!"# %&'()& *+,- .

#/012
!"# %&&'()*%'& %+,#-)*%(#
!"#$%&$' )*+,
.")* /' *"# 01%)& )&/ 2&/%)& 3456 +)-7#*1 8''7 8%7#9
!"
/Denning innovution
!#
:!"# 3456 %&&'()*%'& %+,#-)*%(#
!$
:
;'< /'#1 3456 %&&'()*%'& /%==#- >#*<##& 5"%&) )&/ 2&/%)9
!%
/Concluding comments
!&
3 PwC
4")0 '1 0"# 5.()& )&' %&'()& *+,- 6)27#0. 8117 8(7#9
!"#"$% "$'()*#+ *#',-,."$% /*),$/+ $*0 12(/3'.#4 5678 1*2#1*'."9*# "$ :#",+ "$'-3/"$% ;$/",
-"."/0"1 !234 0$"516 75 867&9
Soaps and cleansers: Market
demand growth (% change paj
2011 2012 2013 2014 2015
Asia and Australasia 5.9 7.0 5.9 5.8 5.3
China 12.0 12.7 9.7 9.3 7.3
Hong Kong 8.6 6.8 3.7 3.4 3.0
lndia 11.1 9.9 10.5 9.8 9.8
Japan -0.6 2.4 1.5 1.4 1.0
Food, beverages, tobacco: Market
demand growth (% change paj
2011 2012 2013 2014 2015
Asia and Australasia 3.0 2.8 3.6 3.3 2.7
China 4.2 2.8 1.6 1.4 1.0
Hong Kong 5.1 4.6 5.1 4.6 4.7
lndia -0.5 1.6 0.9 0.7 0.4
Japan 2.7 2.7 1.9 2.3 2.3
So0|ce: PwC's 2012 O0t|oo| fo| t|e Reta|| and Cons0me| P|od0cts Secto| |n As|a
:#",<# 5678 ),2=*. ;$/",<# 5678 ),2=*.
-"."/0"1 !234 :$"516 75 ;517&
So0|ce: PwC ana|ys|s
:
Denin innovution
>"??*2*$. "$$(9,."($ .@1*# *A"#. .( #*29* /"??*2*$. (BC*'."9*#4 D2*,=.E2(3%E ,$/ 2,/"',- *A.*$/
B*@($/ .E* "$'2*)*$.,-
;$'2*)*$.,- "$$(9,."($
Smull clunges in existing pioducts und seivices viu impiovements in teclnology
oi clunges to tle business model
Typicully S to 2S% impiovements in cost, peiloimunce oi customei vulue (i.e.
speed, vulue, piice)
Cluiucteiised us bettei, lustei, cleupei pioducts und seivices tlut do not diive
ubove uveiuge ievenue giowtl
D2*,=.E2(3%E "$$(9,."($
Signincunt clunge to eitlei tle teclnologies oi business models ol u pioduct oi
1#-(%?#
Bused on entiiely new components ol teclnology oi business model oi new wuys
to oigunise und use existing components
Typicully gieutei tlun 2S% impiovement in cost, peiloimunce oi customei vulue
Signincunt new competitive udvuntuges tlut diive liglei tlun uveiuge ievenue
giowtl
!,/"',- "$$(9,."($
Substuntiul clunges to botl teclnology und business model
New vulue to customei, new pluyeis in tle vulue netwoik und new teclnologies
loi muking und deliveiing tle pioduct oi seivice
New busis ol competition in existing muikets (e.g. new teclnology plutloim oi
cost busis)
Oi, cieutes entiiely new muikets tlut piovide customeis witl new vulue
Oi, cieutes veiy ligl ievenue giowtl iutes
So0|ce: PwC's /nnovat|on o|act|ce
So0|ce: PwC's /nnovat|on o|act|ce
; PwC
;$$(9,."($ "# )(2* .E,$ C3#. -,3$'E"$% $*0 12(/3'.#
The FMCG innovution imperutive
Innovution is u wide concept wlicl uside liom cieuting,
luuncling und muiketing new pioducts ulso includes
impioving slopping piocesses, pioviding consumeis witl
u iunge ol tools to puicluse pioducts us ulso ensuiing tlut
tle entiie oigunisution is locused on tle singului goul ol
impioving tle customei's oveiull expeiience. As Indiun
consumeis become moie globul in tleii uspiiutions und
desiies, us tley tiuvel ubioud und uie exposed to globul
pioducts, tleii uppetite to consume pioducts in tleii lome
muiket will only incieuse. To meet tlis demund, FMCG
?'+,)&%#1 &##/ *' ='?@1 '& ABC )&/ %&&'()*%'& )1 ) +#)&1
to giow tle business. At tle sume time, pioduct lilecycles
uie sliinking, compunies ucioss cutegoiies (e g., consumei
duiubles und electionics) uie luuncling new pioducts, und
tle piessuie to muiket new pioducts, quickly, is stiong.
Innovution is u suivivul tuctic.
Most FMCG CEOs believe tlut long-teim demund und
giowtl uie signincunt in muikets like Indiu, Biuzil, Russiu,
etc. In uddition, tle oppoitunity loi FMCG pioducts is luige
given tlut pei cupitu consumption in Indiu is lowei tlun
in most muikets. Tle oppoitunity in teims ol inciementul
penetiution und consumption is piesent. Most FMCG biunds
uie iusling to design, cieute, test und luuncl new pioducts
to cuptuie tle uttention ol Indiun consumeis.
So0|ce: PwC's /nnovat|on o|act|ce
<
F*,-.E ,$/ 0*--$*##4 : -"?*#.@-* 'E,$%* ")1,'."$% .E* 5678 #*'.(2
3456 >-)&/1 ='?@1#/ '& ABC )&/ %&&'()*%'& )1 ) +#)&1 '=
giowtl luve u cultuie tlut piomotes using customei insiglts to
cieute eitlei tle next geneiution ol pioducts oi in some cuses,
new pioduct cutegoiies.
Not tlut cieuting tle next 'big tling' is eusy. Accoiding to u
suivey by '()*+,-. 0((1* 2-34)(5(67 und Sopleon Coipoiution,
'>1*)?8#1 *' *"# 1@??#11=@8 /#(#8',+#&* )&/ 8)@&?" '= &#<
consumei pioducts cun be lound in tle euiliest stuges ol tle
innovution piocess. Wlile most compunies puiticiputing in
tle suivey lud little dilnculty geneiuting pioduct ideus, less
tlun 20% ol tlose ideus iesulted in pioducts consideied to be
liglly innovutive. Tle iemuindei weie pioduct ievisions, line
extensions oi piomotionul ideus und puckuging clunges.
One uieu tlut we see globul und locul FMCG biunds investing in is
leultl und wellness. Heultl und wellness is u megu tiend sluping
consumei pieleiences und slopping lubits und FMCG biunds uie
listening. Leuding globul und Indiun lood und beveiuge biunds
luve embiuced tlis tiend und uie locused on cieuting new
emeiging biunds in leultl und wellness.
Accoiding to tle PwC-FICCI iepoit 89)1* (: 34;)6-< =4- >-55)-**
3()*+,-.? nutiition loods, beveiuges und supplements compiise u
INR 14S billion to 1S0 billion muiket in Indiu, giowing ut u CAGR
ol 10 to 12%.
Health and wellness brands are based on several
product propositions:
Positively impact the consumers' overall health
Made with natural ingredients, no artifcial preservatives
Contain less sugar, cholesterol, zero transfats, etc.
Dairy-based and contain cultures with health benefts
Baked instead of being deep-fried
lnfused with vitamins and nutrients
Help minimise or reduce cholesterol
Product
propositions in
the FMCG food
and beverage
category:
Good for you,
healthier for you
So0|ce: PwC ana|ys|s
So0|ce: PwC-F/CC/ |eoo|t W|nds of c|ange: t|e we||ness cons0me|
= PwC
GE"-* .E*2* ,2* #*9*2,- 12(/3'.# .,2%*.*/ .( 32B,$ ;$/",$ '($#3)*2#+ .E* #0**. #1(. -"*# "$
#*29"$% .E* HII )"--"($J#.2($% %2(31 (? '($#3)*2# "$ 232,- ;$/",K
Oppoitunities ubound in Indiu's FMCG muiket given tle ligl unnuul
giowtl iutes und low penetiution levels, ucioss cutegoiies. Foi some
cutegoiies, sucl us lome cuie und peisonul cuie pioducts, uibun und
-@-)8 ?'&1@+#-1 <%88 ")(# *"# 1)+# ,@-?")1# /-%(#-1D
Peisonul cuie: It mukes me leel good to weui tlis lipstick, I buy
skin cieum to luve solt skin, etc.
Home cuie: It's impoitunt to keep my lome cleun, I like to luve u
cleun lome since I um louse-pioud, etc.
Tlut suid, wlile FMCG muiketeis see tle impoitunce ol stiengtlening
tleii piesence in uibun uieus, muny uie tuining to iuiul muikets loi
tle next wuve ol giowtl. FMCG muiketeis need to keep tle lollowing
uspects in mind wlen seiving iuiul consumeis:
Wlut uie tle iiglt pioducts tlut will uppeul to tlis tuiget gioup?
How cun tle pioducts be bettei muiketed using tle iiglt
communicution plutloims (e. g. sell-lelp gioups, pluys, skits, etc.),
etc. in oidei to tuiloi tle key messuge?
Wlicl clunnels uie tle best to move pioducts quickly (e.g.
ugiicultuiul loimuts, online, m-commeice)?
Oui tlouglt leudeislip iepoit uNA modc| |ot inc|usivc nnunciu|
sctviccs. utiving ptonrubi|iry %&/%?)*#1 *")* %& '-/#- *' >@%8/ ) +'/#8
loi u piontuble business, bunks luve to become moie inclusive in tleii
uppioucl towuids consumeis using tle DNA model. We leel tlut tlis
peispective is ulso vuluuble und upplicuble to Indiu's FMCG industiy us
consumei goods compunies step up tleii elloits to seive tlis gioup ol
luige und undei-seived consumeis.
>
Different DNA
?
New structures
and
new products
5
Align
partnerships
lnvest resources in devising a USP that is
innovative and radically different.
Don't approach under-served consumers in
the same way you would approach target
consumers: their needs vary!

Offer under-served consumers a product
which is new and transformational.
Determine the best way to source, create,
procure, partner with and deliver the product
to under-served consumers.
Create strong distribution networks and skills to
deliver to the last mile.
Enter into partnerships that help you reach your
market, such as those with farmers, self-help
groups, microfnance, NGOs, etc.
So0|ce: PwC's DNA mode| fo| |nc|0s|ve hnanc|a| se|v|ces: D||v|ng
o|ohtao|||ty, PwC ana|ys|s
@
7E"$, 9# ;$/",4 ;$ 0E"'E ),2=*. ,2* 5678 B2,$/# )(2* "$$(9,."9*L
How does FMCG innovution differ between Chinu und Indiu?
Innovution in Clinu is occuiiing botl in tle B2B us well us tle B2C spleie.
Most Clinese compunies believe tlut innovution is ciiticul to tle lollowing:
Tle ubility to compete in oveiseus muikets
Tle longevity und continued giowtl ol tle compuny
Remuining competitive und suiviving muiket loices
Reluted to pioducing innovutive pioducts is low to best ietuil tlem to
consumeis. PwC's ieseuicl ol online sloppeis globully suggests tlut
Clinese consumeis uie willing to use tle online clunnel us u meuns to
ieseuicl und buy liom. Tlis is u vuluuble insiglt tlut compunies seiving
tlis muiket need to keep in mind, us tley look ut being innovutive in not
only tle pioducts tley ollei but low tley'ie olleied. PwC's @-,7*=9:79)6 =4-
()59)- *4(!!-.< AB ,7=4* (: ,+5=934;))-5 .-=;959)6? u suivey ol 11,000 online
inteiviews ucioss 11 countiies, ieveuls tle lollowing:
Demogiuplicully, Clinu's online consumeis uie tle youngest und
most employed (i.e Clinese consumeis uie young und ielutively
uluent us compuied to online sloppeis in developed muikets wlo
uie uging und luve sliinking puiclusing powei)
5"%&#1# ?'&1@+#-1 ")(# )/',*#/ *"# %&*#-&#* )1 ) -#*)%8 ?")&&#8 #)-8%#-
tlun tleii globul peeis
Clinese consumeis slop online moie liequently tlun tle globul uveiuge
Clinese sloppeis uie uleud ol tle cuive wlen it comes to using new
/#(%?#1 )&/ 1'?%)8 +#/%)
So0|ce: PwC's Demyst|fy|ng t|e on||ne s|oooe|: 10 myt|s of m0|t|c|anne| |eta|||ng
Samo|e: G|ooa|: 11,067 on||ne s|oooe|s, C||na: 900 on||ne s|oooe|s
Note: Resoondents w|o say t|ey a|e s|ooo|ng da||y, wee||y, mont||y o| |ess t|an once
a mont|. Samo|e: G|ooa|: 11,067 on||ne s|oooe|s, C||na: 900 on||ne s|oooe|s
A PwC
M*2#1*'."9*# "$ 5678 "$$(9,."($
Concludin comments
5678 7NO#< 'E,--*$%*#4 :'P3"2"$% '()1,$"*# ,$/ #.2*.'E %(,-# 0"-- ($-@ %*. )@ (2%,$"#,."($ #( ?,2Q
How do I get my teum to tlink ubout tle next big gume-clunging innovution?
Slould I set up un R&D lub/innovution cell? How mucl lunding slould I ullocute to it? How do I identily und liie tle best tulent ?
Do I need to ieslupe tle oigunisutionul cultuie so tlut we encouiuge bieuktliougl ideus und tlinking, witlout instilling u leui ol luiluie?
Aie my piioiities loi innovution und development cleui?
Wlut kind ol time to muikets uie ieusonuble loi u luige innovution?
Do I need to convince tle bouid ol low impeiutive it is to locus on innovution? Wlut kind ol u budget do I luve?
.")* )-# *"# ?@--#&* ,)%& ,'%&*1 %& *%+# *' +)-7#* )&/ "'< /' 2 -#/@?# *"#1#9
So0|ce: PwC ana|ys|s
lndia's FMCG market is mature, competitive, and crowded with local and global brands. ln this
market, innovation is critical for:
Market Remaining competitive
Generating new avenues for sales and profts
Driving growth by entering new categories through relevant innovation
lncreasing market share and moving towards market dominance positions in:
- Brand share
- Overall FMCG market share
- Category share
Growing product and category penetration
Consumer Creating products that match consumers' evolving tastes, preferences and needs
Reaching new customers
Growing the share of wallet from current customers
Product Launching new products and keeping the product portfolio fresh
Channel Leveraging new distribution channels to boost revenue and penetration (e g. social
media, multichannel, omnichannelj
So0|ce: PwC ana|ys|s So0|ce: N|e|sen
Did you know that FMCG brand extensions.
www.pwc.in
2013 PricewaterhouseCoopers Private Limited. All rights reserved. ln this document, PwC" refers to PricewaterhouseCoopers Private Limited (a limited liability company in lndiaj,
which is a member frm of PricewaterhouseCoopers lnternational Limited (PwClLj, each member frm of which is a separate legal entity.
MS 455 - February 2013 lT-T&l.indd
Designed by: PwC Brand and Communications, lndia
About PwC
PwC lelps oigunisutions und individuuls cieute tle vulue tley'ie looking loi. We'ie u netwoik ol nims in 1S8
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visit www.pwc.in.
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entity. Pleuse see www.pwc.com/stiuctuie loi luitlei detuils.
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