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What is FMCG

What is FMCG? – Characteristics, Types, Examples

Table of content

  • Introduction
  • Characteristics of FMCG
  • How does FMCG Work? 
  • Types Of FMCGs
  • Challenges faced by FMCG companies
  • Fast-Moving Consumer Goods (FMCG) Companies
  • FAQ

Introduction

Products that are in high demand, are sold quickly, and have reasonable prices are fast-moving consumer goods (FMCG). Sometimes we call them consumer packaged goods (CPG). Because consumers use these products frequently, they are “fast-moving” goods because they are quick to disappear from a store or supermarket’s shelves.

Characteristics of FMCG

FMCG items are different from other sorts of products by a number of essential qualities. PL Global Impex Pte Ltd. will guide you to the characteristics from both consumer and retailer perspective, as follows:

CHARACTERISTICS OF FMCG FROM THE CONSUMER PERSPECTIVE:

Rapid consumption: 

The interval between the product’s purchase and use is typically only a few hours. For instance, a loaf of bread might be bought in the morning and eaten at noon the same day.

Low cost: 

Because FMCGs are frequently affordable in comparison to other products on the market, they eat less of the money of consumers.

Low buying effort:

FMCG purchases are typically easy for consumers to make. For instance, most people already know they favor a certain brand or type of shampoo without having tried it. This indicates that the majority of individuals go into stores prepared to make an immediate purchase.

Purchased frequently:

FMCGs are items that consumers regularly need, typically daily or nearly daily. For instance, people typically purchase bread and coffee at least once every week.

High availability:

FMCG products are often easily accessible and offered in a variety of retailers and supermarkets around the world. This makes it possible for customers to buy these things quickly and easily.

CHARACTERISTICS OF FMCG FROM THE RETAILER PERSPECTIVE:

Consistency in form, size, color and price: 

Because FMCGs are standardized, they can be produced in large quantities at minimal cost. For instance, if a company makes shampoo, all of the packets are the same size and have the same amount of liquid inside. So, when someone buys a packet of shampoo from their neighborhood store, they are aware of exactly what they are purchasing.

Non-durability:

FMCGs are not long-lasting. This is due to the short time between manufacturing and consumption. They are also available in huge quantities so that producers do not have to store them for long periods of time, allowing them to make sales for less.

Low unit cost: 

The unit pricing for FMCGs is often low because of their high demand and low cost. This translates to shops being able to sell these goods for less while still making a profit. Luxury goods, on the other hand, typically have a high unit cost but low demand, necessitating the need to sell them for a higher price to maintain the retailer’s targeted level of profit.

Highly distributed:

Due to their great demand and low price, these commodities typically need to be broadly disseminated throughout numerous areas. Consider a town where the same brand of bread is sold in a number of different supermarkets.

High turnover rate:

Due to the frequency of customer purchases, FMCG sales are higher than sales of other product types. As a result, businesses can hold onto their inventory of these goods for shorter periods of time, which eventually lowers expenses.

How does FMCG Work?

The FMCG industry has widespread acclaim. From packaged, easily-grabbed daily requirements that may be found in a store to ready-to-eat meals, the quickly developing consumer products sector offers reasonable solutions to everyday difficulties. For instance, because instant noodles don’t require complicated cooking, dormitory students prefer packaged cuisine like them. Additionally, packaged food benefits those who are single and unable to prepare meals at home. Similarly, the market has been assisting consumers by offering medications, masks, cosmetics, personal care, and hygiene items.

Furthermore, the distribution model has two sections: a direct section and an indirect section. Without the involvement of a third party, a transaction between manufacturers and customers takes place in the direct state. In the indirect state, the producers market the good to their customers via a distribution network.

In the wake of the epidemic, numerous channels were broken, which resulted in losses. Companies had to get tough at the same time to keep up with the escalating demand for consumer products brought on by panic buying. Consumer choice shifts in favor of healthier alternatives have presented another problem for the FMCG industry. Additionally, because of the e-commerce explosion, businesses now need to sell their goods through online channels. Additionally, more and more people are becoming price conscious. All of these difficulties have impeded the sector’s expansion.

Types Of FMCGs

Depending on the sector of the economy where they are sold, FMCG products are typically divided into many types. PL Global Impex Pte Ltd listed these:

Food And Beverage

FMCG products

Due to their short shelf lives and high turnover rates, food and beverage goods are typically classified as FMCG. Food and drink items that are typically categorized as FMCGs include but are not limited to:

  • Processed foods, including spaghetti, bread, and potato chips.
  • Food that is already prepared, such as crisps or nut packages.
  • Drinks, such as soda cans, coffee mugs, and bottled water.

Personal Care Products

FMCG products

Since most customers constantly need personal care items like toothpaste and shampoo, they can also be categorized as FMCGs because they are frequently purchased at low prices and are not long-lasting. These include creams, hair dye, lipsticks, cosmetics, deodorants, bath soap, and dental care items, among other things.

Healthcare Care Products

Because they are frequently in great demand, not made to last, and are widely dispersed, healthcare products are also categorized as FMCGs. Plasters, bandages, syringes, condoms, and other items fall under this category.

Home Care Products

FMCG products

Because they are frequently standardized, low-durability commodities that are widely disseminated and sold for typically low unit prices, household products also come into this category. They consist of dusters, bleach, kitchen towels, toilet paper, and cleaning supplies.

Challenges faced by FMCG companies

1. Big Data

Big data

As the capacity to collect, store, and analyze data continues to advance rapidly, there is currently a data explosion. Depending on whose data/analytics firm you speak to, the FMCG industry already possessed a few hundred indicators, including weekly consumer sales, brand tracking, consumer panels, shopper data from helpful and well-paid shops, and a few hundred more metrics.

2. Social Media

Social Media

Nowadays, information spreads quickly. In a matter of hours, a tweet, Facebook post, or YouTube video can go viral. A company can no longer sell a product that was unviable in a developed market because of health issues in a less developed country since laws have not kept up. While consumer information can be easily found online, regulations will take some time to catch up. There will be rapid and uncontrolled information flow.

3. Online Grocery Shopping

FMCG products

Even though it has a limited basis, this is growing quickly in the majority of developed markets. Even if the majority of the big-box stores already provide online shopping and delivery, there will soon be a rise in the number of smaller online shops with more limited product selections and higher pricing.

4. Environment & Sustainability

Stronger consumer bonding ratings will be awarded to organizations that can prove sustainability throughout their entire ecosystem. The capacity to charge a premium to cover rising expenses will be restricted, though, as consumers start to view sustainability as a given rather than a luxury that only a select few can enjoy.

5. Aging

What would a supermarket’s selection of goods look like if everyone who shopped there was over 50? A wide aisle of health supplements is there, along with fresh meals, fish (salmon), wholegrains, and a few luxury sweet options. Given their greater financial resources, this group will evaluate food quality more highly. It will be difficult for firms to appeal to this elderly generation while also being “cool” enough to draw in the younger customers.

Also read: FMCG Distributor-Definition, Types, and Opportunities

Fast-Moving Consumer Goods (FMCG) Companies

#1 – Procter and Gamble (P&G)

The business was established in Cincinnati, Ohio, in 1837 by William Procter and James Gamble. It belongs to the group of enormous, international consumer products firms. They offer a variety of goods for personal care, health, and beauty. The market value of P&G is $326.64 billion. Around 180 nations and territories can find the brand.

 

#2 – Nestle SA

The Swiss firm was established there in 1866. Nearly 190 nations are where it is present. Its market value is greater than $304.1 billion. Nestle has numerous product lines, including those for beverages, coffee, cereals, snacks, baby food, dairy, chocolates, pet food, restaurant service, and more. The Covid-19 lockdown’s frantic food stocking phase witnessed significant profit for fast-moving consumer items, with Nestle surpassing several rivals.

 

#3 – PepsiCo

The well-known corporation was established in various nations and was established in the United States in 1965. Many people value the extensive selection of foods and drinks. The company has a market value of $199.18 billion. The corporation made enormous profits after the epidemic as a result of the increasing use of packaged foods.

FAQ

1. How does the FMCG supply chain work?

The number of small manufacturers (with revenue below 100 crore) decreased by 13% as a result of the difficulties in continuing operations with increasing expenses, according to the report. This is because the price increase is still having an effect on small manufacturers. Manufacturers in the large and medium sizes remained steady. You can read more blogs from the official website of PL Global Impex Pte Ltd.

 

2. What is the future of FMCG products?

One of the biggest global industries is the FMCG (Fast Moving Consumer Goods) or Consumer Packaged Goods (CPG) sector. According to a report, the FMCG sector is well positioned to grow by $310.5 billion between 2022 and 2026, mostly due to consumers’ increased use of ready-to-eat food products.