India, being one of the largest emerging markets with a billion- plus population, is also one of the largest economies in the world in terms of purchasing power with a strong middle-class of over 500 million. Against this background, the Fast Moving Consumer Goods (FMCG) sector has continued to show good momentum. It witnessed a steady growth aided by a strong demand from rural markets. During the second quarter ended September 2007, the sector witnessed around 11-20% growth in sales and 10-15% rise in net profit, compared with the corresponding period last year, against positive factors such as rising disposable income levels.
But most of these factors were more inclined towards the rural markets than the stagnated urban markets, which again were well-supported by good agricultural growth, increased liquidity and various infrastructural developments. However, segment-wise the market growth during 2006-07 displayed mixed results, with the food segment picking up pace and the personal care segment stagnating. However, the industry has a long way to go; the per capita consumption in most product categories are still low, indicating an untapped market potential. Due to various M&A strategies adopted by FMCG companies in 2006-07, the size and scale of many have got a tremendous boost. For instance, according to Adi Godrej, Chairman, Godrej Consumer Products, their Keyline's buyout increased their sales turnover by 20% and, as a result, their profit would increase by 10%. |
