Hamesha Acche Din: Some Trends in the Indian FMCG Sector

The Kal, Aaaj, Aur Kal Acche Din for the Indian FMCG Sector

If there is one sector in the Indian Corporate Landscape that manages to do well all the time, it is the FMCG or the Fast Moving Consumer Goods Sector.

Being concerned with retail and consumer products such as soaps, detergents, toiletries, personal care products, and assorted other consumption based goods and services, the FMCG sector is indeed a steady and consistent performer down the decades.

No wonder the stocks of the companies that make up this sector such as Unilever, P&G or Proctor and Gamble, Johnson and Johnson, and others are usually referred to as Blue Chips for their stellar performance no matter the market circumstances.

The reasons for this sector to have perennial Acche Din lie in the fact that almost everyone (except for those of us who have renounced the world) need consumer goods for our everyday existence, and hence, there is an evergreen demand for FMCG goods.

FMCG and SKU: Some Theory

By the way, the term has been coined to reflect the reality that the products and the brands that make up this sector usually fly off the supermarket and Kirana shelves within no time and therefore, they are both fast moving as well as fast replenished as far as the SKU or the Stock Keeping Units are concerned.

The term SKU is a marketing term that refers to the individual products and brands of the various items that are usually “stocked” in our departmental stores as well as refers to the practice of assigning a specific SKU to each brand and measuring the total quantities of such items that are held in keeping or storage in the shops.

Where Swadeshi and Videshi Coexist

Returning to the main discussion, the Indian FMCG sector has always been a place where both domestic and foreign firms have been active in and involved with. Indeed, even during the heydays of the Swadeshi Movement and the Socialist era in the post Independence times, the Indian Government has allowed the legacy firms of the British Era and even some newer players to participate in the Indian FMCG space.

This was done in the form of letting the firms as locally registered and partly foreign owned entities as well as by ensuring that if any Multinational firm wanted to enter the Indian Market, they could do so by setting up a Fully or Partially Owned Subsidiary. As far as the legacy firms were concerned, previous generations can remember how Bata Shoes, Colgate Toothpaste, Lux Soap, and Johnson and Johnson Ear Buds were always available in India.

Of course, in the decades leading up to the 1970s and early 1980s, as the Indian Economy was in the throes of Import Substitution and Self Reliance trends, there was always a demand for what were known colloquially as “Foreign or Imported” products that found a way into the Indian market despite the best efforts of the Indian Government to clamp down on what were considered “luxuries” for a “poor” country.

The Liberalization of the Indian Economy and the Transformation of the Indian Consumer

Having said that, the sector really took off in the decades following the Liberalization of the Indian Economy and the trickle of foreign brands turned into a flood of extravagant and pricey brands that resulted in a gigantic consumerist revolution and concomitant transformation of the Indian Consumer landscape.

Indeed, while at one point it was said that Indians had to wait for a decade before imported brands were available, the present reality is that there is a simultaneous market release that happens as soon as it releases in the West.

Thus, it can be said that the Indian FMCG Sector is now entering a phase where Acche Din look like to continue for a few years more.

The Emergence of Patanjali

Of course, in all the discussion of the foreign players, it must not be forgotten that our very own Patanjali is giving tough competition to the former and in some market niches; it has already become the largest as far as market share is concerned. Indeed, if not anything, the Indian consumer landscape can be said to have been experiencing its own “Jio Moment” in terms of disruption.

Further, the emergence and spectacular rise of Patanjali satisfies the long held and unmet need for a Swadeshi brand that is of quality comparable to the Multinational ones. Moreover, it also converges with the growing trend of the Indian consumer becoming more nationalistic in their spending habits.

In other words, Patanjali exemplifies how the Be Indian and Buy Indian memes have at last been fulfilled though there were several others before it who tried with some success and definitely not to the extent of the former.

The point to be noted here is that while the demand for foreign brands has not reduced, the Indian consumer is experimenting as never before and given an Indian grown brand that can compete with Western brands, the choice would be easier if not for anything else than being proud of the nation.

Conclusion

Lastly, the fact that the Indian Government is thinking of allowing Multi Brand Retail or the policy of letting foreign retail giants stock many brands means that the Indian FMCG Sector would soon be experiencing another round of disruption.

Taken together, what all these trends mean is that the Acche Din for the Indian FMCG Sector are evergreen and the insatiable demand for novelty and quality means that there is space for both more Wal-Marts and Patanjali’s.


❮   Previous  Article Next  Article   ❯

Similar Articles Under - Globalization

View All Articles


Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Globalization