fmcg summary presentation

8/11/2019 FMCG Summary Presentation

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SYNOPSIS : FMCG INDUSTRY


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FMCG INDUSTRY : SIZE AND GROWTH RATE

490 500540 585

710860

1020

11601300

16711831

2000

0

200

400

600

800

1000

1200

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1600

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FY02 FY04 FY

06

FY

08

FY

10

FY12

FMCG Industry Size

6%

16%

Figures in Rs. bn

Size of the FMCG industry is about Rs. 200,000 crores in FY 2013.About 40% of the FMCG sales are in Rural areas.


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FMCG INDUSTRY : CHARACTERISTICS

One of the extremely competitive industry. Very difficult for new players

to enter and make a big impact. (ITC is yet to become profitable in theirFMCG business even after 10 years)

Very diverse industry. Analysis should happen on category by category

basis because trends, brands and players differ significantly across the

categories.There are strong MNCs and also strong Indian players.

In the last 5 years the growth rates has been 16%. It has picked up

compared to the previous 10 years.

This sector is relatively immune to recession.

The growth in FMCG depends on several factors - Penetration levels,

Per capita consumption, Per capita income increase, Urban and Rural

proportion


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Opportunities in Low Penetration and Low-per Capita Consumption Categories

There is immense opportunities in several categories on account of low

penetration level and low per capita consumption.

Despite having high penetration level, categories like detergent soap,

personal soap and washing powder have low per capita consumption thereforechange in the consumption pattern will drive these categories.

Apart from this, categories like oral care, shampoo, skin cream, deodorant

and packaged juice etc where penetration level and per capita consumption

both is low.Therefore, these categories have enormous opportunity to grow through

addition in consumer base as well as change in the consumption pattern.


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PENETRATION LEVEL OF MAJOR FMCG PRODUCTS

Penetration levels of many FMCG products like Ketchups, juices etc are muchless than even 10%


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PER CAPITA CONSUMPTION OF KEY FMCG PRODUCTS:COMPARISON WITH GLOBAL TRENDS

Toothpaste ( kg) Tea ( kg)


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Skincare ( Rs) Shampoo ( kg)


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Fabric Wash ( kg) Ice-creams ( litre)


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CRITICAL SUCCESS FACTORS (APART FROM BRANDING)

R - Range (coverage of price points and wide variety)I Innovation (packaging, product attributes, new launches, brandambassadors)V Value Weightage (Items weightage on their monthly expenses)E EngageR-Reach

RIVER

Product Proliferation

Slight excess capacities

Market Penetration, Product Development, Market Development and productdiversification


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Some companies are over dependent on their power brands which couldimpact their growth and profitability

Company Dependence on Power Brand


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EFFECTIVE STRATEGY REGARDING POWER BRANDS

The over dependence on a brand or few brands (for sales and margins) can

create trouble for the company in the long term.

It is important to have multiple power brands like HUL

High Dependence : Nestle, Marico and Jyothy Labs

Medium Dependence : Emami and Colgate

Low Dependence : HUL and Dabur

HUL has managed the power brands better. They have done brand

extensions so that the power brands do not depend on one category. Ex:Dove, Lux, Lifebuoy


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Beauty and Personal Care

Personal care industry is Rs 40 000 crores Bath and Shower Hair


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OVERVIEW

Overall Size :Rs. 40,000 crores

Share of Major segments in Personal Care :

Bath and Shower: 30%

Hair care: 25%

Oral Care: 14%

Skin Care: 13%

Mens grooming: 8%

Color cosmetics: 6%Others : 5% (others include Baby and child specific

products, Deodrants, Depilatories, Fragrances, Sun care

etc)

Personal care industry is Rs. 40,000 crores. Bath and Shower, Hair-Care, Oral and Skin care constitute about 80% of the overall personalcare value.


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Bath and Shower

88% of the products in bath and shower are bar soap The


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BATH AND SHOWER : CATEGORY BREAK-UP

88% of the products in bath and shower are bar soap. Thecontribution of shower gel and liquid soap are less than 3%

ProductsValue (in Rs.Mn)

% of TotalCategory Value

Bar soap 106674 88%

Body wash and ShowerGel 993 1%

Liquid Soap 2287 2%

Talcum Powder 11408 9%

Total 121362 100%


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BATH AND SHOWER : COMPANY MARKET SHARES

HUL, GCPL, Reckitts and Wipro holds more than 75% share

Company

Market Shares

2007 2012

Losers

HUL 53.5% 49.8%

Nirma 6.60% 3.90%

Gainers

ReckittsBenckiser 5% 9%

Wipro 7.3% 8%ITC 0% 3.60%

Anchor 0% 2%

GCPL 8.90% 10%

Though HUL is the market leaderwith almost 50% share, it has lost close

3% share along with other major loser

Nirma which also lost 3% share.

Reckitts, ITC, Anchor (Dynabrand), Godrej and Wipro are the

major gainers.

Reckitts share increase is due to

launch of new dettol soap variants,liquid wash and awareness

campaign Proper Handwashing

campaigns.


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BATH AND SHOWER : BRAND SHARES

Top 6 brands constitute 50% of the bath and shower category.

Brand Company Market Shares

2007 2012

Lux HUL 15.3% 13.1%

Lifebuoy HUL 13.3% 11.8%

Dettol Reckitt Benckiser 5.5% 9.1%

Santoor Wipro 7.1% 8.1%

GodrejNo.1

GCPL 5.4% 6%

Dove HUL 1.5% 4.3%

Though the overall growth is expected to slow down liquid


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BATH AND SHOWER : GROWTH

Though the overall growth is expected to slow down, liquidsoap will still grow at impressive rate.

Category CAGR

2007-12 2012-17

Bar Soap 13.8% 3.7%

Body Wash &Shower Gel

15.9% 7.3%

Liquid Soap 33.5% 15.3%

Talcum Powder 5.2% 0.9%

Overall Bath

and Shower

13% 3.8%

H lth d h i d i i th d d li id


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BATH AND SHOWER : KEY TRENDS

Health and Hygiene concerns driving growth

Increasing Realizations

New launches

Importance of social media

Health and hygiene concerns driving the demand on liquid soap

H lth d h i d i i th d d li id


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Driven by increasing health and hygiene concerns, consumers

continued to move towards liquid soap, including hand sanitisers.

Most of the leading companies, including Reckitt Benckiser and

Dabur India, continued to cash-in on this growing trend by running

campaigns to promote the germicidal properties of liquid soap.

Dabur India launched Fem Safe Handz, an instant hand sanitiser

which offers protection against bacteria and viruses.

Health and Hygiene concerns driving growth

Health and hygiene concerns driving the demand on liquid soap

Realizations are increasing due to increase in commodity inflation


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Increasing Realizations

Average unit prices continued to increase, mainly due to

commodity inflation, which led to increases in the prices of the

main ingredients of such products, including oils and glycerine.

In addition, strong growth in liquid soap and body

wash/shower gel, which are comparatively more expensive than

other products, pushed unit prices even higher.

Realizations are increasing due to increase in commodity inflationand movement towards expensive liquid soap and shower gel.

Focus of new launches has been on male targeted products


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NEW LAUNCHESMale targeted products:

Ex: Acqua pulse mens shower from Fiama Di Wills

Nivea for men

Combination Products:Manufacturers focused on combination products to position theirproducts as better-value offerings.

For instance, extra moisturising bar soaps such as Dove continued toperform well, and hand sanitisers with moisturiser, such as Lifebuoy.

Products with new AttributesEx: Exfoliators and scrubs (Exfoliators, which are known for theirproperty of removing dead skin cells, picked up well)

Focus of new launches has been on male targeted products,combination products and products with new attributes.

There is a growing importance of social media in brand


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IMPORTANCE OF SOCIAL MEDIA

There is a growing importance of social media in brandpromotions.

Many companies also moved to social media websites such as

Facebook to promote their brands.

For instance, The Himalaya Drug Co rolled out an innovative

marketing campaign on Facebook to promote its brand

PureHands.

The company invited young and creative minds to make a video

highlighting the product benefits, and announced Rs1 lakh as theprize money for the best video.


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Hair-Care

Hair Oils/ Conditioners and Shampoos constitute more than


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HAIR-CARE : CATEGORY BREAK-UP

/ p77% of the Hair-Care category.

ProductsValue in

Rs.mn%of Total Category

Value

Hair

Oils/Conditioners 40,445 41%Shampoos 36,726 37%

Colourants 15,420 16%

Saloon Hair Care andStyling agents 5,512 6%

Total 98,103 100%

Note:

1. Others include Salon Hair care, Hair-loss treatments, styling agents etc.

Hair care category is quite fragmented. Top 7 companies put


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HAIR-CARE : COMPANY MARKET SHARES

g y q g p p ptogether account for only 65% of the share.

Company Market Shares2007 2012

HUL 18.3% 17.9%

Dabur 11.1% 11.2%

Marico 9.8% 9.5%

L'Oral India Pvt Ltd 5.8% 8%

Procter & Gamble 7.3% 7.7%

GCPL 4.2% 5.8%

Cavinkare 4.7% 4%

LOreals increase is due to its strong presence in Saloon Hair Care (56%) andColourants (10%)GCPLs increase is due to growth of Godrej Hair Dye and Bryl cream brands.

Clinic Plus Dabur and Parachute are the 3 biggest brands


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HAIR-CARE : BRAND SHARES

Clinic Plus, Dabur and Parachute are the 3 biggest brands.

Brand Company Market Shares2007 2012

Clinic Plus HUL 9.1% 7.6%

Dabur Dabur India 5.4% 5.6%

Parachute Marico 4.8% 5.3%

Heads &Shoulders

P & G 4.6% 4.2%

Sun silk HUL 4.4% 4.1%

Colourants, Saloon Hair care, Styling products will drive theh h


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HAIR-CARE : GROWTH

Category

CAGR

2007-12 2012-17

HairOils/Conditioners

12.8% 10.5%

Shampoos 12.3% 3.8%

Colourants 21.9% 17.2%

Saloon Hair Care andStyling agents

25.2% 14.5%

Total 14.3% 9.7%

growth in the Hair-Care category.

Colourants, Saloon Hair care, Styling products will drive theh i h H i C


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HAIR-CARE : KEY TRENDS


GROWTH IN DO-IT-YOURSELF (DIY) PRODUCTS

Young consumers continued to pick up do it yourself (DIY) stylinggels and colourants to style their hair themselves.The DIY trend was also picked up by budget-consciousconsumers, who consider such products an affordable option.The growing desire to look good encouraged budget-consciousconsumers to accept DIY products, which are considerably cheaperthan salon products.

INCREASING REALIZATIONS

Average unit prices increased by 10% in 2011, mainly due to highermanufacturing costs and growing acceptance of premium products.

Colourants, Saloon Hair care, Styling products will drive theth i th H i C t


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HAIR-CARE : KEY TRENDS


ANTI-DANDRUFF PRODUCTS

Anti-dandruff formulae continued to grow, as the climaticconditions led to a high occurrence of dandruff amongst consumers. Furthermore, media campaigns pushed the uptake of anti-dandruff shampoos amongst consumers.

SALOON HAIR CARE

The faster growth in salon hair care will be driven by the increasingnumber of females going to salons for hair care. In addition, growinglooks-co


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Skin Care

Facial creams constitute 90% of the skin care category


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SKIN-CARE : CATEGORY BREAK-UP

Products Value in Rs.mn %of Total Category Value

Facial Care 45914 90.0%

Body Care 4982 9.8%

Hand Care 127.4 0.2%Total 51023.4 100%

HUL is the market leader by a huge margin over other competitors


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SKIN-CARE : COMPANY MARKET SHARES


Hindustan Unilever 59% 56.4%

L'Oral India Pvt Ltd 3.9% 6.5%

Amway IndiaEnterprises

4.5% 5%

CavinKare Pvt Ltd 3.3% 3.4%

Oriflame 2.3% 3.2%

Fair & Lovely is the biggest brand in skin care with about 43%h


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SKIN-CARE : BRAND SHARES

share.


Fair & Lovely HUL 45.3% 42.9%

Ponds HUL 5.7% 6%

Garnier SkinNaturals

L'Oral India PvtLtd

4.3% 5.8%

Lakme HUL 4.6% 4.5%

Fairever Cavinkare 3.3% 3.4%

Skin care is expected to grow by healthy 10% between 2012-17.


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SKIN-CARE : GROWTH

Category

CAGR

2007-12 2012-17

Facial Care16.9% 9%

Body Care 14.3% 10%

Hand Care 35% 17%

Overall 16.7% 10%

p g y y


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SKIN-CARE : KEY TRENDS

The growing desire to lose weight and look slim continued to fuelgrowth in firming/anti-cellulite body care. Oriflame and Amwaycontinued to be the leading brands which pushed growth.Other growing categories are:

Anti ageingCleansersAcne treatments

GROWTH BEYOND FAIRNESS PRODUCTS

DOMINANCE OF HUL

Hindustan Unilever continued to dominate skin care with a share of56% .The company enjoys a leading position with established brands such asFair & Lovely and Ponds, which have enjoyed an established presencein the country for years.


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SKIN-CARE : KEY TRENDS

Skin whitening continued to be a key trend, particularly in facialmoisturisers. Fair & Lovely by Hindustan Unilever alone account fora 43% value share in skin care.In addition to being sold as an added benefit in anti-agers and facialcleansers, whitening emerged as a major trend in face masks.

For instance, The Himalaya Drug Co launched face masks forskin whitening, which proved to be successful.

Manufacturers started to focus on mens skin care, which is the nextmajor area with potential.

Indias obsession with fainess products continues


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Biscuits

Biscuit category is about Rs. 15,600 crores and Plain biscuits arethe biggest selling product category


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BISCUITS : CATEGORY BREAK-UP

Products Value in Rs.mn%of Total Category

Value

Cookies 33,776 22%

Plain Biscuits 85,814 55%Filled and Sandwich Biscuits 23087 15%

Savoury Biscuits and Crackers 13490 9%Total 156167 100%

the biggest selling product category


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BISCUITS : BRAND SHARES


Parle Parle 31.4% 33.1%

Britannia Britannia 36.2% 32.8%

SunFeast ITC 7.9% 13.2%

Anmol Anmol 3.6% 3

Priyagold Surya 2 2.1%

Cookies will be the fastest growing product category inbiscuits.


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BISCUITS : GROWTH

Products

CAGR

2007-12 2012-17

Cookies32% 12%

Plain Biscuits 15.6% 6%Filled and Sandwich Biscuits 23% 9%

Savoury Biscuits and Crackers 14.3% 8.2%

Overall Biscuits 18.6% 8%

biscuits.


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BISCUITS : KEY TRENDS

Cookies the Fastest growing segment

Value sales of cookies registered the fastest growth, driven by higherconsumption and a preference of cookies among children.The expansion of chained grocery stores and increase in product offerings,such as more imported brands on retailersshelves, was another key driver

behind growth in cookies.Innovations in Savories and Crackers

The industry witnessed considerable innovation in savoury biscuits andcrackers. The launch of Aliva by Frito-Lay, the snack food division of PepsiCoin 2009, introduced baked crackers to consumers.

Parle Products introduced sugar-free cream crackers.Consumers are moving towards savoury biscuits and crackers which haveadded health benefits.



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Dominance of Plain Biscuits

Plain biscuits is the largest category in biscuits.The popularity of plain biscuits was mainly due to their affordability.However, its growth was slowest among sweet biscuits as plain biscuits isrelatively mature and there was less product innovation in this category.

New Launches in Premium price pointsPlayers focusing on premium launches to drive up value sales. For example

PepsiCo launched its global Quaker Oats brand of premiumcookies at a price point of Rs30.ITC launched two products under its Sunfeast brand, DarkFantasy Choco Fills and Dark Fantasy cream biscuits, whichwere priced Rs30 and Rs20 respectively.Britannia also launched a cream biscuit brand, Treat-O, inaddition to its other premium launches such as DiabetesFriendly Essentials and Chocodecker.The launches in the premium segment are expected to besuccessful, because urban consumers are increasingly lookingfor varieties and better ualit roducts.



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Dominance of Parle and Britannia

Parle and Britannia derive their dominance from wide range of productswhile others focus mainly on niche segments.These 2 companies also have the greatest reach in terms of distribution.The above 2 reasons make biscuits a very difficult category for new players.ITC has been the only exception to penetrate this category in a big way overthe last 5 years.


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Soft Drinks

Bottled water, Carbonates, Fruits and Vegetable juices constituteabout 95% of the soft drinks market.


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SOFT DRINKS : CATEGORY BREAK-UP

9 %

ProductsValue inRs.mn

%of Total CategoryValue

Bottled Water 128773 37%

Carbonates 156119 44%

Fruits andvegetable Juices 54031 15%

Others 12549 4%

Total 351472 100%

Note:Others include Concentrates, Sports and Energy Drinks,

Almost half of Soft drinks sales by value are to on-trade channel.


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SOFT DRINKS : OFF-TRADE VS ON-TRADE

Products Off-trade On-trade

Bottled Water 51% 49%

Carbonates 41% 59%

Fruits and

vegetable Juices 75% 25%

Others 40% 60%

Total 51% 49%

Note:

1. On-trade is selling to hotels , restaurants, pubs.2. Off-trade is sales to the end customers through retail outlets.


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Bottled Water

Top 3 players have gained about 8% market shares mainly at thecost of regional players


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BOTTLED WATER : COMPANY MARKET SHARES


Parle Bisleri 37.5% 42.8%

Pepsico 13.5% 14.9%

Coca Cola 9.2% 11.3%Dhariwal Co 9% 8%

Others (Small andregional play

28% 20%

cost of regional players.

Bisleri is the biggest brand by huge margin follwed by Acquafinaand Kinley


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BOTTLED WATER : BRAND SHARES


Bisleri Parle Bisleri 37.5% 42.8%

Acquafina Pepsico 13.5% 14.9%

Kinley Coca Cola 9.2% 11.3%Oxyrich Dhariwal Co 9% 8%

y

Bottled water has been and will be one of the fastest growingcategory.


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BOTTLED WATER : GROWTH

Period Growth (CAGR

2007-12 28%

2012-17 24%

g y


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BOTTLED WATER : KEY TRENDS

Still bottled water is the only product. Flavored or functional water aresold in negligible quantities.Fastest growing product category in soft drinksHigh awareness of safety and hygiene, poor quality of tap water drivingsales.Few years back only high income groups were the target segment buttoday middle classes, tourists and travelers also consume bottled water.Prices have remained constant or increased very little. Because there isvery little customer loyalty and the customer could easily shift to otherbrands.Distribution is the key to be competitive. All the top 3 players have strong

distribution network. In 2011, Parle Bisleri launched Bisleri hubs to driveconsumption, with local stationery shops and dairies exclusively selling theBisleri brand.


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Carbonated Drinks

Cola and Lime carbonates corms more than 70% of the category.


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CARBONATES : CATEGORY BREAK-UP

ProductsValue in

Rs.mn%of Total Category

Value

Regular ColaCarbonates 63133 40%

Low Calorie ColaCarbonates 1235 1%

Lemonade / LimeCarbonates 49242 32%

Orange Carbonates 23462 15%

Other Non-ColaCarbonates 19047 12%

Total 156119 100%

Non cola carbonates especially lime based are the major drivers ofgrowth.


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CARBONATES : GROWTH

ProductsCAGR

2007-12 2012-17

Regular Cola Carbonates 10.5% 7.5%

Low Calorie ColaCarbonates 10.7% 10.2%

Lemonade / LimeCarbonates 14.5% 16%

Orange Carbonates 4.3% 4%

Other Non-Cola

Carbonates 15.5% 15.5%Overall 10.5% 10.1%

Non cola carbonates especially lime based are the major drivers ofgrowth.


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CARBONATES : GROWTH

ProductsCAGR

2007-12 2012-17

Regular Cola Carbonates 10.5% 7.5%

Low Calorie ColaCarbonates 10.7% 10.2%

Lemonade / LimeCarbonates 14.5% 16%

Orange Carbonates 4.3% 4%

Other Non-Cola

Carbonates 15.5% 15.5%Overall 10.5% 10.1%

Carbonates is effectively a 2 player category. Coca cola gained 3 %share between 2007-12.


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CARBONATES : COMPANY MARKET SHARES


Coca-Cola 56.2% 60%

Pepsi Co 39.6% 37.2%

Others 2.6% 1.6%

Coca-Colas brands dominate 4 of the top 6 carbonates brands.


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CARBONATES : BRAND SHARES


Sprite Coca-Cola 12.3% 16.5%

Thums Up Coca-cola 14.9% 16.5%

Pepsi Pepsi Co 14.5% 15%Coca Cola Coca-cola 8.7% 8.8%

Limca Coca-cola 8.6% 8.3%

Mirinda Pepsi Co 9.6% 7.6%


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CARBONATES : KEY TRENDS

Convenience and distribution are driving this category .

Non-Cola carbonates especially lemonade is growing much faster

due to its perceived as a substitute of nimbu paani.

Off-Trade sales have grown faster than the on-trade, reflecting the

trend of increasing home buyers.

Carbonates sales show a lot of seasonal fluctuations. Players aretrying to overcome the seasonal fluctuations by targeting homes,

shopping centers, cinema halls, pubs, etc.

Growing health concerns is a threat for this category and some urban

consumers are shifting to fruit juices.Players are trying to neutralize the health concern threat by:

Focusing on heavy advertisement campaigns

Launching products in non-carbonate category.

fmcg summary presentation

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