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 soft drinks, toiletries, and grocery items. They generally sell in large quantities, so the cumulative profit on such products can be substantial and these industries often operate on thin margins.
Nondurable goods are consumed in less than three years and have short lifespans. Examples of nondurable goods include food and drinks. These goods are useful for less than 3 years, or pure services which are consumed instantaneously as they are produced.
The term FMCG refers to those retail goods that are generally replaced or fully used up over a short period of days, weeks, or months, and within one year. This contrasts with durable goods or major appliances such as kitchen appliances, which are generally replaced over a period of several years.
Examples of FMCG Goods
Some fast-moving consumer goods are highly perishable, such as meat, dairy products, baked goods, fruits, and vegetables. Sales of FMCG are usually affected by discounts being offered by the stores, and by holidays and other seasonal periods. Given below are the key categories in which FMCG goods can be classified:
- Baked goods such as cookies.
- A chocolate bar and candies.
- Frozen food such as ice-cream.
- Ready to make and ready to eat foods like chips.
- Packaged beverages like bottled water and orange juice.
- Processed foods like breakfast cereals.
- Alcoholic Beverages
- Cleaning Products
- Clothing & Apparel
- Cosmetics & Personal Care
- Food & Nutrition
- Furniture, Furnishings & Household Items
- Home Improvement & Gardening
- Non-alcoholic Beverages
- Pets & Animal Supplies
- Tobacco
- Toys
Characteristics of FMCG Goods:
People do not spend too much time while purchasing FMCG products. A quick buying decision is the beauty of the FMCG product. People do not think too much while purchasing these products. This industry also gives a huge opportunity for employment. Large numbers of retailers, wholesalers, stockiest, transporters, distributors or warehousing, and logistics give a huge opportunity for employment. The following are the main characteristics of FMCGs:
From the consumer perspective
Most of these fast-moving consumer goods have a short shelf life, either because of high consumer demand or because the product deteriorates rapidly. Seasons and holidays influence their sales. For maximum efficiency, the logistics and distribution systems often require secondary and tertiary packing.
- Frequent purchases
- Low engagement (little or no effort to choose the item)
- Low prices
- Short shelf life
- Rapid consumption
- Price comparison over online purchase by the customer
From the marketer perspective
FMCG product touches every aspect of human life. These products are frequently consumed by all sections of the society and a considerable portion of their income is spent on these goods. Apart from this, the sector is one of the important contributors to the economy. This sector has shown extraordinary growth over the past few years, in fact, it has registered growth during the recession period also. The future for the FMCG sector is very promising due to its inherent capacity and favorable changes in the environment. From a marketer perspective, this industry offers very high volumes and quick inventory turnarounds.
- High volumes
- Low contribution margins
- Extensive distribution
- High inventory turnover
The fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with Household and Personal Care accounting for 50 percent of FMCG sales in India. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 60 percent) is the largest contributor to the overall revenue generated by the FMCG sector in India and recorded a market size of around US$ 29.4 billion in 2016-17. However, in the last few years, the FMCG market has grown at a faster pace in rural India compared with urban India. Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50 percent of total rural spending.
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