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Fast Moving Consumer Goods Industry 1

The fast-moving consumer goods (FMCG) sector is an important contributor to India’s GDP and
it is the fourth largest sector of the Indian economy. Items in this category are meant for
frequent consumption and they usually yield a high return. The most common in the list are
toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged
foodstuff, and household accessories and extends to certain electronic goods. The Indian FMCG
sector, which is the fourth biggest sector in the Indian economy, has a market size of `2 trillion
with rural India contributing to one third of the sector’s revenues. The Indian FMCG sector is
highly fragmented, volume driven and characterized by low margins. The sector has a strong
MNC presence, well established distribution network and high competition between organized
and unorganized players. FMCG products are branded while players incur heavy advertising,
marketing, packaging and distribution costs. The pricing of the final product also depends on the
costs of raw material used. The growth of the sector has been driven by both the rural and
urban segments. India is becoming one of the most attractive markets for foreign FMCG players
due to easy availability of imported raw materials and cheaper labor costs.

Major segments in FMCG sector

Household care
The fabric wash market size is estimated to be ~USD 1 billion, household cleaners to be USD 239
million, with the production of synthetic detergents at 2.6 million tones. The demand for
detergents has been growing at an annual growth rate of 10 to 11% during the past five years.
On account of convenience of usage, increased purchasing power, aggressive advertising and
increased penetration of washing machines, the urban market prefers washing powder and
detergents to bars. The regional and small unorganized players account for a major share of the

Fast Moving Consumer Goods Industry 2

total detergent market in volumes. Household Care category recorded robust volume and value
growth during the year through focused innovation in the portfolio to provide greater consumer
value. Vim bar continues to delight consumers by delivering superior performance and new
offerings like the Anti-Germ Bar and the Monthly Tub Pack. Vim liquid continues to develop the
liquid dish wash category driven by superior product quality and strong advertising. It has
effectively accomplished the dual job of growing the liquids market by reaching out to more
households, while increasing consumption in existing households. Domex continued to provide
clean and germ free toilets to the consumers.

Personal Care
The personal care products (PCP) market in India is estimated to be worth ~USD 4 bn p.a.
Personal hygiene products (including bath and shower products, deodorants etc.), hair care, skin
care, color cosmetics and fragrances are the key segments of the personal care market. Each of
these segments exhibits its unique trends and growth patterns. For example, the largest
segment of personal hygiene products, largely dominated by bar soaps, has grown at ~5% p.a.
over the last five years. In comparison, the second largest segment, hair care products have
seen a much higher growth of ~9-10% p.a. during the same period. The hair care market can be
segmented into hair oils, shampoos, hair colorants & conditioners, and hair gels. The coconut oil
market accounts for 72% share in the hair oil market.  The skin care market is at a primary
stage in India. With the change in life styles, increase in disposable incomes, greater product
choice and availability, people are becoming more alert about personal grooming. The oral care
market can be segmented into toothpaste – 60%; toothpowder – 23%; toothbrushes – 17%.

Food & Beverages

Food processing industry is one of the largest industries in India, ranking fifth in terms of
production, growth, consumption, and export. The total value of Indian food processing industry
is expected to touch USD 194 billion by 2015 from a value of USD 121 billion in 2012, according
to Indian Council of Agricultural Research (ICAR). The packaged food segment is expected to
grow 9% annually to become a `6 lakh crore industry by 2030, dominated by milk, sweet and
savory snacks and processed poultry, among other products, according to the report by CII-
McKinsey. The ready-to-drink tea and coffee market in India is expected to touch `2,200 crore in
next four years, according to estimates arrived at the World Tea and Coffee Expo 2013. Branding
could drive the next growth wave in the country’s food processing sector. The total soft drink
(carbonated beverages and juices) market is estimated at ~USD 1 billion. The market is highly
seasonal in nature with consumption varying from 25 million crates per month during peak
season to 15 million during offseason. The market is predominantly urban with more than 25%
contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks market.

Pestel Analysis

Fast Moving Consumer Goods Industry 3

Political Factors
• Tax exemption in sales and excise duty for small scale industries.

• Transportation and infrastructure development in rural areas helps in distribution network. •

Restrictions in import policies.

• Help for agricultural sector.

Economic Factors
• The GDP rate of Indian economy is increasing every year. It is expected in future it would be
better only in comparison with other countries.

• Inflation rate is increasing across the world and India is also no exception. The government
and Reserve Bank of India both are trying to control the inflation rate with the help of different

• Increase in disposable income has taken place due to higher GDP rate. The per capita income
is increasing so the customers are having more income to spent for various reasons.

• Indian FMCG sector recorded 16% sales growth in last fiscal year and it is expected it would
further improve in the forthcoming years.

• The FMCG sector is a 4th largest sector of Indian economy with market size of more than
60,000 crores. The Indian Territory is very large and number of customers is also very high.

Social Factors
• Demographical analysis

• The Indian culture, social & life styles are changing drastically. The total population is nearly
115 crores and population includes rich, poor, middle class, male, female, located in rural, urban
and sub urban areas, different level of education etc.

Technology Factors
• Technology has been simplified and available in the industry. Where technology is not
available then it is brought from foreign countries to meet FMCG sector requirements.

• Foreign players help in high technological development. With research and development
facilities the new technologies are developed alone or with the help of foreign players.

Fast Moving Consumer Goods Industry 4

Environmental Factors
 Ecological: The ecological and environment aspects such as weather, climate, & climate
changes, which may especially affect industry such as tourism, farming, & insurance. In
 Environmental issues: Global warming is one of the major issue now-a-days as external factor is becoming
a significant issue for firms to consider. Many remedies have been taken to reduce
Global warming.
 Environmental regulations: Various regulations have been declared by government to safeguard the
environment. For example-no company should through its waste in rivers.

 Employment law: Employment law provides equal opportunities to every citizen to work & earn his livelihood.
It provides equal opportunities to every citizen.
 Consumer protection: This law helps to protect the rights of consumers & he can file a case
against seller if he fined that he is cheated. Industry-specific regulations: These laws are
related to industry for example- no industry can establish in between cities i.e. it should be
outside the cities.


To determine industry attractiveness and long-run industry profitability of the Indian FMCG
Industry, we chose to apply the Porter’s five forces in our analysis.

Porter’s five forces are: (1) Barriers to Entry and exit, (2) Threat of substitutes, (3) Buyer
bargaining power, (4) supplier bargaining power, and (5) Industry Competition.

1. Barriers to Entry and exit: The Indian FMCG Industry is characterized with modest entry and
exit barriers. Integrated business model and increasing capital requirement in the industry
restrict new entrants. Huge investments in setting up distribution networks and promoting
brands and competition from established companies.

2. Threat of substitutes: Being an essential commodity the demand for consumer products is
elastic. Multiple brands positioned with narrow product differentiation. Companies entering a
category /trying to gain market share compete on pricing which increases products substitution.
Hence, threat of substitute is high in the industry.

3. Buyer bargaining power: High brand loyalty for some products, thereby discouraging
customers’ product shift. But low switching cost and aggressive marketing strategies under
intense competition within the FMCG companies, induce Customers to switch between
products, thereby driving value for money deals for consumers.

4. Supplier bargaining power: Prices are generally governed by international commodity

markets, making most FMCG companies price takers. Due to the long-term relationships with
suppliers etc., FMCG companies negotiate better rates during times of high input cost inflation

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5. Industry Competition: Competitiveness among the Indian FMCG players is high. With more
MNCs entering the country, the industry is highly fragmented. Advertising spends continue to
grow and marketing budgets as well as strategies are becoming more aggressive. Private labels
offered by retailers at a discount to mainframe brands act as competition to undifferentiated
and weak brands.

Procter & Gamble Company

The Procter & Gamble Company (P&G) is a giant in consumer goods. The leading maker of
household products in the United States, P&G has operations in nearly 80 countries around the
world and markets its nearly 300 brands in more than 160 countries; more than half of the
company's revenues are derived overseas. Among its products, which fall into the main
categories of fabric care, home care, beauty care, baby care, family care, health care, snacks,
and beverages, are 16 that generate more than $1 143 billion in annual revenues: Actonel
(osteoporosis treatment); Always (feminine protection); Ariel, Downy, and Tide (laundry care);
Bounty (paper towels); Charmin (bathroom tissue); Crest (toothpaste); Folgers (coffee); Head &
Shoulders, Pantene, and Wella (hair care); Iams (pet food); Olay (skin care); Pampers (diapers);
and Pringles (snacks). Committed to remaining the leader in its markets, P&G is one of the most
aggressive marketers and is the largest advertiser in the world. Many innovations that are now
common practices in corporate America--including extensive market research, the brand-
management system, and employee profit-sharing programs--were first developed at Procter &

Brand: One of the best advantages of P&G is that it owns brands which are very valuable by
themselves. It owns Gillette which is the 138th ranked brand in the world and has a 20-billion-
dollar brand valuation. It also owns Tide and Ariel which are in the top 500. Duracell, Pampers,
Pantene, Vicks, Whisper, Olay are all famous brands by themselves. Naturally, P&G is an
umbrella brand company and the parent brand has a fantastic valuation.

Expenditure on R&D: An advantage of P&G is its excellent R&D due to which it has innovated
and brought many products in the market which have taken the market by storm. This is the
reason that P&G has a good bottom-line. All its products are innovative in nature.

Gross profit margin: Because of their expenditure in R&D as well as Marketing and distribution,
P&G believes in keeping higher profit margins, a strategy which has benefited them immensely
because they have the highest margin in the FMCG industry. This in turn results in the brand
investing even further in brand building and therefore revenue generation.

Multiple products: It has got different types and varieties of products under its brand name
which are of day to day use and customers prefer to buy those products.

Fast Moving Consumer Goods Industry 6

Integration: It has got good integration with its customers and this helps them in knowing about
new customer demands and developing and bringing new products in the market.

Losing market share: It has been losing market share for quite some time. As it has been
lagging in leadership in online media.

Beauty products for women only: Now a day there has been a change in beauty market i.e. men
have also started taking for their looks.

Stiff competition: There is a stiff competition from the competitors in the market. And the
competition goes on getting tougher.

Fake products: Many fake products are there in the market as copy of the product of P&G.


Tapping rural markets: A major challenge for all FMCG companies is penetrating the rural
markets, which are price sensitive and impervious to advertisements. Availability and pricing are
two major factors affecting the decision making of rural markets and this is an opportunity still
for the likes of HUL and P&G.0

Growth of middle class: Growth of middle class in the society is one of the factors which would
prove to be an opportunity to increase its sales.

P&G products for men: As men have also started to become conscious about their looks it will
be in favour of P&G to produce male beauty products, as this would increase its sales.

Improving social networks: It must work on its online leadership and increase its level which
would be of benefit to itself.

Eco – Friendly: It must try to produce products in such a manner which is eco-friendly and does
not cause any harm to environment.


Cut throat competition: In the market, there is cut throat competition so P&G will have to keep
up itself in such a manner so that it can survive in the market.

Availability of substitutes: There are various substitutes of P&G products available in the
market so it will have to come up with various innovations and new products range to survive in
the market.

Raw materials cost: As the cost of raw material increases the cost of product also increases.

Recession: Due to recession, the consumer spending has decreased globally.

Fast Moving Consumer Goods Industry 7

Marico is one the leading company in FMCG sector incepted in year 1988. Every month, over 70
million packs from Marico reach approximately 130 million consumers in about 23 million
households through a widespread distribution network of more than 2.5 Million outlets in India
and overseas.


Consumer products business

Marico’s consumer products have prominent market share in coconut oil, hair oils, post wash
hair lice treatment, edible oil, fabric care, etc. Under this it created brands like Parachute,
Safola, Revive, Starz, Medikar, hair & care etc.
It has also entered food segment through Saffola Diabetes Management Atta mix.

International products
Marico presence in international market became more evident through its major acquisition of
international brands namely camellia, aromatic, Fiancée, Hair Code, Sundari, etc. Acquisition of
Fiancée & Hair Code gave Marico a customer base of 26 million.

With KAYA Marico entered skin care segment. Its KAYA Skin clinic offers dermatological &
scientific procedures most of them approved by USFDA. Today there 65 Skin Clinics in 19 Indian
cities, 9 in Middle East has a customer base of 350,000.


1. Excellent distribution network and product availability
2. The product portfolio of Marico has brands covering Edible Oil, Hair Oils, Skin Care, Fabric
Care, etc.
3. Popular brands, good brand visibility and excellent advertising of products has led to strong
brand loyalty
4. Experience management and good R&D
5. Marico is present in more than 25 countries across Asia and the African continent.
6. Marico reaches over 2.5 million outlets and around 130 million customers

1. Market share is limited due to presence of other strong FMCG brands
2. Marico products has stiff competition from big domestic players and international brands

1. Tap rural markets and increase penetration in urban areas
2.Mergers and acquisitions to strengthen the brand
3.Increasing purchasing power of people thereby increasing demand

Fast Moving Consumer Goods Industry 8

1.Intense and increasing competition amongst other FMCG companies
2.FDI in retail thereby allowing international brands
3.Competition from unbranded and local products


Britannia was started as a biscuit company in 1892 in a nondescript house in Kolkata. The initial
investment at the time of foundation of this company was Rs 295. The company merchandised
its operations by 1910 with the advent of electricity and in 1921 Britannia became the first
company east of Suez Canal to use imported gas ovens. Along with the flourishing business the
company had acquired a reputation for quality and value. The Government also showed its trust
in Britannia during the World War II by giving it the contract to supply large quantities of
“service biscuits” to the armed forces.

Parry’s used to be the distributor for Britannia biscuits in India. In 1975, Britannia took over
distribution business from Parry’s. After the public issue in 1978, Indian shareholding in
Britannia crossed 60%. The company was re-christened Britannia Industries Limited (BIL) in
1979. In 1983, the company crossed the revenue mark of Rs 100 crore.Britannia unveiled its new
corporate identity in 1997 through its new campaign “Eat Healthy, Think Better” and made its
entry into the dairy products market. The “Britannia Khao, World Cup Jao” campaign further
highlighted the popularity of Britannia amongst its consumers.

Britannia entered into 21st century as one of the India’s biggest brand in food industry.
Innovative marketing strategies like Lagan match which was voted as India’s most successful
promotional activities of 2001, have helped Britannia to grow in to the brand it is today. In the
same year 2001, Britannia 50-50 Maska-Chaska became India’s most successful product launch.
Britannia’s New Business Division formed a joint venture with the world’s second largest dairy
company – Fonterra in 2002 and this marked the birth of Britannia New Zealand Foods Pvt. Ltd.
Forbes Global rated Britannia ‘One amongst the Top 200 Small Companies of the World’ and The
Economic Times rated Britannia as India’s 2nd Most Trusted Brand.

Fast Moving Consumer Goods Industry 9


Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India. [2]
Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers
in Gujarat.[3]
The white revolution was spearheaded by Tribhuvandas Patel under the guidance of Sardar
Patel. As a result, Kaira District Milk Union Limited was born in 1946. Tribhuvandas became the
founding chairman of the organization which he led till his last day of his life. He hired Dr. Kurien

Fast Moving Consumer Goods Industry 10

three years after the white revolution. He convinced Dr.Kurien to stay and help with the mission
rest was history in the dairying industry.
Amul spurred India's White Revolution, which made the country the world's largest producer of
milk and milk products.[4] In the process Amul became the largest food brand in India and has
ventured into markets overseas.

1. Amul has a high brand equity and top of the mind brand recall.

2. Strong network of over 3 million milk producers are associated with Amul.

3. It is the world’s largest manufacturer of pouched milk.

4. India’s largest food brand: Amul is trusted for its quality.

5. Number of popular milk products are offered like ice cream, ghee, butter, paneer, dahi, milk,

6. Products available at affordable prices.

7. In India, It is a market leader in butter segment.

8. Amul is responsible for white revolution in India. Increasing the milk production in India.

9. Successful advertising and marketing campaigns has enhanced the brand presence.

10. Strong network of retail outlets, stalls and parlours.

11. Successful advertising -A popular mascot in the Amul girl.

1.Low market share in chocolates segment for Amul.

2.Strong competition from international & domestic players in the ice cream segment means
limited market share. – PARAG , MOTHER DAIRY , BRITANIA , NESTLE as they are also providing
dairy and milk products in the market at a similar range of prices.

1. Amul can introduce new products in the chocolate segment.

2.To tap the untapped market, It can increase its reach in rural markets.

Fast Moving Consumer Goods Industry 11

3.Rise in purchasing power of Indian people will lead to consumption of more healthy food

4. Amul can tieup with hotels, resorts, restaurants etc. for providing them milk , butter cheese
and milk shakes( amul cool).

1.Strong competition from international players can reduce the market share of Amul.

2.Economic slowdown and inflation can affect business.

ITC Limited

ITC Limited or ITC is an Indian conglomerate headquartered in Kolkata, West Bengal. Its
diversified business includes five segments: Fast-Moving Consumer Goods (FMCG), Hotels,
Paperboards & Packaging, Agri Business & Information Technology.

Established in 1910 as the Imperial Tobacco Company of India Limited, the company was
renamed as the Indian Tobacco Company Limited in 1970 and further to I.T.C. Limited in 1974.
The periods in the name were removed in September 2001 for the company to be renamed as
ITC Ltd. The company completed 100 years in 2010 and as of 2012-13, had an annual turnover of
US$8.31 billion and a market capitalization of US$45 billion. It employs over 25,000 people at
more than 60 locations across India and is part of Forbes 2000 list.



 Managing diverse business. ITC has 105 subsidiaries connected with its various
 Wealth of local knowledge & international expertise helps it to be globally competitive.
 High quality standard products & services
 Excellent export earnings.
 Highly professional management.
 Excellent distribution network.
 Excellent brand making capability helping it to diversify it into Retailing, IT & Hotel

Fast Moving Consumer Goods Industry 12

 Agro-export segment showing excellent growth of 28 % & earning Rs. 4 billion foreign
 A lasting impression by catchy ads.
 ITC ltd is one of the most liquid scripts in the capital market. With domestic institutions
having a considerable stake this is likely to improve liquidity in De-mat trading.
 Good returns by way of dividend per share every year. In 31.3.2002 the dividend
declared is 13.50 Rs per share
 The lifestyle retailing segment has won acclaim & moving towards higher sales.
 The expression greeting card is widening its base all over India & it is available at most
retail shops.
 Steady increase in the return on capital employed.
 Sophisticated research & development facilities.

 Diversification into various lines in which it does not have much knowledge would be
very risky proposition.
 High competition from established brands which has resulted in reduction in profit
 Steep increase in cigarette taxes has adversely affected the revenue earned.
 Due to high price of cigarette, consumers are switching to other cheaper forms of
 Its hotel industry has still not created a big share in the market size.

 Big untapped market available. For cigarettes, hotels, it, retail garment, packaging &
agricultural products.
 High growth potential could be achieved.
 Good source of revenue & foreign exchange available by way of exports of agricultural
products, hotels & cigarettes.
 Its competitors don’t have the financial banking like it so it can take advantage of this.
 Proper publicity of the hotels would increase its brand image & revenue.

 Negative publicity for smoking could affect its cigarette segment.
 Government is under huge pressure from public organizations for banning tobacco
products which could affect it adversely.
 High competition from established brands.
 Competition from unbranded products.

Fast Moving Consumer Goods Industry 13

 Due to terrorist attacks the tourism industry has taken a back seat which would affect
the hotel segment.
 Poor monsoon leads to poor agricultural growth which would affect the agro-exports.


In 1929 a small company by the name of Parle products emerged in British dominated India. The
intent was to spread joy and cheer to children and adults alike, all over the country with its
sweets and candies. The company knew that it wouldn’t be an Easy task, but they decided to
take the brave step. A small factory was set up in the suburbs of Mumbai, to manufacture
sweets and toffees. A decade later it was upgraded to manufacture biscuits as well. Since then,
the Parle name has grown in all directions, won international fame and has been sweetening
people's lives all over India and abroad. Apart from the factories in Mumbai and Bangalore Parle
also has factories in Bahadurgarh in Haryana and Neemrana in Rajasthan, which are the largest
biscuit and confectionery plants in the country. Additionally, Parle Products also has
7manufacturing units and 51 manufacturing units on contract. A long time ago, when the British
ruled India, a small factory was set up in the suburbs of Mumbai city, to manufacture sweets
and toffees. The year was 1929 and the market was dominated by famous international brands
that were imported freely. Despite the odds and unequal competition, this company called Parle
Products, survived and succeeded, by adhering to high quality and improvising from time to
time. A decade later, in 1939, Parle Products began manufacturing biscuits, in addition to sweets
and toffees. Having already established a reputation for quality, the Parle brand name grew in
strength with this diversification. Parle Glucose and Parle Monaco were the first brands of
biscuits to be introduced, which later went on to become leading names for great taste and

 Low price as compared to competitors: They constantly endeavor at designing products
that provide nutrition and fun to the common man. Most Parle offerings are in the low
and mid-range price segments. This is based on their understanding of the Indian
consumer psyche. The value-for-money positioning helps generate large sales volumes
for the products. However, Parle Products also manufactures a variety of premium
products for the up-market, urban consumers. And in this way, caters a range of
products to a variety of consumers.
 Affordability: Parle G offers 1Rs. pack which contains 4 biscuits which is affordable to
anyone aims to satisfy hunger.

Fast Moving Consumer Goods Industry 14

 Sizeable market share in the country: Many of the Parle products - biscuits or
confectioneries, are market leaders in their category and have won acclaim at the
Monde Selection, since 1971. With a 40% share of the total biscuit market and a 15%
share of the total confectionary market in India, Parle has grown to become a multi-
million dollar company. While to consumers it's a beacon of faith and trust, competitors
look upon Parle as an example of marketing brilliance.
 Offers variety of products in different sizes under its brand: Parle offers a variety of
biscuits at different pricing range. The Parle marketing philosophy emphasizes catering
to the masses. We constantly endeavor at designing products that provide nutrition and
fun to the common man. Most Parle offerings are in the low and mid-range price
segments. This is based on our cultivated understanding of the Indian consumer psyche.
The value-for-money positioning helps generate large sales volumes for the products.
However, Parle Products also manufactures a variety of premium products for the up-
market, urban consumers. And in this way, caters a range of products to a variety
of consumers.
 An experienced team of sales and marketing executives: Sales and Marketing executives
are selected through a special process. A proper verification of identity and financial
background are done for a better structure of the human resource in the company.
 Largest distribution system: The extensive distribution network, built over the years, is a
major strength for Parle Products. Parle biscuits and sweets are available to consumers,
even in the most remote places and in the smallest of villages with a population of just
500.Parle has nearly 1,500wholesalers, catering to 4, 25,000 retail outlets directly or
indirectly. A two hundred strong dedicated field force services these wholesalers and
retailers. Additionally, there are 31 depots and C and F agents supplying goods to the
wide distribution network.
 Wide coverage area of manufacturing units: Parle Products has one factory at Mumbai
that manufactures biscuits and confectioneries while another factory at Bahadurgarh, in
Haryana manufactures biscuits. Apart from this, Parle has manufacturing facilities at
Neemrana, in Rajasthan and at Bangalore in Karnataka. The factories at Bahadurgarh
and Neemrana are the largest such manufacturing facilities in India. Parle Products also
has 14 manufacturing units for biscuits and 5 manufacturing units for confectioneries,
on contract. All these factories are located at strategic locations, so as to ensure a
constant output and easy distribution. Each factory has state-of-the-art machinery with
automatic printing and packaging facilities.
 The quality commitment: All Parle products are manufactured under the most hygienic
conditions. Great care is exercised in the selection and quality control of raw materials,
packaging materials and rigid quality standards are ensured at every stage of the
manufacturing process. Every batch of biscuits and confectioneries are thoroughly
checked by expert staff, using the most modern staff, using the most modern
 The customer confidence: The Parle name conjures up fond memories across the length
and breadth of the country. After all, since 1929, the people of India have been growing
up on Parle biscuits and sweets. Today, the Parle brands have found their way into the

Fast Moving Consumer Goods Industry 15

hearts and homes of people all over India and abroad. The consumer is the focus of all
activities at Parle. Maximizing value to consumers and forging enduring customer
relationships are the core endeavors at Parle. Their efforts are driven towards
maximizing customer satisfaction and this is in synergy with their quality pledge.

 “Parle Products Limited will strive to provide consistently nutritious and quality food
products to meet consumers' satisfaction by using quality materials and by adopting
appropriate processes. To facilitate the above we will strive to continuously train our
employees and to provide them an open and participative environment.”

 Breakage of biscuits while delivering to retailers: Sometimes biscuits get damaged while
delivering to retailers. Company should adopt innovative packaging techniques. So that
the quality of biscuits are good till it reaches the customer, also attractive for the
 No proper replacement system for broken biscuits to retailers: There is no proper
replacement system for broken biscuits to retailers. Company should start a program for
the loyal retailers and wholesalers to reduce their complaints by providing timely supply
and replacement. This will help in increasing their sales.
 Improper and irregular supply: There is improper supply of products to retailers and
distributors. Hence it is advised to increase the number of stock keeping units {SKU}
available in the retailer’s store. Each salesman should stress the retailers to keep the
maximum SKUs and to maintain these SKUs throughout. With this, the replacement of
the damaged and expired biscuits should be prompt and without any hassles, so that
retailer can be saved from the loss of the expired and damaged goods.
 Dependent on its flagship brand, Parle-G: The major income source for Parle Company is
the Parle-G biscuits. The biggest concern for Parle - G is that the brand shouldn’t
become outdated as it is a historic brand. The brand has managed to retain its
leadership position because it has evolved its campaign with every consumption trend.
Hence Parle Company should opt for innovative techniques to maintain the brand of
 Poor packaging in family pack of glucose biscuits: Company should adopt innovative
packaging techniques, as they have their own packaging unit as consumers are highly
attracted towards new packaging. The packaging of Parle Glucose biscuits (1/2 and 1
kilogram packs) must be improved for its better sales. The company should come up
with double packaging as people refuse to buy family pack biscuits with loose packaging.
The company should take proper measures that the schemes and offers are not gulped
by the middlemen, and that it benefits the retailers and customers.
 Lack of schemes for retailers and distributors: One of the advantages of Parle Company
is the wide range of retailers and Distributors. Parle Company should implement more
innovative schemes for retailers and distributors. So there is better relationship
between the company and retailers, distributors.

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 Rising demand for innovative packaging in packaged foods: Parle should adopt new
innovative packaging techniques. Since it can attract more customers specially kids
through innovative packaging techniques. Due to proper packaging the quality of the
biscuits will be retained and the retails will not suffer loss if goods are spoiled before it
reaches their place.
 Retaining loyal retailers or wholesalers: Parle can motivate retailers and wholesalers
good incentives and programs. The Parle Company can maintain the loyal retailers and
wholesalers. Since one of the most important strength of the company is wide spread
distribution network. The wholesalers and retailers are one of the main reasons for the
same. Hence it is advised that new innovative programs and more incentives should be
given to them.
 Improving supply system for established brands: As discussed in the earlier point the
company can attract more retailers and wholesalers. Due to this the company can
expand the supply system and attract more customers. This in turn will earn good profit
to the company.
 New innovative promotion techniques: Promote Parle brand through schemes such
as “Parle Gramin Swastha Yojana” (a network of ambulance van visiting rural areas
giving basic medical treatments educating people on nutrition deficiency problems and
promoting Parle nutritious products) Promote Parle brand through T. V. shows such as
“Parle Shakti” (“Parle- Friend of Women”- The weekly T. V. show will cater to health
issues of women and children and will explain long term benefits of healthy diet).
Results Expected Improved sales through “Top of mind recall”. Parle is weak in Eastern
India and Tamil Nadu. To cover up this loop hole, they are giving scholarships to children
in these states to cover up the corporate equity which is less than Britannia in these
states. Based on the above mentioned facts, the following are some of the suggestions
that may help Parle Products Pvt. Ltd. to maintain its position as a leading company in
the food and beverage market in India.
 Penetrate the Market Share of the Unorganized Sector: The Indian biscuit industry is
divided into the organized sector that has 60% market share and the unorganized sector
that has the rest 40% market share. Parle can take a pie of the market share of the
unorganized sector by tapping rural markets through several government schemes such
as mid day meals. They can also be a part of NRHM centers. By this, they would be able
to improve their visibility in the rural biscuit market in India.
 Innovation and Rural Market: Innovating new products, especially non-glucose type
biscuits, and its test marketing in the rural market with its existing distribution channel
would help them establish a new market in rural India. This would be similar to
replication of their strategy of innovation following which they launched their product -
Hide and Seek that is a premium segment product mainly focused in the urban or semi-
urban market.
 Going Public: Parle is one of the oldest companies in the biscuit market and except for
its glucose biscuit business, no other product has had a significant impact in the market.
In order to follow an aggressive expansion plan and to foster world class R & D, it may

Fast Moving Consumer Goods Industry 17

need funds, which it can easily generate through an IPO because of its brand name. This
can also help them diversify into different related markets. It is important to note that
both of its major competitors, namely, Britannia and ITC are publicly listed companies
that have aggressively pursued advertising and R & D.
 Diversify in New Market: Today, though Parle has a commanding position in the biscuit
industry, the future may be much more competitive in this industry. This is because of
entry of several new companies into this market. The entry of new product suppliers in
the market is also one of the Porters five forces which can alter the market scenario.
Hence, Parle being an established brand should diversify into different market such as
dairy products like cheese, butter, etc. The image that it has among the Indian masses is
that of a “chai-biskut” providing company in the rural India. Specifically, in this context,
in the urban sector Parle can create a new image of itself in the confectionary market by
catering to high end.

 Highly advertised brands such as Britannia: Parle faces the adverse competition from
Britannia. Now-a-days Britannia have adopted intensive advertisement such as through
media to promote their products. This can result in less attraction for the brand
products of Parle.
 Ever increasing competition from multinationals and local companies: ITC is promoting
their Sun Feast brand by using strong promotional campaign with Brand ambassador
ShahRukh khan. ITC Foods Ltd has expanded network and is promoting its Sun feast
biscuits across 1000 schools in the country. Britannia Tiger has brand ambassador Rahul
Dravid and Virender Sehwag who are doing heavy duty endorsement on their personal
equity line for the brand.
 Increase in sale of cheap local bakery products: There is sudden increase in bakery
products for past certain period of time in the market. Due to this the Parle biscuits are
facing competition. This can affect the performance of the company.
 Emerging substitutes like wafers, snacks and toast: Earlier it was just the biscuit which
was available as snacks item. Now there are many other products like wafers and toast.
Thus company is facing threat due to the new substitute products.

Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is India’s largest consumer goods company based
in Mumbai, Maharashtra. It is owned by the British-Dutch company Unilever which
controls 52% majority stake in HUL. Hindustan Unilever distribution covers over 2
million retail outlets across India directly and its products are available in over 6.4
million outlets in the country. As per Nielsen market research data, two out of three
Indians use HUL products.

Fast Moving Consumer Goods Industry 18


1. HUL is a part of the Unilever group, hence strong brand
2. It has over 18000 employees
3. Hindustan Unilever has a reach of 6.4 million retail
outlets which includes direct reach to over 1.5 million
retail outlets
4. Two R&D centres in India in Mumbai and Bangalore
5. Products with presence in over 20 consumer categories
with over 700 million Indian consumers using its

Weaknesses 1. Market share is limited due to presence of other strong

FMCG brands
2. Hindustan Unilever faced controversies like skin
lightening creams, pollution etc

Opportunities 1. HUL can tap rural markets and increase penetration in

urban areas
2.Mergers and acquisitions to strengthen the brand
3.Increasing purchasing power of people thereby
increasing demand

Threats 1. Intense and increasing competition amongst other

FMCG companies can affect business of HUL
2. FDI in retail thereby allowing international brands
3. Competition from unbranded and local products can
hurt Hindustan Unilever's market


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