The Indian fast moving consumer goods (FMCG) industry has the potential to develop by more than 15% over the next two to three years, if players in the sector focus on improving brand penetration, a report said on 8 March 2017.
As per the joint report by the Confederation of Indian Industry and Bain & Company, India is cusp of the FMCG S-curve and there is major room to grow over the next 5 to 10 years. The industry’s growth rate compared to Gross Domestic product (GDP) has fallen to 0.8 from a historical ratio of 1.2, the report added.
During the slowdown, FMCG companies scaled back growth-oriented investments and modified focus to sustaining profits all at the cost of the top line.
Last year, the FMCG industry grew at 9% till October and rural growth was 1.7 times the urban areas. Across these 22 categories, volume growth was driven by underlying penetration gains and even extremely penetrated kinds like toothpaste and hair oil, both with over 95% penetration, recorded material penetration gains, report added.
‘Food emerged as the fastest growing segment at 10%, with larger towns and more well off consumers driving this growth. conversely, home care grew at 9%, which was driven by less affluent consumers staying in small towns and rural areas’. The report was announced at the National FMCG Summit 2017 organized by the Confederation of Indian Industry.