stage 3 slides

8/6/2019 Stage 3 Slides

1/34

Project 2015

Final Stage

ndian FMCG INDUSTRY

By: Ravi, Shiv, Namrata, Mewa, Ratnakar and Chetan


2/34


3/34

Market Segmentation

Geographic

Demographic

Socio Economic

2015


4/34

Recap

Detailed industry analysis

Meaning and characteristics of FMCG

Market segments

Rural market

SWOT analysis

Top players

Individual company analysis

2015


5/34

ABOUT FMCG

Products that are sold quickly at relatively low cost.

Characterized by:

Low absolute profit, but high cumulative profit

Non-durable

Include essential commodities

Calls for little time on purchase decision

Extremely price sensitive- companies like to stick to

popular prices ofRs 2, 5, 10 etc.

2015


6/34

INDIAN FMCG INDUSTRY

Fourth largest sector in the economy and has a market size of US$

17.6 billion.

Predicted to reach to US$ 33.4 billion in 2015 from US $ billion 11.6

in 2003.

Competitiveness lies in easy availability of raw materials, cheaplabour and presence across value chain.

Potential lies in untapped rural India consisting of 70% of countrys

population wherein FMCG penetration is 2% only

Increasing disposable incomeUrban India is almost saturated for segments like household and

personal care where penetration is about 80% and 70% respectively.

2015


7/34

11.6

17.6

33.4

0

5

10

15

20

25

30

35

40

2003 2010 2015

FMCG Market Size

($bn)

43%

34%

23%

Market Segments

Food &

Beverages

Personal

Care

Household

2015


8/34

Product Mix

HULD

abur Nestle P&GFood

Personal Care

Home Care

Nutrition

Water

Health, Hygiene &

Beauty

Hair Care

Oral Care

Skin Care

Digestives

Fruit Juices

Honey &

Chyawanprash

Glucose

Milk Products and

Nutrition

Beverages

Chocolates andconfectionery

Prepared Dishes and

Cooking Aids

Fabric care

Hair care

Baby care

2015


9/34

HULDISTRIBUTION NETWORK

Setting up rural and small town marketing

distribution network.

Establishing new products at difference price points.

2015


10/34

P&G DISTRIBUTION NETWORK

Streamlining its distribution network in anexercise code named Operation Golden EyeGetting out of rural market.

Focusing on the class A&B towns.

Moving to a demand based model which

enables to reduce the quantum ofwaste. Reducing the no. of price points atwhich it

offers its products

2015


11/34

DABURDISTRIBUTION NETWORK

Following the basic HLLs track i.e. every possible

price point

Reducing the no. of distributors where population of

the town is less than 20,000.

Appointing super-stockist.

Instead of expanding distribution to increased

demand for a product, demand should drivedistribution

Star 2015


12/34


13/34

Branding Strategy

HUL- Power branding strategy, 35 Power brands

2 umbrella brands Brooke Bond and Lipton

P&G- power brand

NESTLE- sub brand and power brand

DABUR- sub brand

2015


14/34

FMCG INDUSTRY-ARURAL JOURNEY

2015


15/34

Rural IndiaGaon GaonKi Kahani

Annual size of rural market in FMCG Rs. 50,000 cr.

70% of Indias population is dependent on the rural economy.

Disposable income of the consumer is low.

It has been growing 5 times the pace of the urban market. Accounts for 50% of sales of soaps and detergents.

Penetration of FMCG products, esp tea and soaps has gottendeeper.

Challenges which has to overcome

Challenge of reach To ensure that consumers are aware of and want your brand.

Challenge to communicate the right message.

2015


16/34

Key Factor

Reasonable pricing would have to be the key factor

of companies success in rural India. Components of rural distribution and marketing:

Mandis, Haats and Melas, are major components of

rural distribution and marketing.

Key Factors

2015


17/34

Mergers and Acquisitions

HUL

Acquired govt. stake in modern foods

Acquired lipton tea and brooke-bond

Acquired ponds cosmetics

DABUR

acquisition of balsara group( oral care)

Acquired fem care pharma Acquired namaste laboratiories

NESTLE

Acquire medical nutrition division

Merger with anglo Swiss condensed milk

P&G

Acquire gillette

Acquisition of Sara lee air care( coffee and food brand)

Merger of wella-AG ( Germany group deals in hair care and cosmetics).

2015


18/34

FINANCIALANALYSIS

2015


19/34

NESTLE

( in cr.)

2643 2944

3647

4471

5222

309 315 413534 655368 405 450 511 613

0

1000

2000

3000

4000

5000

6000

2005-06 2006-07 2007-08 2008-09 2009-10

sales

profits

total assets

1197513035

14715

17320 18220

1354 15391743 2000 21022362 2796 1527 1987

2583

0

5000

10000

15000

20000

2005 2006 2007 2008-09 2009-10

sales(in crores)

profits

total assets

HUL

(in cr.)

2015


20/34

DABUR:

( in cr.)

1757 20802396

28343417

214 282 333 391501624 670 749

1060 1129

0

1000

2000

3000

4000

2005-06 2006-07 2007-08 2008-09 2009-10

Sales

profits

total assets

P&G

(YEAR ENDING IN JUNE)

( in cr.)

597 553

652

773

913

13990 131

179 180273 291

351445

0

200

400

600

800

1000

2005-06 2006-07 2007-08 2008-09 2009-10

Sales

profits

total assets

2015


21/34

Key Financial Ratios


22/34

Nestle India(in Rs. Cr.)

150.33

163.97 160.29

98.90

112.83 112.68

43.4049.09

60.29

10.02 11.39 11.61

42.92

55.39

67.94

0

20

40

60

80

100

120

140

160

180

Dec'07 Dec'08 Dec'09

ROCE (%)

RONW (%)

ROA

ITR

EPS

SOURCE: moneycontrol.com


23/34

Hindustan Unilever(in Rs. Cr.)

138.72

118.59106.78

122.97 121.34

85.25

6.61 9.4511.848.20 9.26

8.998.12 11.47 10.09

0

20

40

60

80

100

120

140

160

Dec.'07 Mar' 09 Mar' 10

ROCE (%)

RONW (%)

ROA

ITR

EPS

SOURCE: moneycontrol.co


24/34

Dabur India

(in Rs. Cr.)

67.51

47.98

61.6261.58

51.20

58.04

5.95 8.43 8.6

12.5210.94 11.31

3.67 4.32 4.99

0

10

20

30

40

50

60

70

80

Mar' 08 Mar' 09 Mar' 10

ROCE (%)

RONW (%)

ROA

ITR

EPS

SOURCE: moneycontrol.com


25/34

Procter & Gamble(in Rs. Cr.)

52.86 51.6044.05

37.9140.64

33.62

106.79

135.56

164.70

16.88 17.7921.28

40.48

55.10 55.38

0

20

40

60

80

100

120

140

160

180

June' 08 June' 09 June' 10

ROCE (%)RONW (%)

ROA

ITR

EPS

SOURCE: moneycontrol.co


26/34

On the basis of key financial Ratios

ROCE- Nestle 150.33

RONW- HUL 122.97

ROA- P&G 106.79

ITR- P&G 16.88

EPS- Nestle 42.92


27/34

Selection of a Potential Star


28/34

Net Profit margin ratio

(profit as a % 0f sales)

Total asset turnover ratio

(sales as a ratio of total

assets)

Return on equity

( PAT as a % of owners

equity)

YEAR

&

NAME

2007-

08

2008-

09

2009-10 2007-

08

2008-

09

2009-

10

2007-

08

2008-

09

2009-

10

NESTL

E 11.3 12 12.5 7.2:1 8.7:1 8.5:1 98 112 113

HUL 11.8 11.54 11.53 9.6:1 8.7:1 7:1 121 121 81.3

DABU

R

13.8 13.8 14.7 3.2:1 2.7:1 3:1 27 24 27

P&G 20 23 19.7 1.9:1 1.7:1 37 40

RATIO ANALYSIS2015


29/34

FUTURE SCENARIO

HULEntered the noodles market and giving tough competition to

NESTLE MAGGI

About to enterRs100 crore pasta market through its KNORR

subsidiary.Project SHAKTI, Project SAMRUDHDHI

DABUR

Re-branding ofREAL JUICE

Launched retail subsidiary- H&B STORES in DelhiOfficial partner for IPL team KINGS XI PUNJAB

Launched Vitamin and Health suplement- NUTRIGO

2015


30/34

NESTLE

Setting up a R&D center in India which will be a part of its global

network of 29 R&D centers.

Building capacity in India by spending Rs 650 crores in capital

investments in the last 3 years

Launched Nutrition Awareness Programme.

P&G

Connect and Develop model

Contd

2015


31/34

Key success factor of P&G

70% spent on TV advertisement.

Refund offer to consumer on home products.

Improving affordability to a large no. of consumers

Project Peace: Environment Education Programme Opened Gujarat Earthquake Relief centres in partnership with SSP.

Project Shiksha: Secure your childs Future.

2015


32/34

Key success factor of HUL

Availability near the consumer through a wide distribution

network.

Continued efforts in reducing the brand cost.

Winning relationships with customers.

Project Shakti a unique opportunity in accessing r ural

consumers.

Developed advanced marketing mix modelling techniques.

Good Turnover, Good Profits and strong cash delivery during

recession.

2015


33/34

Key success factor ofDabur

Knowledge base and Modern Science

Over 10 Research Areas

Production of Ayurvedic medicines

Leadership in health care

Maintaining global standards

Ranked as Indias Most CustomerResponsive FMCG Company

(2010-11)

2015


34/34

THANK

YOU

stage 3 slides

Documents