AT Kearney sees potential in FMCG

After having traversed the cycle of boom and bust, the fast moving commercial goods (FMCG) industry experts opine that the sector still hold potential for a tremendous growth.

The industry, which has staged a growth rate of around 1.5 per cent (in terms of value) in 2003-04, is expected to grow at a faster pace in the current financial year primarily driven by an increase in consumer spending.

Moreover, aggressive marketing strategy by industry bigwigs in terms of price cuts have propelled volume growth in certain categories.

The total size of the industry in the financial year 2003-04 stood at Rs 60,900 crore. After a stagnant growth for around three years, the sector saw signs of revival, registering a growth of 4.7 per cent in October this year.

"The industry as a whole has vast growth potential. The growth in most segments are mainly driven by the rising middle class and upper class and high income group," an AT Kearney report on the FMCG sector said.

The middle class population in India, according to the report, is close to 250 million, which is equivalent to the same class of population in the US, the UK, France, Russia, Italy and Japan put together.

The report was released at the third national FMCG conclave organised by the Confederation of Indian Industries (CII). The industry is gearing up to exploit growth opportunities being thrown open by the rural market and the expansion of the organised retail sector.

What also offers a huge potential is the fact that family spend on FMCG is merely 4 to 5 per cent of the total expenditure of the Indian household.

The key segments that witnessed a double digit growth in the last fiscal include deodorants (40 per cent), hair dyes (25 per cent), cleaners and repellents (20 per cent) and branded coconut oil (10 per cent).

Certain segments such as personal healthcare, dishwash, soaps, oralcare, however, witnessed negative growth.