Global FMCG majors bet big on India despite slowdown

The Indian FMCG sector is currently pegged at around $13.1 bn

India was the flavour of the year, at least in the FMCG sector, as multinationals hiked stakes in their subsidiaries lured by long term potential of the country, while homegrown executives made their way to top hierarchy of global firms in 2013.

The Indian FMCG sector, which is currently pegged at around $13.1 billion, also saw various challenges in the form of subdued demand despite good monsoon and bumper harvest that were expected to boost rural sales.

Unilever, GlaxoSmithKline and PepsiCo made big bang announcements during the year as they decided to enhance their play in the "strategic and emerging" Indian market.

Anglo-Dutch consumer goods giant Unilever PLC spent Rs 19,180 crore to increase its stake in the Indian arm Hindustan Unilever Ltd (HUL) to 67.28 per cent through an open offer.

It, however, fell short of its target of 75 per cent from the earlier stake of 52.48 per cent due to lukewarm response from the shareholders to the offer.

Likewise, UK-based GlaxoSmithKline (GSK) also hiked its stake in its consumer healthcare arm in India to 72.5 per cent from the earlier 43.2 per cent stake in a transaction worth Rs 4,800 crore.

Towards, the end of the year, the UK-headquartered firm, which terms India as a key emerging market, also announced plans to raise stake in its Indian pharmaceutical arm for a total consideration of Rs 6,389.02 crore.

The year also saw global beverages and snacks major PepsiCo announcing to invest, along with its partners, Rs 33,000 crore in the Indian operations, as a part of which it announced to set up the company's biggest beverages plant in Andhra Pradesh at an outlay of Rs 1,200 crore.

Signifying the importance of the Indian market, PepsiCo Chairperson and CEO Indra Nooyi said the company was making the investments in order to to more than double the capacity of the business in the country by 2020.

PepsiCo's announcement came more than a year after its arch rival Coca Cola had said it, along with partners, would invest USD 5 billion in India by 2020 on various activities, including setting up of new bottling plants.

The Atlanta-based firm reposed its faith in the Indian market and said it won't slow down its USD 5 billion investment plans in India despite the current slowdown, saying it expects the country to be in its top five global markets within the next seven years.