written by | October 3, 2022

What is FMCG? Its Characteristics and Type.

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Not many people are aware of the full form of FMCG. FMCG stands for Fast Moving Consumer Goods. It is a group of consumer products widely available and used in our households. They contribute to our day-to-day life, and we spend a large chunk of our monthly budget on them. 

FMCG is one of the key segments of the Indian economy. This article will give a deep understanding of the meaning of FMCG, its different features, industry characteristics, and about top Indian companies.

Did you know? 

As per India Brand Equity Foundation, it is estimated that the FMCG market share will increase by a compound annual growth rate of 14.9% and will reach US$ 220 billion by 2025. In the year 2021 FMCG market grew by 16%, the highest in 9 years.

What is FMCG?

FMCG's full form is Fast Moving Consumer Goods, also known as Consumer Packaged Goods. They are one of the largest sold products in the market and are specially manufactured to cater to the general people's daily needs. Nearly everyone on this planet uses consumer goods, which are consumed regularly; thus, consumers need to buy them frequently. Due to their short shelf life, they are sold quickly and at low per unit prices. Generally, you will find sale offers and heavy discounts on FMCG. 

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It is one of the largest segments of the market, which will keep growing. The key factor that leads to its continued growth is the increase in population. More population means more people, which leads to more consumption of consumer packaged goods. It is estimated that the FMCG market to grow annually at a compounding rate of 14.9%. Let's break down the meaning of FMCG and understand its key characteristics in the following section. 

What are FMCG characteristics?

Not all consumer goods are classified as fast-moving consumer goods. Certain characteristics are common in FMCG products. 

Following are the key features of FMCG: 

  • Durability: 

There exist two types of consumer goods, durable and non-durable. Durable goods are also known as slow-moving consumer goods. The durable goods last for at least 3 years. The FMCG products are non-durable and need to be consumed immediately. They are perishable and cannot be stored for long periods. Generally, they have a shelf life of 6 months to one year. But in a few cases, like food items, they last for a few days to a week. 

  • Purchased Frequently: 

We can not function properly without FMCG. These goods are for meeting the daily needs of consumers. From toothpaste to your delicious pasta, all are covered under FMCG. They are regularly consumed and which is why consumers frequently purchase them. 

  • Large Number of Options: 

There are many products available in the single FMCG category. For example, various brands manufacture shampoos. The consumer has many options in the market. 

  • Easily Available: 

The robust distribution channel has made consumer goods readily available. You can easily find them in Supermarkets, Hypermarkets, and Grocery Stores and can easily place orders on E-Commerce websites.

  • Low Cost: 

Consumers can easily buy these goods at a low price. They are manufactured in large quantities and thus priced comparatively low. Another factor that contributes to the lower price is the shelf life. For goods with very low shelf life or are easily perishable, sellers tend to sell those products at lower rates for stock clearance. 

Features of the FMCG Industry

FMCG are sold in huge quantities and is an ever-growing market. Let's look into the industry features:

  • High Turnover: 

Due to the frequent use and short shelf life of FMCG, the industry turnover rate is high. These goods are produced and manufactured in large quantities and sold in high volumes. Due to this, FMCG is the best wholesale business option. 

  • The Competitive Market: 

The fast-moving consumer goods market is large. Top leading companies like Coca-cola, Nestle, and Unilever are key market players. Apart from manufacturers, there are wholesale and distribution opportunities in FMCG. The industry is huge in manufacturing, distribution and retail. 

  • Attractive Packaging: 

Packaging plays an important role. Manufacturers make attractive and appealing packaging to stand out in the market. Good and sturdy packaging also helps in protecting non-durable products. The goods delivered at the customer's doorstep are required to be properly packed to avoid any damage during transportation.

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  • Offers and Discounts: 

The sellers provide different offers and discounts to attract customers. The main focus is to make high-volume sales. The bulk sale ensures huge revenue even if the profit margin is low. 

  • Inelastic Demand: 

Usually demand for any product or industry is affected by many factors. But the demand for FMCG is inelastic. Any change in market conditions will have a minimum impact on demand.

Different Types of FMCG Sectors

There is a large variety of FMCG products available in the market. For example, cosmetics, food, medicines etc. We can group these different products based on the industry or the market sectors. The different categories are: 

  • Home Care: 

These categories of products are specifically manufactured for households' day-to-day needs. They are mostly cleaning and hygiene maintaining products. These products are standardised, have limited life, and thus are classified as FMCG. Customers can choose from a variety of home care products. The subcategories include:

  • Dishwashing products for cleaning utensils and crockery.
  • Home cleaning liquid and soap. 
  • Air fresheners.
  • Toilet cleaners.
  • Home disinfectants. 
  • Fabric care products like detergents and soaps. 
  • Food and Beverages: 

They are widely available, have a very short shelf life, and thus qualify as FMCG products. They form the major sector of the FMCG industry. This category can be further divided into:

  • Processed foods include food items like packed pasta, cereals, etc. Processed foods are made by processing raw agricultural produce.
  • Dairy products are milk and milk-related food items. They are cheese, butter, ice cream and dry and condensed milk. 
  • Ready-to-eat foods are already prepared and ready for consumption. There is no requirement for prior cooking.  
  • Baked goods include cookies, bagels, cakes etc. 
  • Fresh foods like fruits and vegetables have a life of 2 to 3 days. They are the fastest consuming products. Due to their short life, the seller quickly sells them at a very low unit cost.
  • Frozen foods include various products, such as frozen ready-to-eat items, frozen vegetables etc. 
  • Dry food includes dry dates, raisins, almonds, walnut etc.
  • Beverages include tea, coffee, soft drinks, and packaged drinking water. 
  • Personal Care: 

These products are for day-to-day personal hygiene and body and hair care. They are for external use and available for all different age group people. They are frequently used and last only for 6 months or a year after opening the packaging. The subcategories are:

  • Skincare includes items that are for improving skin conditions and texture. 
  • Cosmetics include foundation, concealer, lipsticks, lip gloss, mascara etc. These products don't penetrate the skin.   
  • Hair care products target the scalp and hair. The category includes shampoo, conditioner, hair cream, gel, wax etc. 
  • The baby care range is specifically designed for sensitive baby skin. They protect and improve the quality of the skin and hair of the baby. 
  • Oral care includes mouthwashes, toothpaste, etc., that help maintain oral cavity hygiene. 
  • Healthcare Care: 

These medicines are available without doctor prescriptions. And readily available in the medical stores. They are also called over-the-counter drugs. This category also includes supplements and female care products. 

Top 10 Indian FMCG Companies

The following are the top players in the Indian market.

  • Hindustan Unilever Ltd- Market Value: ₹5,59,214 Crore
  • ITC Limited- Market Value: ₹3,38,335 Crore
  • Nestle India- Market Value: ₹1,63,797 Crore
  • Dabur India- Market Value: ₹1,07,618.26 Crore
  • Godrej Consumer Products Ltd.- Market Value: ₹94,031.44 Crore
  • Britannia Industries Ltd-Market Value: ₹86,028.52 Crore
  • Tata Consumer Products Ltd.-Market Value: ₹76,677.71 Crore
  • Marico - Market Value: ₹69,997.93 Crore
  • Varun Beverages Ltd.Market Value: ₹41,122.99 Crore
  • GlaxoSmithKline Consumer Healthcare Ltd-Market Cap: ₹37,727 Crore

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Conclusion

We hope this blog has given you a better understanding of the meaning of FMCG, its different characteristics and the various FMCG sectors. Although to meet the changing consumer needs and lifestyles, the FMCG market is evolving and expanding. Still, you can easily differentiate between FMCG and non-FMCG items.  

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FAQs

Q: What was the market growth of the FMCG sector in the year 2021?

Ans:

In the year 2021, the FMCG market share increased by 16%.

Q: What are the major types of FMCG categories?

Ans:

There are four categories of FMCG. 

  • Food and Beverages.
  • Home care.
  • Personal care.
  • Health care.

Q: What is the meaning of FMCG?

Ans:

FMCG refers to those consumer goods with a short shelf life, are readily available in the market and are frequently used in day to day life of the consumer. These goods are sold at a relatively low cost.

Q: What is the full form of FMCG?

Ans:

FMCG stands for Fast Moving Consumer Goods, also known as Consumer Packaged Goods.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.