behavior have rendered
conventional Brand Management tools obsolete.

CONCLUSION:
The FMCG industry in India is having huge potential to
grow. The Industry is now focusing towards the semi-
urban and rural market for growth as there are many
remote areas in our country which are untouched and
they don’t have the exposure to number of
alternatives or brands, so by focusing on these
aspects of Indian economy the fmcg sector in India
has a huge potential to grow further.
Further,the companies like TATA and HUL are
using CSR ie. Corporate social responsibility to
further strengthen their brand or create a positive
image in the minds of people thus it will help in
increasing their revenues. The advertising campaigns
have also changed to the changing scenario in Indian
economy,and the companies in the fmcg sector are
becoming more cautious on making false claims as
the consumer in India has evolved and is more
informed than its ancestors.
According to my views the product or the brand
or the company which has a positive image in the
minds of the people and which is innovative in its
ideas to fast changing consumer preference and
which gives the best value for price is going to
survive in the long run or else they have to either
change their strategy or quit the Indian FMCG market.

REFERENCE

http://www.coolavenues.com/know/mktg/competitive-
strategies-2.php
http://www.rediff.com/money/2005/nov/15spec.htm
www.hll.com
www.itc.com
www.insightory.com
www.oppapers.com
http://www.indianmba.com/Faculty_Column/FC448/fc448.htm
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