FMCG

8/4/12 FAST MOVING CONSUMER GOODS

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AGENDA
1. 2. 3.

Introduction Changes in HR Practices GDP Contribution of the sectors and the reasons Recent Innovations in FMCG Sector Expectations from a 2 year programme Students perspective
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4. 5.

INTRODUCTION
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It refers to consumers non-durable goods Sold quickly at relatively low cost Generally sold at large quantities Sector touches every aspects of human life from looks to hygiene to palate Mainly consists of sub segments: personal care, oral care, and household products
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HR Policies

Role of HR

Develop, implement and propose HR policies Maintain HR policies with strategic expectation Administration and Co-ordination of HR policies for retention of high calibre work force Compilation and distribution of pay for employees Maintaining and providing productive and harmonious work environment. Providing training and development interaction Ensuring safe working environment for all the employees.
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10 Best Practices

Safe healthy and happy work place Open book management style Performance linked bonuses 360- performance Management feedback system Fair evaluation system for employees Knowledge Sharing Highlight Performers Open house discussion and feedback mechanism Reward ceremonies Delight employees with the unexpected
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Hit of Recession
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HR Challenges

Global Competition Ageing Work force Employee retention Dearth of employees with critical skills Cross cultural impact Recession hit economy Increasing revenues through new market entries, mergers, acquisition and partnerships
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Change in HR policies

Decentralization of HR unit.
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Use of HRIS for better management of employee information Training and development most common KPI, followed by staff retention, culture change and performance management. Paid Parental leaves and flexible work hours Retention strategies revised- financial incentives, mentorship program Importance on inclusion and diversity. Encourage to employees to bring their buddies by giving incentives.

Feedback Effect
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GDP Contribution
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FMCG Market in India

1950s 1980 Low investment in sector

Post Liberalization
-Entry of MNCs -Focus shifted to getting rural consumer first -Nirma and Cavin care

Low purchasing power

Govts emphasis on small scale sector HLL and other companies urban focus

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Growth of FMCG Compared to Indian GDP

Growth of FMCG market 10
12 8 6 4 2

The FMCG market has grown at a CAGR of 13.13%

Market size of Rs 110,000 crore in 2010

12

Growth of Indian Economy

It constitutes to 2.15% of the Indian GDP

10 8 6 4 2

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Break up of FMCG sector

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Reasons for growth of FMCG in India

1)Large consumer good spender
1999 Population(millions) Population<25 years Urbinization

2001 1012 546 28

2006 1087 565 31

864 480 26

Rapid urbanisation Increased literacy Rising per capita income, Around 45 percent of the population in India is below 20 years of age

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54% of expenditure is in consumer durable goods

Consumer Profile

Total consumer expenditure on food in India at US$ 120 billion

Rise in Indias per capita disposable income

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2)Vast rural Markets

Urban Population 2001-02 (mn household) Population 2009-10 (mn household) 53

Rural 135

The total number of rural households rose from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world.

69

153

% Distribution 28 (2001-02) Market 3,768 (Towns/Village s) 1

72

627,000

Rural India accounts for more than 700 Million consumers, Universe of Outlets (mn) or 70 per cent of the Indian Population Source: NCAER It accounts for 50 per cent of the total FMCG market

3.3

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Rural sector profile

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FMCG share in rural market is 13% The rural market is currently worth approximately USD$9 billion in consumer spending in the FMCG space annually. The Indian rural market is expected to grow more than tenfold to become a USD$100 billion opportunity for retail spending in the next 15 years, The Nielsen Company has found.

3) Large low cost production

Material Costs

Labour cost Comparison

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largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and fruits & vegetables. India also has an ample supply of caustic soda and soda ash, the raw materials in the production of soaps and detergents India produced 1.6 million tonnes of caustic soda in 2003-04. Tata Chemicals The availability of these raw materials gives India the locational advantage.

4) FDI Policy

investment allowed for most of the food processing sector ; except

Alcohol and beverages

Those reserved for small scale industries

24% foreign equity is permitted in small scale sector The evolution of a more liberal FDI policy environment in India is clearly supported by the successful operation of some of the NET FDI in India. global majors like PepsiCoinflow

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Malted food

The Indian government has abolished licensing for almost all food and agroprocessing industries except for some items like alcohol , cane sugar, hydrogenated animal fats and oils etc., and items reserved for the exclusive manufacture in the small scale industry

5) Removal of Quantitative Restrictions

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5)Presence Across value chain

Demand in india is across all value chains Raw material Final processed Packaged good Personal care Food processing 8/4/12

Makes the firms located in India more cost competitive.

5) Removal of Quantitative Restrictions The Indian government has abolished licensing for almost all
food and agro-processing industries except for some items like alcohol , cane sugar, hydrogenated animal fats and oils etc., and items reserved for the exclusive manufacture in the small scale industry

Future of FMCG
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Future Of FMCG

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Future of FMCG

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Key Drivers for growth in FMCG Sector

Rapid urbanization Rise in disposable incomes Constant innovation in existing products from customer feedback Penetration to rural markets with strong distribution channels Rise in rural non-agricultural income and benefits from government welfare programmes
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RECENT INNOVATIONS IN FMCG SECTOR

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INNOVATIONS IN FMCG SPHERE

Example Colgate Maxfresh

Revolutionary: Examples: 1. Lays Kurkure 2. Salt Toothpaste

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Evolutionary:

SCOPE OF INNOVATION

Supply gap indicates an untapped opportunity in areas such as packaged form, convenience

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e-CHOUPAL

Totally owned and set up by ITC with the operators not having any investment or risk of their own Focus on creating internet access for global market information

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ITCs internet kiosks called e-Choupals to support its agricultural product supply chain

Technology innovations

Machine Innovation Applications Mobile Apps (Nestle for you) Johnson and Johnsons Acuvue P&G App P&G system in manufacturing plants
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Innovations in Social Media and Marketing

Consumer Ideation PR Initiative (Feel Good Factor): Dove Soap Consumer feedback channels on every pack Regular Blogs, tweets and other social media platforms . Supporting customer grievances and queries at social media platforms
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Expectations from 2 year MBA program: Students perspective

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Why MBA?
12 10 8 6 4 8/4/12

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2 0

Most Effective Method of Teaching

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Should Specializations be offered in 1st year?

2nd YEAR 1st YEAR

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Benefits of committee in an MBA Program

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Is work experience beneficial for MBA program

IInd Year
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Ideal duration of summer internship

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Sample

Placement procedure
q

Concept of Dream Company: 90% students want the concept of dream company to be introduced. Pre-placement Offer : Most students feel that they should be allowed to decide the minimum package at which PPO is mandatory.
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THANK YOU
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