FMCG sector to grow $220-240 billion by 2025- Report

Smaller towns and cities are expected to contribute more in shaping future demand for the FMCG sector and the digital medium is increasingly going to play a key role in engaging and influencing consumers as the e-commerce channel’s contribution to the share of sales for FMCG companies is expected to become bigger, reported Business Line.

According to a CII-BCG white paper on the FMCG sector, growth in disposable income, increased urbanisation and the increase in the number of nuclear households are driving the growth of the Indian branded FMCG sector, which is pegged at about $65 billion and has been growing at a robust pace.

Nearly two-thirds of households in the country are nuclear households and at the same family income size, nuclear families spend more on FMCG than joint families, said Abheek Singhi, Senior Partner and Director, the Boston Consulting Group.

“The FMCG sector has been delivering far superior returns over the past few years compared to most other sectors. Our projections indicate that the sector will continue to grow by 13-14 per cent in the next 5-10 years and is likely to become a $220-240 billion industry by 2025,” Singhi added.

The CII-BCG white paper will be unveiled on Monday at the CII National FMCG summit, which will see top CEOs deliberating on the theme ‘Re-imagining FMCG in India’.

Shiv Shivakumar, Chairman, CII National Committee on FMCG 2015-16, & Chairman and CEO, PepsiCo India, said the FMCG sector is already a key driving force behind ‘Make in India’ and a bedrock of talent.

Talking about the regulatory framework, he said the industry has seen a lot of openness from the food processing industry and the FSSAI and are having a constant dialogue, which is progressing in the right direction.

He further says for industry leaders included food laws, food safety, having better working relationships with the regulatory authorities, one common market in terms of tax, initiatives to grow talent and a focus on newer distribution channels.

The white paper also indicates that companies will need to focus on tier-2 and tier-3 cities and rural regions as their contribution will be an important source of demand for the sector as more and more consumers move from the non-branded to the branded segment.

With the growing number of digitally influenced FMCG buyers, companies are expected to shift more and more marketing dollars to the digital media as share of sale from the e-commerce channel grows.