FMCG sector is the fourth largest sector in the Indian economy. And household and personal care account for about 50% of FMCG sales in India. Increasing awareness, easier access, growing younger population and changing lifestyles have been the key growth drivers for the industry. The urban segment accounts for a revenue share of around 55% is the largest contributor to the overall revenue generated by the FMCG sector in India. Semi-urban and rural segments are also growing at a rapid pace and FMCG products account for 50% of the total rural spending.
The FMCG market in India is estimated to be around US$ 1.1 trillion currently. Revenue of FMCG sector reached US$ 103.7 billion in 2020. From October 2020 to December 2020, the FMCG market rose 7.1%, driven by food items, health, hygiene and rural areas. The corona virus scare being a major driver. Rise in rural consumption will drive the FMCG market. It contributes around 36% to the overall FMCG spending. In FY20 in rural India, FMCG witnessed a double-digit growth recovery of 10.6% due to various factors like high agricultural produce, reverse migration (due to covid lockdown) and a lower unemployment rate.Investments/ Developments
The Government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand retail and 51% in multi-brand retail. This would bolster the FMCG industry in India quite considerably. The sector witnessed healthy FDI inflows of US$ 17.8 billion from April 2000 to September 2020.Industry Future
Rural consumption has increased, led by a combination of increasing income and higher aspiration levels. There is an increased demand for branded products in rural India. The rural FMCG market in India is expected to grow to US$ 220 billion by 2025.
Due to increase in brand consciousness among the younger educated population, the share of the unorganized market in India is falling rapidly and the organized FMCG sector is growing up quite steadily.
On the other hand, with the share of unorganised market in the FMCG sector falling, the organised sector growth is expected to rise with increased level of brand consciousness, augmented by the growth in modern retail.
Online portals are expected to play a key role for companies handling FMCG goods. Internet has contributed in a big way, facilitating a cheaper and more convenient mode to increase a company’s reach. The number of internet users in India is likely to reach 1 billion by 2025. It is estimated that 40% of all FMCG consumption in India is made online now. The online FMCG market reached US$ 45 billion in 2020 .