General trade comprising of the ubiquitous kirana stores is the largest sales channel forming the majority of overall retail sales. Tobacco consumption is more or less a habit, and thus the bargaining power of consumers is only to the extent of choice of the brand.
Notwithstanding the slump caused due to macro factors like demonetisation and hiccups in the GST implementation - falling inflation and interest rate levels along with seventh pay commission hikes will continue to be positive for the sector over the long run.
Distribution —ITC services 1.
Social Contribution -Create employment for people with lower educational qualifications. Bargaining power of buyers Rising competition and the onslaught of the e-commerce boom does provide good bargain opportunities for customers. The share of the branded players in these set of products is fairly low.
Better infrastructure facilities will improve their supply chain. Over time, the implementation of a single tax regime is expected to benefit the FMCG sector immensely by reducing the overall incidence of taxation.
The organised space is no more as urban-centric as it used to be. While traditionally, rural demand has outpaced urban demand, the same has not been the case in recent times as growth in both the markets has been similar.
GST has already reduced the cascading effect by replacing a multitude of indirect taxes. The big brands have definitely made a comeback post the roll out of GST. Consumption is expected to be driven by factors such as increasing income, rising urbanisation, nuclearisation, as well as growing work force.
However, the demand in urban areas would be the key growth driver over the long term. In case of tobacco, branded cigarettes, bidis and contraband compete with each other.
The resulting cost savings by the companies is seen to be passed on to the final consumer thereby boosting demand. However, growth of consumer goods retailed through the newer channels is now outpacing the growth of FMCG products in general trade. While consumer goods are largely retailed through two primary sales channels - general trade and modern trade, present times are quite interesting as new channels such as e-commerce have emerged quickly to become forces to reckon with; but this space is yet to provide a profitable and sustainable model as things stand today.
While crude prices have been down, companies have been passing on costs to customers, and utilising the savings to focus on boosting volumes - in the form of aggressive advertising and promotion expenses - to keep the momentum going in an otherwise disinflationary environment.
However, post the GST implementation, things are looking up for the FMCG players as they have passed on the cost benefits from the tax savings to consumers, spurring demand.that around half of the final price of retail goods can be attributed to the cost of goods and half to distributors’ gross margins (Table 1).
These shares have changed only moderately over the nine years from /99 to /08, with the share owing to the cost of goods declining by 3 percentage points over this time.
FMCG OVERVIEW-Fast Moving Consumer Goods (FMCG) goods, popularly named as consumer packaged goods, play a vital role as Analysis of FMCG Sector.
Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth.
And if the companies are able to. majority of FMCG product categories to be adjudged as being unaffordable. That said, income levels will impact the characterised by companies that supply low-cost products that are in constant high demand. Products that are classified Considering a breakdown of household consumption expenditure by product category, the World.
How much will it cost to launch / market my new product? That’s a difficult question to answer, but one we’re asked all the time.
And we generally respond the same way each time “how much does it cost to build a house?”. Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at relatively low cost.
Examples include non-durable goods such as packaged foods, beverages, toiletries, over. The first term is called variable cost, and it is a cost that varies with changes in the level of output. An example would be material, such as chicken for Whack-a-Wing's soup product.
In contrast, fixed costs are costs that do not change with the level of output. An example of fixed costs would be Whack-a-Wing's office rent or executive salaries.Download