Project 2015

Final
Stage

ndian FMCG
INDUSTRY

By: Ravi, Shiv, Namrata, Mewa, Ratnakar and Chetan

 Market Segmentation
2015

• Geographic
• Demographic
• Socio Economic
 Recap…

2015
•Detailed industry analysis
Meaning and characteristics of FMCG
Market segments
Rural market
SWOT analysis
Top players
•Individual company analysis
 ABOUT FMCG
2015

Products that are sold quickly at relatively low cost.

Characterized by:
•Low absolute profit, but high cumulative profit
•Non-durable
•Include essential commodities
•Calls for little time on purchase decision
•Extremely price sensitive- companies like to stick to
popular prices of Rs 2, 5, 10 etc.
 INDIAN FMCG INDUSTRY
2015

•Fourth largest sector in the economy and has a market size of US$
17.6 billion.
•Predicted to reach to US$ 33.4 billion in 2015 from US $ billion 11.6
in 2003.
•Competitiveness lies in easy availability of raw materials, cheap
labour and presence across value chain.
•Potential lies in untapped rural India consisting of 70% of country’s
population wherein FMCG penetration is 2% only
•Increasing disposable income
•Urban India is almost saturated for segments like household and
personal care where penetration is about 80% and 70% respectively.
 2015
Market Segments
FMCG Market Size ($bn)
40

35 33.4
23% Food &
30 Beverages

25 Personal
43%
Care
20
17.6
Househol
15 d
11.6
10
34%
5

0
2003 2010 2015
 Product Mix
2015
HUL Dabur Nestle P&G
•Food •Hair Care •Milk Products and •Fabric care
Nutrition

•Personal Care •Oral Care •Beverages •Hair care

•Home Care •Skin Care •Chocolates and

confectionery •Baby care
•Nutrition •Digestives
•Prepared Dishes and
•Water •Fruit Juices Cooking Aids

•Health, Hygiene & •Honey &

Beauty Chyawanprash
 HUL DISTRIBUTION NETWORK
2015

• Setting up rural and small town  marketing

distribution network.

• Establishing new products at difference price points.

 P&G DISTRIBUTION NETWORK 2015

• Streamlining its distribution network in an

exercise code named ‘Operation Golden Eye‡’
Getting out of rural market.
• Focusing on the class A&B towns.
• Moving to a demand based model which enables
to reduce the quantum of waste.
• Reducing the no. of price points at which it offers
its products
 DABUR DISTRIBUTION NETWORK
Star 2015

• Following the basic HLLs track i.e. every possible

price point
• Reducing the no. of distributors where population of
the town is less than 20,000.
• Appointing super-stockist.
• Instead of expanding distribution to increased
demand for a product, demand should drive
distribution
Nestle Distribution 2015
 Branding Strategy
2015

•HUL- Power branding strategy, 35 Power brands

2 umbrella brands – Brooke Bond and Lipton

•P&G- power brand

•NESTLE- sub brand and power brand

•DABUR- sub brand

 2015

FMCG INDUSTRY-
A RURAL JOURNEY
 Rural India
Gaon Gaon Ki Kahani

• Annual size of rural market in FMCG Rs. 50,000 cr.

• 70% of India’s population is dependent on the rural economy.
• Disposable income of the consumer is low.
• It has been growing 5 times the pace of the urban market.
• Accounts for 50% of sales of soaps and detergents.
• Penetration of FMCG products, esp tea and soaps has gotten deeper.
Challenges which has to overcome
• Challenge of reach
• To ensure that consumers are aware of and want your brand.
• Challenge to communicate the right message. m arkets
rro w’s
e tomo
ts a r
rke
l ma
Rura
2015
 Key Factors
Key Factor 2015

• Reasonable pricing would have to be the key factor

of companies success in rural India.
• Components of rural distribution and marketing:
Mandis, Haats and Melas, are major components of
rural distribution and marketing.
 Mergers and Acquisitions
2015
HUL
• Acquired govt. stake in modern foods
• Acquired lipton tea and brooke-bond
• Acquired ponds cosmetics
DABUR
• acquisition of balsara group( oral care)
• Acquired fem care pharma
• Acquired namaste laboratiories
NESTLE
• Acquire medical nutrition division
• Merger with anglo Swiss condensed milk
P&G
• Acquire gillette
• Acquisition of Sara lee air care( coffee and food brand)
• Merger of wella-AG ( Germany group deals in hair care and cosmetics).
 2015

FINANCIAL
ANALYSIS
 NESTLE
( in cr.)
6000
5222
5000 4471
2015
4000 3647
2944 sales
3000 2643 profits
2000 total assets
1000 413450 534511 655613
309368 315405
0
2005-06 2006-07 2007-08 2008-09 2009-10

HUL
(in cr.)
20000 18220
18000 17320
16000 14715
14000 11975 13035
12000 sales(in crores)
10000 profits
8000
6000 total assets
4000 2362 2796 2000
1987 2583
2102
1354 1539 1743
1527
2000
0
2005 2006 2007 2008-09 2009-10
 DABUR:
( in cr.)

4000
3500 3417
2834 2015
3000
2500 2396
2080 Sales
2000 1757 profits
1500 1060 1129
1000 670 749 total assets
624 391 501
500 214 282 333
0
2005-06 2006-07 2007-08 2008-09 2009-10
P&G
(YEAR ENDING IN JUNE)
( in cr.)
1000 913
900
800 773
700 652
597 553
600 Sales
500 445
351 profits
400
273 291 total assets
300
200 139 179 180
90 131
100
0
2005-06 2006-07 2007-08 2008-09 2009-10
• Key Financial Ratios
 Nestle India
(in Rs. Cr.)
180
163.97 160.29
160
150.33
140

120 112.83 112.68

98.9 ROCE (%)
100
RONW (%)
ROA
80 ITR
67.94
60.29 EPS
60 55.39
49.09
43.4 42.92
40

20 11.39 11.61
10.02
0
Dec'07 Dec'08 Dec'09
SOURCE: moneycontrol.com
 Hindustan Unilever
(in Rs. Cr.)
160

140 138.72
122.97 121.34
120 118.59
106.78
100
ROCE (%)
85.25
RONW (%)
80 ROA
ITR
60 EPS

40

20 11.84
9.45 11.47
9.26 10.09
8.99
6.618.28.12
0
Dec.'07 Mar' 09 Mar' 10 SOURCE: moneycontrol.com
 Dabur India
(in Rs. Cr.)

80

70 67.51
61.58 61.62
60 58.04
51.20
50 47.98
ROCE (%)
RONW (%)
40 ROA
ITR
30 EPS

20
12.52 10.94 11.31
10 8.43 8.6
5.95 4.32 4.99
3.67
0
Mar' 08 Mar' 09 Mar' 10
SOURCE: moneycontrol.com
 Procter & Gamble
(in Rs. Cr.)
180
164.7
160

140 135.56

120
106.79
ROCE (%)
100 RONW (%)
ROA
80 ITR
EPS
60 52.86 51.60 55.10 55.38
40.48 40.64 44.05
40 37.91
33.62
17.79 21.28
20 16.88

0
June' 08 June' 09 June' 10
SOURCE: moneycontrol.com
 On the basis of key financial Ratios
• ROCE- Nestle 150.33
• RONW- HUL 122.97
• ROA- P&G 106.79
• ITR- P&G 16.88
• EPS- Nestle 42.92
Selection of a Potential Star
 RATIO ANALYSIS
2015
Net Profit margin ratio Total asset turnover ratio Return on equity
(profit as a % 0f sales) (sales as a ratio of total ( PAT as a % of owners
assets) equity)
YEAR 2007- 2008- 2009- 2007- 2008- 2009- 2007- 2008- 2009-
& 08 09 10 08 09 10 08 09 10
NAME
NESTLE 11.3 12 12.5 7.2:1 8.7:1 8.5:1 98 112 113

HUL 11.8 11.54 11.53 9.6:1 8.7:1 7:1 121 121 81.3

DABUR 13.8 13.8 14.7 3.2:1 2.7:1 3:1 27 24 27

P&G 20 23 19.7 1.9:1 1.7:1 37 40

 FUTURE SCENARIO

2015
•HUL
•Entered the noodles market and giving tough competition to NESTLE
MAGGI
•About to enter Rs100 crore pasta market through its KNORR
subsidiary.
•Project SHAKTI, Project SAMRUDHDHI
DABUR
•Re-branding of REAL JUICE
•Launched retail subsidiary- H&B STORES in Delhi
•Official partner for IPL team KINGS XI PUNJAB
•Launched Vitamin and Health suplement- NUTRIGO
 Contd…
2015
NESTLE
•Setting up a R&D center in India which will be a part of its global
network of 29 R&D centers.
•Building capacity in India by spending Rs 650 crores in capital
investments in the last 3 years
•Launched Nutrition Awareness Programme.

P&G
•Connect and Develop model
 Key success factor of P&G
2015

• 70% spent on TV advertisement.

• Refund offer to consumer on home products.
• Improving affordability to a large no. of consumers
• Project Peace: Environment Education Programme
• Opened Gujarat Earthquake Relief centres in partnership with SSP.
• Project Shiksha: Secure your child’s Future.
 Key success factor of HUL
2015

• Availability near the consumer through a wide distribution

network.
• Continued efforts in reducing the brand cost.
• Winning relationships with customers.
• Project Shakti – a unique opportunity in accessing rural
consumers.
• Developed advanced marketing mix modelling techniques.
• Good Turnover, Good Profits and strong cash delivery during
recession.
 Key success factor of Dabur
2015

• Knowledge base and Modern Science

• Over 10 Research Areas
• Production of Ayurvedic medicines
• Leadership in health care
• Maintaining global standards
• Ranked as India’s Most Customer Responsive FMCG Company
(2010-11)
 THANK
YOU..