WHY THE FMCG SECTOR GROWING IN INDIA- 2020

Do you know FMCG sector is the 4th largest sector in our Indian Economy.

The Rural Area contributes almost 40% to the FMCG sector and the Growth rate is 5 To 10 percent in every Quarter.

What’s in it for me?

1. INNOVATION & PRODUCT PREMIUMISATION
2. RURAL FOCUS
3. IN-STORE FOCUS 
4. FOCUS ON CONSUMER ENGAGEMENT
5. AUTOMATION 
6. E-COMMERCE
7. CONCLUSION
8. FAQs

Do you know the retail market in India is estimated to succeed in US$ 1.1 trillion by 2020 from US$ 840 billion in 2017.

With modern trade expected to grow at 20 percent – 25 percent once a year, which is probably going to spice up revenues of FMCG sector companies.

Revenues of the FMCG sector reached Rs 3.4 lakh crore (US$ 52.75 billion) in FY18 and are estimated to succeed in US$ 103.7 billion in 2020.

The world witnessed the growth of 16.5 percent in value terms between July-September 2018; supported by moderate inflation, increased private consumption, and rural income.

Because of these 6 reasons,FMCG sector increases very rapidly in INDIA ;

1. Innovation & Product Premiumisation.

2. Rural Focus.

3. In-Store Focus.

4. Focus On consumer Engagement.

5. Automation.

6. E-commerce Platforms.

 1) INNOVATION & PRODUCT PREMIUMISATION:

Packaging Innovation –

Now the packaging is becoming much better than before and Because of packaging, there is a complete impact on the demand for the product.

It also has advantages such as product protection or to increase product durability, identification of products, grabs customer attraction, and convenience especially in the FMCG sector.

Product Premiumisation–

In this it is that the premium range of a product is launched

This attracts the customer more and he also pays more money for that product because the consumer perceives a higher level of that product.

Example – Like earlier, a simple detergent powder used to come.

But now its premium range has been launched which has different qualities and provides an ease to consumers due to which the customer is ready to pay more.

Because of these premium products the brand value of the company also increases.

2) RURAL FOCUS :

You may be a little surprised to know that the growth of rural areas is more than urban areas.

According to a report, the food & beverage industry of the FMCG sector in rural areas has been increasing continuously in the last few years.

Some questions may come to your mind that why is this happening ?

There are many reasons behind this such as many government schemes,

Like Digital India Program, Pradhan Mantri Kaushal Vikas Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana, MGNREGA Sameeksha.

These policies help to create the infrastructure of roads, electricity, internet connectivity, employment in rural areas.

That’s why More companies in the FMCG sector are moving towards rural areas.

Companies that are making their products by looking at the demographic, geographic conditions of the rural area people.

Because to increase the demand for its product in this area, the company has to understand the mindset of the people there.

They mostly provide customized small size packs according to their necessity.

And these products must be in average price range so that they may buy.  

In this way, most FMCG sector companies are expanding their distribution network in rural areas.

3) IN-STORE FOCUS :

Now big brands or companies of the FMCG sector are focusing on supermarkets for their merchandise.

To increase the visibility of their new launch and premium products.

It is also known as Sales Promotion.

In earlier times the concept of merchandise in FMCG sector was not so much popular.

But as time is passing, the methods of competition of competitors are also changing in the same way.

In order to increase the visibility of their products or to convey the qualities of their products to the consumer, companies do their branding in supermarkets by taking a lot of separate space.

Companies hire their promoters to describe the qualities of their products or for their feedback from the customer so that they can interact with the people immediately and understand the mindset of the people.

There is a golden statement  in the business “What looks the most, sells the most” (जो ज्यादा दिखता है , वही सबसे ज्यादा बिकता है )

4) FOCUS ON CONSUMER ENGAGEMENT : 

Now companies are more engaging with their customers and retailers for their positive or negative feedback.

They can Engage with their consumers and retailers in 2 ways –

ONLINE –

Now companies or brands launch their products and run the campaign on social media platforms.

Where customers come and share their experiences without hesitation and if they like a particular product then they can share with their friends and relatives.

So this is also promoting that particular product or brand. We can say it helps in indirectly branding the company and word of mouth publicity.

Companies also run different types of online contests to compete with their competitors due to which the consumer remains connected with their brand for more time.

You must have seen that companies keep on offering during the duration of IPL or any WORLD CUP events.

Example –

“Drink Pepsi and get a chance to sit in Pepsi VIP box”

“Eat Britannia and get a chance to meet the captain”

OFFLINE – 

This is a traditional and evergreen method to engage with customers, nothing is better than physical interaction with customers.

The salesmen who are in it, go door to door and advertise their product and also give a demo of that particular product to the customer.

Due to this, the doubts which are in the mind of the consumer become clear and the purchasing power of the customer increases.

5) AUTOMATION :

Earlier, salesmen used to go to shops and used to write orders in their notebook but now all companies almost have their own app.

So the salesman or distributor wants to take any order or do some work related to the company, then he can manage directly via the app.

Due to this technology, it becomes very easy for the salesman to take payment and keep a book of accounts.

All the products of the company are available inside the app, due to which the distributor can explain about the products to the shopkeeper in a better way, hence the retailer purchases the goods in more quantity.

Due to this technology, companies can now monitor all their employees, how active is the distributor in their area.

The company keeps looking at the average sale of its products directly and in how much time a shopkeeper purchases new quantity, what range is available in the shops, which products are most liked by the customers, all these information companies would know through the app.

It stays and collects a large amount of data, due to which the company keeps reviewing its products from time to time and customizing the product accordingly.

6 ) E-COMMERCE :

In 2018, around 120 million people had done online shopping and this figure can go up to 175 million in 2020.

The Indian e-commerce market is expected to reach the US $ 84 billion by the end of 2021 which was the US $ 38.5 billion in 2017. The report also says the Indian e-commerce market is expected to grow to US $ 200 billion by 2026.

But currently, only 1% of the entire turnover belongs to the FMCG sector.

The highest contribution of electronic gadgets is online. But now all the big companies have started coming to this sector like Big basket, Grofers, Amazon pantry, Jio mart e.t.c.

So it will increase in the coming few years due to high internet connectivity in urban areas as well as in rural areas and the trust of online payments is increasing also.

So we can say it is growing very fastly in India. And it is becoming an important part of people’s life.

CONCLUSION

These days FMCG sectors are growing worldwide. And hence following the trend FMCG sector started growing in the Indian market too.
Basically there are main 6 reasons which lead to the growth of the FMCG sector in India.

Innovation and premiumization of products, Rural focus, In-Store focus, Focus on consumer engagement, Automation, and E-Commerce sites. All these play a part in the growth of the FMCG sector.

Most importantly there is a maximum income of the FMCG sector which comes from the rural areas only.

One should be having the knowledge of these areas for the growth of their company.

FAQs