Indian FMCG Sector Trends - 2008

In this post i have covered multiple trends happening in the Indian FMCG sector.

1. Focus on Health
Companies are widening their health food portfolio to cash in on the rich, urban, health conscious Indian. In recent we have seen flurry of products in this segment. Have a look of some of them:
1.1) Sugar free Chywanprash
1.2) Organic spices/ pulses
1.3) Multi grain pastas/ Biscuits
1.4) Processed foods particularly juices
1.5) Probiotic Ice Creams
1.6) Butter Lite (Nutralite)
1.7) Corn Flakes/ Oats
1.8) Lays (40% less saturated fats) – Snack Smart
1.9) Low Calorie Sweetners

2. Impact of Inflation: The expenditure of FMCG in the consumer's wallet is coming down year on year. This is leading to low sensitivity with price increases. ALmost a decade back people use to downtrade from expensive brands to value for money ones. But now the trend is changing. Consumer are not switching to cheaper substitutes. Rather companies have come with lower quantity SKUs and make consumers switch from higher to lower SKUs and not from premium to popular brands (like Dove to Lux International). Just to give you an example, Henkel instead of increasing the price of their Henkwl detergent from Rs. 46 to Rs. 50, they have launched a new SKU of 400gms for Rs. 40. During the time of inflation, people shift to sachets of their brands. Sales numbers of FMCG companies are quite robust.
FMCG spend now comprises a smaller share of consumer’s wallet

3. Micro Segmentation/ Niches: Its interesting and funny to see that companies are not leaving any opportunity to micro segment the market. I can forsee that we are here to see further segments in different categories. Here are some examples:
Age
a) Junior Horlicks
b) Junior Chyawanprash
c) Pepsodent Barbie for Kids/ Colgate Strawberry
Sex
a) Women’s Horlicks
b) Male fairness cream
Specialized Household Cleaners
a) Kitchen Cleaner: Mr. Muscle
b) Power Cleaner (Rust): Easy Off Bang

4. Low value SKUs - Sachetization: You name the category it has a sachet !! We all know that it all started in 1980's with shampoos. I think Nano is an interesting example of an automobile sachet. Here is a small list of sachets:
4.1) Shampoos
4.2) Butter (Munna Pack)
4.3) Hair Oils (Navratan – Thanda Thanda Cool Cool)
4.4) Noodles (Chotu Maggi)
4.5) Ketchup (Pichko)
4.6) Toilet Cleaner (Harpic)

5. Jet Age Consumer Products: Becasue of changing lifestyles, busy jobs etc marketers are coming up with Jet Age consumer products.
Ready to Eat
a) Con Flakes/ Oats
b) Pastas
c) Biscuits
d) Noodles
e) Pizzas
f) Burgers
Ready to Drink
a) Energy Drinks
b) Non-Cola Drinks (Juices)
Ready to Cook
a) Cut Vegetables
b) Soups
c) Paranthas/ Rotis
d) Snacks

6. Mainstream Penetrated Growth Categories: The high penetrated categories like Hair Oils, Washing Detergents, Detergent Cakes, Soaps etc are expected to grow at a healthy rate of 10%, attributed to price increases (not much impact of inflation - explained in point 2) and low volume growth.

7. Under-penetrated Growth Categories: Barring few main mainstream categories as mentioned above, there are number of FMCG categories with low penetration and are expected to grow by 20% during 2008-2009. Have a look of that list:
7.1) Men’s grooming products
7.2) Skin care & Cosmetics
7.3) skin/fairness cream
7.4) Anti-aging solution
7.5) Shampoos
7.6) Toothpaste
7.7) Hair Colour
7.8) Deodorants
There lies a huge potential in these categories.

8. Low Per Capita Consumption: Currently we are nowhere near to other developing countries in terms of per capita consumption. Be it Laundary, Skin Care, Shampoos or deodarants. Marketers have put in efforts to increase the consumption frequency or quantum of consumption per occasion. Colgate started the "twice a day" campaign few years back. Recently we have Good Night coming up with Double power pack. Per Re1 increase in per capita consumption of a category will lead to growth of more than 100 crores (with a popular base of more than 1 Billion)

9) Evolved Product Forms: 20 years back consumers had limited choices to pick from. The days of Tortoise Mosquito repellent coils are gone. This is the age of aerosols with value added functionality. I have picked up some examples, were we have seen a change in the product forms. Here is the list:
Dish Wash: Powder to Bar to Liquid
Shaving: Creams to Foams/ Gels
Repellents: Coils to Aerosols/ Body Creams/ Gels
Air Freshners: Sprays to Electric
Toilet Cleaner: Acid to Harpic to In-Cistern