The survey attributes the reflected buoyancy to the following factors:

1) Several cost saving measures

2) Various tax benefits

3) Rising demand

4) Growing GDP

5) Good monsoon

6) Strong economic fundamentals

7) The expected policy packages to be announced by the new government for farmers for raising rural income is bound to stimulate growth further

The FICCI Survey offers insights into the dynamics of growth in a competitive market environment. The salient features of development the survey has identified include:

• The improvement has been much more pronounced in volume terms than in value terms for most of the products.
• Post liberalization period provided the consumers the opportunity to make choices amongst the products of domestic companies and imported products.
• One of the greatest achievements made by the FMCG industry has been the ‘sachet’ bug which have helped the companies to introduce products in smaller package sizes, at lower price points and reach new users and to expand market share for value added products in urban India.
• Several cost saving measures, various tax benefits, rising demand, good monsoon have helped the industry to achieve positive growth.
• Most of the multinational companies have started sourcing their products from India. HLL has become the production center in respect of personal consumer products like oral care, skin care products, soap , detergents globally for Unilever.
• There has been a trend from shift to own manufacturing from third party manufacturing or procuring goods from third party small-scale manufacturers.
• Though the companies are going global, they are focusing on the overseas markets like Bangladesh, Pakistan, Nepal, Middle East and CiS countries because of the lifestyles, consumption habits similar to India. Godrej Consumer, Marico, Dabur, Vicco laboratories are among the companies.
• The offshoots and mushrooming of regional companies which are posing a threat to bigger FMCG companies like HLL. The rise of Jyothi Laboratories, throwing challenge to Reckitt Benckiser is a case in point.
• FMCG market remains highly fragmented with almost half of the market representing unbranded, unpackaged home made products. This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products.
• There is competition between the organized and the unorganized sectors in the FMCG sector.
• Marketing and distribution are very important in FMCG companies. New products require a large investment in product development, market research, awareness campaign, developing franchise for a new brand advertisements, free samples and product promotions.
• All these developments have made the consumers strong , who are in a position now to choose a variety of products, from a number of companies, at different price points. Bargaining power of customers is high.
• Key factors to success are distribution (in rural markets) and advertising (in urban markets). Critical factors for success are the ability to build, develop and maintain a robust distribution network.
• The fact that a lot of women have started looking for specialized products has driven growth.

The FICCI survey confirms higher growth rates for some FMCGs belonging to personal care products, fabric & personal wash products, oral care products and Hair care products for 2003-04 as compared to the previous year based on the estimates made by the industry and interaction with the concerned representatives in the industry.

The sectors which have recorded double digit growth in terms of value are shaving cream (20 per cent), deodorant (40 per cent), branded coconut oil (10 per cent),anti dandruff shampoos (15 %), hair dyes (25 per cent), cleaners & repellents (20 per cent).

Some sectors which have recorded negative growth are personal health care (-3 %) Laundry soaps (-5 percent), dish wash (-3 %), toilet soap (-4.5%) Tooth paste (-5 percent), tooth powder (-8 percent).

The performance of the industry during the periods April-March 2003-04 and the corresponding previous year, April-March 2002-03 in terms of absolute figures and the percentage growth rates sector wise are presented below:

Growth in production of FMCG

Segment wise analysis:-

Fabric wash market: The demand for detergents has been growing at an annual growth rate of 10-11 per cent during the past five years, while the laundry bar market has witnessed a negative growth. This year growth rate is low at 2 per cent for detergent cakes and 2.5 per cent for washing powder. In the urban markets, people prefer to use washing powder and detergents, instead of bars, on account of convenience of usage, increased purchasing power, aggressive advertising and increased penetration of washing machines.

Personal wash market: While the growth rate for the overall personal wash market is only 1 per cent compared to average growth rate of 5 per cent, premium and middle-end soaps are growing at a rate of 10 per cent. The leading players in this market are HLL (Lux, Lifebuoy, Breeze, Rexona), Nirma (Nima), Godrej Soaps (Cinthol, FairGlow, Shikakai, Nikhar), and Reckitt & Colman (Dettol).

Oral care market: The oral care market valued at Rs. 26 bn has suffered a negative growth of 5 per cent in 2003-04. Toothpaste and toothpowder have suffered negative growth of 5 % and 8 % respectively. The market for tooth brushes valued at Rs 4 bn has grown at 5 per cent in 2003-04 as compared to 10 % in 2002-03.

Skin care and cosmetics market: Skin care and cosmetics valued at Rs 12 bn and includes cold creams, lotions, moisturizers, cleansers, talcum powders, deodorants, lipsticks, nail enamels, etc. The shaving cream market valued at Rs 1.1 bn, has grown by 20% in 2003-04. The market is dominated by C-P, Gillette India and Godrej Soaps. The skin care market has seen the entry of a number of international brands, like Oriflame, Avon and Aviance. The herbal-based products are also quite popular in
this market.

Hair care market: Hair care includes a variety of branded and unbranded products like hair oils, shampoos, creams, conditioners hair dyes, etc. The Coconut Oil Market account for 72 per cent of the hair oil market. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. HLL is also extending its Sunsilk brand to hair oils. The market for branded coconut oil valued at approximately Rs. 8 bn has grown by 10 %. The market has been witnessing a shift in usage patterns in both urban and rural markets.

Feminine hygiene market: The feminine hygiene market is estimated to be worth Rs. 2 bn market. The market has reversed from a negative growth in previous years and flat growth in the last year has recorded a growth of 2 per cent in 2003-04. This has
got a boost from the withdrawal of excise duties.

Deodorants market: The deodorant market is estimated to be worth Rs 0.8 bn and has been growing at 40 per cent annually. The organized segment is dominated by HLL with its Rexona, Axe, Denim and Impulse brands in different categories targeting different segments of the market.

Dish wash market: The total size of the dish wash market, estimated at Rs 4.4 bn has recorded a negative growth of 3 per cent in 2003-04. Over 60 per cent of the market is dominated by bars, while dish wash powders accounts for 32 per cent. The
penetration levels are, however, still very low.

Cleaners / Repellents Market: The cleaner market covering products like floor cleaners, air, phenyl and toilet cleaners, and is estimated to be growing at 20 per cent per annum. The key players are HLL, Reckitt & Colman India (RCI), Henkel Spic, Bayer India and Balsara Hygiene. The market for insecticides and repellents is estimated to be around Rs 8 bn has grown by 20 per cent in 2003-04. Godrej Sara Lee is the world's largest manufacturer of mosquito mats, with an all-India market share of about 66 per cent. The organized sector is trying to increase penetration levels by higher brand visibility.

The survey outlines some measures for raising productivity, efficiency and making FMCG competitive as follows: -

• Level of abatement for soaps and detergents should be revised to 45 per cent in consideration of hike in the prices of various inputs.
• Excise duty of about 50 per cent without CEN VAT credit facilities on alcohol based toiletries is very high and should be on par with non-alcoholic toiletries.
• Higher and different sales tax rates in different states.
• VAT applicable for these products should fall in the proposed 4 per cent slab.
• Companies need to have a distribution system of its own or rely on other companies and for product awareness and demand creation try new products with already established popular product lines.
• The companies should introducing product variants that account for distinctive regional tastes as well as a wide range of package sizes and prices to suit to purchasing preferences of India’s varied consumer segments.

The survey confirms that the FMCG sector is poised for further growth because of the emerging opportunities and strong fundamentals developing in the economy. The FICCI survey highlights the need for pro-active government action for
helping the industry to achieve lower cost, improved quality and better performance in the competitive environment.

The survey foresees that future growth will come from newer segments such as the youth and through increased rural and small town penetration. The Internet and e-commerce will change the dynamics of this industry helping companies improve their procurement, distribution and selling efficiencies. This will, in turn, help them reduce prices and still remain profitable.

A package of fiscal incentives provided by various State governments like Himachal Pradesh, Uttranchal, have encouraged companies to set up manufacturing facilities in these regions. Some companies setting up units in backward areas are:
• Britannia Industries
• Colgate Industries
• Dabur Industries
• Godrej Consumer Products
• Hindustan Lever
• Marico Industries

FMCG market remains highly fragmented with almost half of the market representing unbranded, unpackaged home made products. This presents a tremendous opportunity for makers of branded products who can convert consumers to branded products.

In the past decade, the personal care industry has witnessed a consumer boom. This has been possible due to liberalization, growing urbanization and an increase in the disposable incomes due to rise in Gross Domestic Product. The changing lifestyles, higher level of awareness among the rural community as a result of the onslaught of satellite television has fuelled demand.

The boom has also been fuelled by the reduction of excise duties, de reservation from the small-scale sector and the concerted efforts of personal care companies to tap the potentials of the segment of the middle class through product and packaging innovations.

On the basis of the above positive developments conducive for further positive growth, the white goods industry makes the following projection in respect of the commodities for the first two quarters of 2004-05 as per the table below: