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All fast moving consumer goods industries have the potential to grow in India, some more than others. The top three by value sales are apparel and footwear, personal accessories and packaged food. Together these account for over 50% of all retail sales, and the appearance of personal accessories in this top three sets India apart from the global village. While these rankings are not going to change anytime soon, faster growing categories also provide exciting new avenues for growth.
In a new report, FMCG in India: Understanding a Billion Needs, Euromonitor International explores the current state of a range of key FMCG industries and their future potential. Changing patterns of consumer expenditure and evolving aspirations are shaping the potential of these industries for the future.
Indian FMCG industries have higher growth potential compared to many markets around the world based on the life cycles of two broad industry types:
Consumers in India are slowly moving beyond basic necessities. As household disposable incomes grow, the share of spending on leisure and recreation, and miscellaneous goods and services, will witness stronger growth than categories constituted by basic necessities. However, income inequality will become more pronounced, as the share of disposable income of richer households continues to grow till 2030.
Source: Euromonitor International
In 2014, the US boasted the highest per capita spend based on a basket of 18 FMCG industries combined, at US$6,028 per person. China’s per capita spend is five times lower at US$1,262. While India stands at just US$203.
If we assume that the US represents peak penetration, then over time FMCG in India has the potential to grow thirty-fold. Even to reach the global average, India’s per capita spending would increase seven-fold. Quite how long it might take to catch up is not clear, although the size of the opportunity India represents is immense, and the direction is set.