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WealthRays Research Desk

FMCG sector report 1
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October, 2014

FMCG consumption in urban India is more than that of rural India and with increase in the pace of
consumption of FMCG products in urban region, the revenue of the companies is seen increasing. With
decrease in the cost of the raw materials such edible oils and crude, these companies are expected to
make higher revenues when compared to previous financial year.
With S&Ps outlook for India rating upgraded, the investors would now more focus on high beta stocks
rather than defensive sectors like FMCG, IT or Pharma, which could affect the flow of funds in these
sectors.
Problems faced by the Organizations in this sector:

Higher Input Costs
Rising Inflation
Demand slowdown and Policy issues
Operational Issues

Measures & Expectations from the Government:

FDI in Multi Brand Retail To increase more foreign investment, Government of India has already
allowed 100% FDI is Single brand Retail and is pondering over the decision of increasing the FDI percent
in Multi-Brand Retail as well. Such a decision by the Government would be a huge boost to the FMCG
sector in the long term.
GST Good and Services tax will help the major players in this sectors as it could simplify tax structure
and eliminate black marketing which a major threat to this sector.
Future Outlook of Sector:
FMCG market is expected to increase at a CAGR of 14% to US$ 110.4 billion during 20122020, with the
rural FMCG market expected to increase at a CAGR of 17% to US$ 100 billion during 20112025.
Online portals or e-commerce are expected to play key role for going forward as Internet is also allowing
for a low cost high reach approach by overcoming geographical barriers. India is set to become a key
market for wearable technology such as smart watches and fitness monitors, on the back of consumer
interests in these latest gadgets and growing spending on consumer durables. American measurement
company Nielsen projects that rural India's FMCG market will top the US$ 100 billion mark by 2025.









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FMCG sector report 1
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October, 2014



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