The fast-moving consumer goods industry is one of the key contributors to the Indian economy. The FMCG sector accounts for the fourth-largest sector in the economy, with
accounting for 50 percent of shares. The main growth drivers for FMCG have been increasing income, changing lifestyles, increasing awareness, and easier access. Besides, the trend toward sustainable products also influences consumers’ purchase behavior. Even though the
, semi-urban and rural segments had witnessed significant growth in the last decade.
Digitalization of FMCG sector
In the coming years, the FMCG sector is set to emerge as a digitally oriented industry due to the increasing use of mobile analytics, artificial intelligence, and cloud technologies. The
online FMCG market size in the e-commerce sector is estimated to be over 14 billion U.S. dollars in 2024. Moreover, this industry is heavily dependent on insights, consumer behavior, preferences, and market trends. During the coronavirus pandemic consumer goods' supply and distribution channel was disrupted. In a country where local Kirana stores still account for 80 percent of sales, it is important to ensure a consistent supply of orders from these outlets. Since digitalization has made this possible over the last few years, retailers can now safely
place orders using an app and check the status of the order fulfilment. With the use of digitalization, the FMCG companies are integrating suppliers, inventory, and distributors into one ecosystem. However,
several startups had achieved success in recent years, securing a strong foothold in a growing market.
Market player trends
Most of the key players in the industry happen to be
well-established conglomerates, some foreign and some domestic. Many FMCG conglomerates like Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, and others have dominated the Indian market and are now competing with direct-to-consumer start-ups such as MamaEarth, Bey Bee, Azah, and Pee Safe. Each of these has brands that are popular across households with some variation depending on the two region or tier. Additionally,
advertising plays a vital role in determining how far a product or brand reaches its target, directly impacting consumer spending. Moreover,
with the rising inflation, consumers in India have a tangible purchasing behavior. The FMCG companies are increasing product prices due to rising raw material prices. They are not only raising retail prices but also reducing the package sizes, which is referred to as “grammage reduction”. In addition, this practice has been targeted especially at low-unit price items by the companies.
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