FMCG

1
 KEY POINTERS FOR FMCG INDUSTRY

•Overall Industry Trends

 Size and Growth
 Segments
 Rural and Urban demand
 Penetration and per capita consumption
 General Trade and Modern Trade
 Some common strategies adopted by FMCG players
Category Analysis
 Category break-up in terms of different products
 Growth of different products within the category
 Company Market shares and changes over the years
 Brand shares and changes over the years
2  New launches and key category trends
 KEY POINTERS FOR FMCG INDUSTRY

• FMCG Company Analysis

 Business Mix
 Growth
 Margins
 Distribution
 Analysis of Brands
 New Launches in the last 2-3 years and their performance
 Focus categories for the future
 M&As – Why and their impact?
•Impact of Modern Retail on FMCG

3
 Overall Industry Trends

4
 FMCG industry size is expected to double between 2020 and 2025.

FMCG: MARKET SIZE AND GROWTH

Source: https://www.statista.com/statistics/742463/india-fmcg-market-size/
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 Food and Beverages constitute 44% of FMCG industry.

FMCG: SEGMENTAL SHARE

Source:
https://www.techsciresearch.com/admin/gall_content/2016/11/2016_11$thumbimg10
2_Nov_2016_004628313.pdf
6
 Rural markets contribute to 45% of the industry revenues and has
been growing faster than the urban market in the last few years.

IMPORTANCE OF RURAL MARKET

Share

45%
Rural
55%

Urban

Source:
Company Reports
7
 Modern trade constitute 15% of the overall FMCG sales which is
much lower than that of other developing or developed countries.

SHARE OF MODERN RETAIL IN FMCG

90% 85% 85%
80%
70%
70%
60%
60%
50%
Axis Title

Modern Trade
40%
40%
30%
30% General Trade
20% 15% 15%

10%
0%
India China Malaysia USA
Source:
1. Industry Reports
2. https://www.indianretailer.com/article/whats-hot/retail-trends/why-traditional-
8 trade-share-in-grocery-retail-to-fall-by-20-pc-in-next-5-years.a7736/
 Low penetration and per-capita consumption indicates
high future potential growth.

LOW PENETRATION AND PER CAPITA CONSUMPTION

• Low penetration of less than 10% in many categories (Ex:

BodyWash, Dishwash Liquids, Conditioners, Facewash etc)

• India’s per capita consumption is much less than that of even other

developing countries (half of Indonesia’s, one-fourth of China’s)

9
 SOME COMMON STRATEGIES ADOPTED BY FMCG
COMPANIES

• Frequent NPI
• High spend on advertising, promotions and offers
• WMI
 Presence in multiple categories
 Go National and Local
 Premiumization
 Smaller Package sizes
 Personalization
 Multiple brands in a category
• Shelf space
• Green initiatives (Ex: Smart Fill machines
https://www.youtube.com/watch?v=vs4kqLryjJs)
• DTC
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 Category Analysis

11
 Bath and Shower

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 BATH AND SHOWER

Category Size : Rs. 28500 Crores (FY 2021)

1% 7%
5%

87%
Bar Soap Talcum Powder
Body Wash Liquid Soap/Hand Sanitizer
Source:
 Estimates from Company Documents , Media Reports and Industry sources

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 Body wash and Liquid Soap will drive the growth of the
category.

BATH AND SHOWER : GROWTH

Products Expected CAGR (2021-25)

Bar Soap 3 to 5%
Body Wash 12 to 14%

Liquid Soap/Hand Sanitizer 18to 20%

Talcum Powder -1 to -3%%
Overall Bath and Shower 6 to 8%

Source:
 Estimates from Company Documents , Media Reports and Industry sources

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 HUL, Reckits, Wipro and Godrej and Reckitts holds more than
70% share

BATH AND SHOWER : COMPANY MARKET SHARES

Company 2016 2021

HUL 42% 36%
Reckitts Benckiser 7.5% 11%
Wipro 6.5% 10.5%
Godrej 10% 10%
ITC 3% 5%
Nirma 7% 1%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
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 Top 6 brands constitute 50% of the bath and shower category.

BATH AND SHOWER : BRAND SHARES

Brand Company Market Shares

2016 2021
Lifebuoy HUL 14% 11%
Dettol Reckitts 8% 11%
Santoor Wipro 7% 10.2%
Lux HUL 12% 9%
Godrej No.1 GCPL 6% 6.5%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
16
 NEW LAUNCHES AND KEY TRENDS

•Due to Covid, Hygiene has become a key driving force

•Hand sanitizer has moved from being a niche to essential
•PH battle (Seabamed vs HUL vs Brinton)
 https://www.youtube.com/watch?v=V110X4_x9bk
 https://www.youtube.com/watch?v=7NmXilDJ8gc
•Gender specific products:
•Products with multiple attributes
•Products with new attributes
•Nature based products (Herbal/Ayurvedic)

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 NEW LAUNCHES AND KEY TRENDS

•To regain some of their share, HUL has launched

 Liril body wash and bar soap variants with a strong freshness
proposition
 Lux Botanicals
 Pears Naturale

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 Hair Care

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 Hair Care

Category Size : Rs. 25,000 Crores (FY 2021)

5% 2%

19% hair oils

46% Shampoos and

Conditioners
Colourants

Saloon Haircare

29%
Source:
 Estimates from Company Documents , Media Reports and Industry sources
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 Colourants, Saloon Hair care, Styling products will
drive the growth in the Hair-Care category.

HAIR-CARE : GROWTH

Expected CAGR (2021-

Category 25)
7 to 10%
Hair Oils
4 to 6%
Shampoos and Conditioners
Colourants 8 to 12% %
Saloon Hair Care 10 to 13%%
Total 8 to 10%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
 https://www.mordorintelligence.com/industry-reports/india-hair-care-and-styling-products-market-industry
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 Hair care category is quite fragmented. Top 7 companies put
together account for only 60% of the share.

HAIR-CARE : COMPANY MARKET SHARES

Company Market Shares
2012 2021
Marico 7% 17%
HUL 15% 17%
L'Oréal India Pvt Ltd 7% 9%
Dabur 10% 6%
Procter & Gamble 9% 6%
Emami 5% 4%

Source:
Estimates from Company Documents , Media Reports and Industry sources

22
 Parachute, Clinic Plus and Dove are the 3 biggest Hair-care
brands.

HAIR-CARE : BRAND SHARES

Brand Company Market Shares

2012 2021
Parachute Marico 5% 10%
Coconut Oil
Clinic Plus HUL 8% 6%
Dove HUL 2.5% 5%
Head & P&G 5.0% 3.5%
Shoulders
Bajaj Consumer Bajaj 3% 3.5%
Care

Source:
Estimates from Company Documents , Media Reports and Industry sources

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 KEY TRENDS

 Hair care category had negative growth of -4% in 2020 due to lock
down.
 Many concerns about hair - volumising, dryness, heat, moisturising,
shine, regrowth etc
 Brands promoting SLS and paraben-free hair care products (Ex: Body
Shop, Khadi, Forest Essentials)
 Personalization based on hair type (Ex: Bare Anatomy, Freewill)
 Personalization based on Dosha type (Ex: Vedix)
 Large number of variants – pollution control, weather based etc.
 Customers are also willing to spend more for hair care

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SOCIAL MESSAGING IN ADVERTISING

•Vatika’s “Brave & Beautiful” campaign attracted 3 million views within

3 months
•Dabur’s ‘700 Se 7 Kadam’ was also hugely successful

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 Deodorants

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 Deodorant

Category Size : Rs. 4,000 Crores (FY 2021)

22% Liquid Deodorants

(Pumps)
1% Roll ons

Sprays
77%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
27
 Deodrant category is expected to grow at a healthy rate
till 2025 due to low current level of penetration.

DEODRANTS : GROWTH

Category 2020 - 25
Pumps 13% to 15%
Roll ons 10% to 12%
Sprays 10% to 12%%
Total 11% to 13%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
 https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-market/articleshow/68623268.cms
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 Vini Cosmetics and ITC which did not even exist 10
years ago are the top 2 players.

DEODRANT : COMPANY MARKET SHARES

Company Market Shares
2011 2021
Vini Cosmetics Pvt Ltd 0% 21%

ITC 0% 11%
Hindustan Unilever Ltd 30% 9%

Nivea India Pvt Ltd 6% 7%

McNroe Chemicals Pvt Ltd 10% 7%

Helen Curtis India 2% 5%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
 https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-market/articleshow/68623268.cms
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 Fogg, Engage and Wild Stone are the 3 biggest brands.

DEODRANT : BRAND SHARES

Brand Company Market Shares

2011 2021
Fogg Vini Cosmetics Pvt Ltd 0% 21%

Engage ITC 0% 11%

Wild Stone McNroe Chemicals Pvt 10% 7%
Ltd
Axe HUL 18% 6%
Park Avenue Helen Curtis India 2% 5%

Source:
 Estimates from Company Documents , Media Reports and Industry sources
 https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-
market/articleshow/68623268.cms
30
 KEY TRENDS

 Deodorant category had negative growth of -3% in 2020 due to lock

down.
 HUL lost bulk of it’s market share in the last decade from 30% to 9%
despite having 6 brands – Axe, Dove, Denim, Rexona, DIY, Sure due to
Axe promotional strategy and failure of brand extensions.
 Pocket size Deo launched by Engage has been a big hit and followed by
others like Park Avenue, Wild Stone and Axe.
 Fogg made huge gains through it’s unique liquid deodorant, auto-pause
mechanism and innovative marketing (Ex: Deodorant as a Gift product)
 Overall a high growth category as Deodorant penetration is less than 5%

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 Soft Drinks

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 Almost 46% of Soft drinks sales by value are to on-trade
channel.
SOFT DRINKS : OFF-TRADE VS ON-TRADE BY VALUE
Products Off-trade On-trade
Bottled Water 49% 51%
Carbonates 41% 59%
Fruits and vegetable
Juices 77% 23%
Concentrates 100%
Sports and Energy
Drinks 71% 29%

Overall Soft drinks 54% 46%

Note:
1. On-trade is selling to hotels , restaurants, pubs. (Ex: Coca Cola-
McD, Pepsi-Pizzahut)
2. Off-trade is sales to the end customers through retail outlets.
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 Company Analysis

34
 PARAMETERS FOR COMPANY ANALYSIS

 Business Mix
 Growth and Margins
 Distribution
 Analysis of Brands
 New Launches in the last 2-3 years and their performance
 Focus categories for the future
 M&As – Why and their impact?
 HUL, among peers, by far the largest contributor to overall group
turnover

HUL: THE JEWEL IN UNILEVER’S CROWN

Company India as % of Total Group Turnover

• 90% of Indians use at-least one HUL product.

• India is the second biggest market for Unilever after US (which contributes
16.3% of Unilever’s revenue).
• India is expected to become the largest market for Unilever in FY 27
• HUL’S market capitalization is 50% of Unilever’s market capitalization (US$
66bn vs US $ 113.25 bn on 20th April 2022 )
 Personal Care products contribute 39% of HUL ‘s Sales
but 50% of it’s profits.

BUSINESS MIX: REVENUE AND PROFIT CONTRIBUTION

Revenue Contribution EBITDA Contribution

Source: Company Documents

 HUL’s margin decreased between 2003 and 2010 but on an upward
trend since 2010.

EBITDA Margin in %

30%
25%25%
25% 22%
21% 20%20%21%
20% 18%19%
17%17%
15% 14%15%15%16% 15%
15% 13% 13%

10%
5%
0%
FY FY FY FY FY FY FY FY FY FY
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Source: Company Documents
 The margins for beauty and personal care is higher than
that of other segments.

BUSINESS MIX : SEGMENT WISE MARGINS

EBITDA in % FY 17 FY 18 FY 19 FY 20 FY 21

Beauty and 23.6 25.3 26.5 28.1 28.5

Personal Care

Home Care 11.1 14.6 16.8 18.8 19.9

Foods and 14.1 15.2 17.3 16.5 16.6

Refreshment

Source: Company Documents

 HUL has strongest distribution in both General and Modern Trade

DISTRIBUTION: GENERAL TRADE AND MODERN TRADE

Company General Trade Modern Trade

Reach Sales
Contribution
HUL 9.2 mn 20%
Dabur 6.5 mn 15%
ITC 6.5 mn 15%
GCPL 6 mn 10%
Colgate 5 mn 10%
Marico 4.6 mn 20%

Source: Company Documents, Industry Sources

40
 Winning in many Indias (WMI) is one of the important
strategies of HUL.

HUL’s brands straddle the entire price pyramid across, different

categories.
Examples

Premium Brands Surf, Dove, Taj Mahal, Lipton

Rin, Sunlight, Pepsodent, Bru, 3

Mid-priced Brands Roses

Mass Brands Wheel, Lifebuoy, Taaza, Sunsilk

41
 PERFORMANCE OF TOP BRANDS

2011 2021
No. of Brands with Annual 0 1 (Suf Exel)
Revenue of more than Rs. 5000
crores
No. of Brands with Annual 0 5 (Wheel, Brooke Bond,
Revenue of Rs. 2000 crores to Rs. Glow & Lovely,
5000 crores Lifebuoy, Horlicks)

No. of Brands with Annual 7 (Surf Exel, 8 (Rin, Vim, Lux, Lakme,
Revenue of Rs. 1000 crores to Rs. Wheel, Brooke Dove, Ponds, Clinic
2000 crores Bond, Fair & Plus, Boost)
Lovely,
Lifebuoy, Lux,
Rin)

Source: Company Documents

42
 While 10 of the top 11HUL brands belong to Personal care, 5 of the
top 6 FMCG brands of ITC belong to Food and Refreshments.

TOP ITC BRANDS

• Ashirwad Atta > Rs. 6000 crores

• Sunfeast biscuits > Rs. 4000 crores

• Bingo Chips and Snacks > Rs. 2700 crores

• Yippie Noodles > Rs. 1300 crores

• Mint-o, Candyman, Gum on > Rs. 660 crores

• Vivel > Rs. 500 crores

Source: Company Documents

43
 PERFORMANCE OF NEW LAUNCHES

Brands launched in the Category Performance

last few years
Indulekha Hair oil, Shampoo
Lever Ayush Beauty and Personal Care
Comfort Fabric Conditioners
Love and Beauty Planet Beauty and Personal Care Excellent or Good
Love and Care Liquid Fabric Wash
Magnum Ice Cream
Pure Derm Shampoo
Cif Surface Cleaner
Citra Skin Care Poor
Sure Deodorants

Source: Company Analysis

 HUL is betting on 9 categories for future growth

FUTURE CATEGORIES

Facewash, Instant
Explode
Coffee, Handwash

Soups, Hair
conditioner, Liquid Accelerate
Detergents, Fabric
Conditioners

Bodywash, Liquid Seed

Dishwash

Source: Company Reports

45
RECENT ACQUISITIONS

Source: Company
46
INDULEKHA
• Acquired in April 2016 for Rs330
Indulekha is the most expensive even crs, the brand had an annual
among Ayurvedic oils
turnover of Rs100 crs
• In 2019, the brand clocked a
turnover of Rs400 crs (4x) and the
Valuation increased to Rs. 2000 crs
(6.8x)
• HUL converted a regional brand
into Pan India brand through it’s
distribution and marketing.
Source: https://www.business-standard.com/article/companies/hul-s-
indulekha-enters-rs-2-000-cr-club-three-years-after-acquisition-
119082301346_1.html 47
GSK MERGER
• HUL-GSK merger is the biggest in the Indian consumer goods space.
• GSK major brands Horlicks, Boost, Viva and Maltova
• Health Food Drinks (HFD) is an under penetrated category and HUL aims
to grow the category more than 5x
• Post merger, HUL launched Rs. 2 sachets of Horlicks and Boost
• Distribution Synergies
• Strengthening of GSK brands in North and West where Mondelez is the
leader.
• Cross Promotions
• Cost Reduction (GSK had very high operating Cost structure )

48
49
 Patanjali became third largest FMCG company in India in 2017.

NEW PECKING ORDER IN FMCG INDUSTRY

Company Revenue in Rs.
Cr 2017
HUL 30,783
ITC (FMCG) 10,337
Patanjali (excluding pharmacy) 9,200
Nestle India 9,159
Godrej Consumer Products 9,134
Britannia 8,844
Dabur 7,691
Marico 5,918
Colgate-Palmolive 4,010
Emami 2,480
Source: Capitaline, Business Standard
50
 While Patanjali has grown almost 92x between FY 11 and FY 17
but it’s growth is stagnant after 2017.

PATANJALI AYURVED: REVENUES

Note:
12000 Patanjali Group reported
9783 Rs. 30,000 cr revenue in
10000 9200 9022
8330
8136 2021 which include
Ruchi Soya – Rs. 14,000 crs,
Rs. Crores

8000
Patanjali Natural Biscuits –
6000 5000 Rs. 650 crs,
Divya Pharmacy – Rs. 450
4000 crs,
2006 Patanjali Agro – Rs. 1600
2000 1184
841 crs,
100300 Patanjali Parivahan - Rs
0
548 crore,
Patanjali Gramoudyog - Rs
396 crore

Source: ROC, ET, BUSINESS STANDARD, LIVEMINT

51
 1. How Patanjali grew very fast between 2011 and 2017?

2. Why their growth stagnating after 2017?

52
 How Patanjali grew very fast between 2011 and 2017?

53
 FACTORS CONTRIBUTING TO PATANJALI’S SUCCESS
BETWEEN 2011 TO 2017

 FLANKER STRATEGY
 Alternative Distribution System
 Ayurvedic products
 Low Price
 Less Advertisements and promotion costs
 Branded House Strategy
 Combination of Yoga, Baba Ramdev’s popularity, Spirituality, Nationalism
and Religion
 Initially entered less competitive categories
 Launched products across many categories in short time

54
PRESENCE ACROSS CATEGORIES
• Patanjali’s top 3 categories
- Cow(Ghee) (Rs. 1467
Crores), followed by
Toothpaste (Rs. 940
Crores) and them
Shampoo (Rs. 850
Crores).
• These three products
contributes ~35% of the
total sales.
Source: https://unlistedzone.com/analysis-of-patanjali-an-indian-fmcg-giant-of-baba-ramdev/

55
 Why their growth stagnating after 2017?

56
•Lack of readiness of the Channel for GST compliance in 2017
•Other strong FMCG companies increased their focus on Ayurvedic and Nature
based products.
•Quality issues on certain products and risk of branded house strategy
•Process Issues
• Weak Distribution – Many retailers report frequent stockouts
• Receivables of 86 days1 much higher than the industry average of 14 to 21
days.
• Excessive Diversification intentions(Logistics, SIM cards, Solar panels, Phones,
Jeans etc)
•Fail to become market leader or achieve critical market share in many of the
categories
Source:
1. https://unlistedzone.com/analysis-of-patanjali-an-indian-fmcg-giant-of-baba-
ramdev/
57
 Impact of Modern
Retail on FMCG

58
 Impact of Modern Retail on FMCG

Pros Cons

• One more distribution • Shift in Bargaining power

Channel • Private Labels

• Modern retail can increase • Channel Conflicts

the sales due to better

visual merchandising and

Store level activation

• Less distribution cost

59