The FMCG industry has emerged as one of the largest sectors in the Indian economy by registering an astonishing double-digit growth rate in sales in the past couple of years. The year 2008 is certainly a memorable year for the industry with a booming economy and consumerism. Characterized by a healthy distribution network, strong MNC presence, intense competition between the organized and unorganized segments and low operational cost , it is one of the fast growing industries in India with a total market size of $13.1 bn. The growth in the sector has so far been both volume and value-driven. While the recent spiraling inflation remains a barrier to the sector's growth prospects, many FMCG companies still blossom under inflationary pressures by passing on the increasing cost to consumers through a well-thought-out blend of price hikes, reduction in packaged size, and alteration in product mix.
The early years of this decade marked a disappointing phase for the Indian FMCG sector. Many big players such as HUL and P&G found it difficult to hold on to their status as market leaders. The companies got a new lease of life mainly after 2004, when sales in the retail outlets picked up momentum. Subsequently, the industry seems to have had a sharp rebound. A substantial rise in household incomes, changing lifestyle patterns in India, rise in per capita consumption, and the spread of modern retailing revolution continued to drive the growth in FY 2007-08. Most of the FMCG companies are expected to have strong revenue growth in the face of recent price hikes across product portfolios. |
