A Glimpse into the Evolving Landscape of the FMCG Industry in 2024
Wednesday, 22 November 2023, 18:18 IST
The Fast-Moving Consumer Goods (FMCG) industry has always been characterized by its rapid pace and responsiveness to consumer preferences. These goods, ranging from packaged foods, beverages, personal care items, and household products, are essential in our daily lives due to their quick turnover and relatively low cost. In recent years, this industry has witnessed substantial growth, driven by changing consumer behaviors, technological advancements, and a focus on sustainability. In 2024, sustainability is no longer an option but a necessity for FMCG companies. Consumers are increasingly conscious of the environmental impact of their purchases. Brands are responding by embracing eco-friendly practices across their entire supply chain. From sourcing raw materials responsibly to reducing packaging waste and implementing energy-efficient manufacturing processes, sustainability initiatives are becoming integral to FMCG businesses. Brands that demonstrate a commitment to sustainability are likely to gain favor among environmentally-conscious consumers.
Accounting for nearly 50 percent of FMCG sales, household goods and personal care items have fortified the industry's position as the country's fourth-largest income generator. The rural segment, though representing 45 percent of FMCG sales, has been the focal point of accelerated growth, surpassing the urban sector, which accounts for 55 percent of sales. Projections indicate a staggering growth rate of 14.7 percent, propelling the FMCG market to nearly US$ 220 billion by 2025. The sector's trajectory has been influenced by the increasing digital marketplace, witnessing a significant expansion in online retail sales, surging from 4.7 percent in 2019 to 10.7 percent presently.
Imran Saeed, Director of analytics at Absolutdata, says, "Today, the FMCG industry is on the verge of a major disruption. With increasing digital adoption, changing consumer profiles, increasing competition, and the evolution of new distribution channels, FMCG companies expect technologies such as Big Data and AI to guide them into the New Normal. After all, decision-making based on financial books and business acumen is neither enough today nor relevant to survive the cut-throat competition. You have to go either intuitive or go home altogether".
Notably, the Government managed e-marketplace portal has processed 6.87 million orders worth US$ 15.67 billion, signaling a monumental shift towards digital retail. The FMCG industry is undergoing a significant transformation, primarily driven by evolving consumer demands, the impact of the COVID-19 pandemic, and changing market dynamics. The Key trends shaping the FMCG landscape include:
Sustainability: The industry is placing a significant emphasis on sustainable product development, focusing on eco-friendly packaging and responsibly sourced materials. Startups like Flexi-Hex and Vegshelf are offering solutions for plastic-free packaging and digital platforms connecting vegan FMCG brands with consumers.
Enhanced Customer Experience: Improving customer experiences is a priority, with startups leveraging technologies like Augmented Reality (AR) and Virtual Reality (VR) to engage and inform consumers about products. Innovations from Chekkit and DRNKAR provide consumer intelligence and AR solutions for personalized marketing.
Digital Transformation: FMCG companies are actively embracing digitalization, utilizing data analyticsq, AI, and Machine Learning (ML) to better understand consumer behavior and engage with customers across multiple online channels. Solutions from Gladminds and Repeat focus on customer relationship management and smart replenishment.
E-Commerce Expansion: The shift towards e-commerce in FMCG is accelerating, especially post-pandemic, leading to increased online sales. Startups like Crystallize and Squarelovin offer headless e-commerce solutions and social commerce platforms to enhance online presence and boost sales.
Utilization of Big Data: FMCG companies are tapping into big data analytics to gain insights into consumer preferences and behaviors. Zhimatech and Massive provide consumer-based data platforms and consumer reviews analytics solutions to support consumer-centric strategies.
Artificial Intelligence Integration: The integration of AI technologies such as chatbots and conversational AI is transforming customer interactions and marketing strategies in the FMCG sector. Letmetalk and C-gence offer AI-powered solutions for customer engagement and consumer intelligence.Direct-to-Consumer Distribution: Brands are increasingly adopting direct distribution channels to establish direct connections with customers, thereby enhancing customer loyalty. Ivy and Merlin Tech Labs provide platforms for automated sales, distribution, and direct-to-customer services in FMCG.
Internet of Things (IoT) Implementation: IoT devices are finding applications in FMCG, improving inventory management and enabling targeted messaging to consumers while shopping. Startups like Ripen Apps and Connected Fresh offer IoT-based solutions for iBeacon technology and temperature monitoring.
Blockchain Integration: Blockchain technology is gaining traction in the FMCG industry, offering transparency in supply chains and consumer engagement through loyalty programs. Greenface and ExtoLab provide blockchain-based solutions for supply chain traceability and financial services.
3D Printing for Sustainable Products: Additive manufacturing, facilitated by 3D printing, empowers FMCG enterprises to create environmentally conscious products and diminish the use of plastic, contributing to waste reduction. Essentium and Mything provide platforms catering to industrial 3D printing and immediate access to localized on-demand 3D printing services.
Commerce Minister, Piyush Goyal emphasized the government's commitment to enhancing the quality of Indian products, aiming to establish practical quality standards to bolster manufacturing competitiveness and safeguard consumer interests. Speaking at an industry event organized by FICCI, Goyal highlighted the adverse impact of substandard goods, particularly in the FMCG sector, originating from specific regions, potentially alluding to China, which significantly widened India's trade deficit and weakened local manufacturing. Urging collaboration among manufacturers, FMCG providers, and consumers, Goyal emphasized the need to elevate Indian domestic manufacturing by ensuring high-quality production at competitive prices. He underscored the pivotal role of the FMCG sector in driving India's economic growth, calling for increased respect and support for domestic products and producers. Goyal also highlighted the significance of purchasing products that generate employment, fortifying India's economy, and breaking the cycle of investments, expenditure, and job creation within the country, in contrast to bolstering economies counter to India's interests. He lamented the previous influx of low-quality imported goods during India's economic liberalization and reiterated the government's focused efforts to revitalize local manufacturing, acknowledging it as a prolonged endeavor.
Accounting for nearly 50 percent of FMCG sales, household goods and personal care items have fortified the industry's position as the country's fourth-largest income generator. The rural segment, though representing 45 percent of FMCG sales, has been the focal point of accelerated growth, surpassing the urban sector, which accounts for 55 percent of sales. Projections indicate a staggering growth rate of 14.7 percent, propelling the FMCG market to nearly US$ 220 billion by 2025. The sector's trajectory has been influenced by the increasing digital marketplace, witnessing a significant expansion in online retail sales, surging from 4.7 percent in 2019 to 10.7 percent presently.
Imran Saeed, Director of analytics at Absolutdata, says, "Today, the FMCG industry is on the verge of a major disruption. With increasing digital adoption, changing consumer profiles, increasing competition, and the evolution of new distribution channels, FMCG companies expect technologies such as Big Data and AI to guide them into the New Normal. After all, decision-making based on financial books and business acumen is neither enough today nor relevant to survive the cut-throat competition. You have to go either intuitive or go home altogether".
Notably, the Government managed e-marketplace portal has processed 6.87 million orders worth US$ 15.67 billion, signaling a monumental shift towards digital retail. The FMCG industry is undergoing a significant transformation, primarily driven by evolving consumer demands, the impact of the COVID-19 pandemic, and changing market dynamics. The Key trends shaping the FMCG landscape include:
Sustainability: The industry is placing a significant emphasis on sustainable product development, focusing on eco-friendly packaging and responsibly sourced materials. Startups like Flexi-Hex and Vegshelf are offering solutions for plastic-free packaging and digital platforms connecting vegan FMCG brands with consumers.
Enhanced Customer Experience: Improving customer experiences is a priority, with startups leveraging technologies like Augmented Reality (AR) and Virtual Reality (VR) to engage and inform consumers about products. Innovations from Chekkit and DRNKAR provide consumer intelligence and AR solutions for personalized marketing.
Digital Transformation: FMCG companies are actively embracing digitalization, utilizing data analyticsq, AI, and Machine Learning (ML) to better understand consumer behavior and engage with customers across multiple online channels. Solutions from Gladminds and Repeat focus on customer relationship management and smart replenishment.
E-Commerce Expansion: The shift towards e-commerce in FMCG is accelerating, especially post-pandemic, leading to increased online sales. Startups like Crystallize and Squarelovin offer headless e-commerce solutions and social commerce platforms to enhance online presence and boost sales.
Utilization of Big Data: FMCG companies are tapping into big data analytics to gain insights into consumer preferences and behaviors. Zhimatech and Massive provide consumer-based data platforms and consumer reviews analytics solutions to support consumer-centric strategies.
Artificial Intelligence Integration: The integration of AI technologies such as chatbots and conversational AI is transforming customer interactions and marketing strategies in the FMCG sector. Letmetalk and C-gence offer AI-powered solutions for customer engagement and consumer intelligence.Direct-to-Consumer Distribution: Brands are increasingly adopting direct distribution channels to establish direct connections with customers, thereby enhancing customer loyalty. Ivy and Merlin Tech Labs provide platforms for automated sales, distribution, and direct-to-customer services in FMCG.
Internet of Things (IoT) Implementation: IoT devices are finding applications in FMCG, improving inventory management and enabling targeted messaging to consumers while shopping. Startups like Ripen Apps and Connected Fresh offer IoT-based solutions for iBeacon technology and temperature monitoring.
Blockchain Integration: Blockchain technology is gaining traction in the FMCG industry, offering transparency in supply chains and consumer engagement through loyalty programs. Greenface and ExtoLab provide blockchain-based solutions for supply chain traceability and financial services.
3D Printing for Sustainable Products: Additive manufacturing, facilitated by 3D printing, empowers FMCG enterprises to create environmentally conscious products and diminish the use of plastic, contributing to waste reduction. Essentium and Mything provide platforms catering to industrial 3D printing and immediate access to localized on-demand 3D printing services.
Commerce Minister, Piyush Goyal emphasized the government's commitment to enhancing the quality of Indian products, aiming to establish practical quality standards to bolster manufacturing competitiveness and safeguard consumer interests. Speaking at an industry event organized by FICCI, Goyal highlighted the adverse impact of substandard goods, particularly in the FMCG sector, originating from specific regions, potentially alluding to China, which significantly widened India's trade deficit and weakened local manufacturing. Urging collaboration among manufacturers, FMCG providers, and consumers, Goyal emphasized the need to elevate Indian domestic manufacturing by ensuring high-quality production at competitive prices. He underscored the pivotal role of the FMCG sector in driving India's economic growth, calling for increased respect and support for domestic products and producers. Goyal also highlighted the significance of purchasing products that generate employment, fortifying India's economy, and breaking the cycle of investments, expenditure, and job creation within the country, in contrast to bolstering economies counter to India's interests. He lamented the previous influx of low-quality imported goods during India's economic liberalization and reiterated the government's focused efforts to revitalize local manufacturing, acknowledging it as a prolonged endeavor.
