The FMCG Industry is rapidly expanding around the world. With the increase in population, the demand for consumer goods is rising, thus providing businesses room for growth.
Investing in a growing economy like India is a golden chance for organizations to reap the benefits of its expanding FMCG sector. Thus, companies planning to enter this market should consider availing assistance from market experts to plan their forray effectively.
FMCG Industry Outlook for 2023 & India’s Role in It
The Fast-Moving Consumer Goods (FMCG) industry has maintained a sustainable pace of growth and returns on investment in the last few years. It is the only sector that has continued to expand even during the pandemic. However, in 2022, there has been a shift in consumer behavior, trends, buying habits, and more, thus affecting this industry.
With a probable rise in living costs in the future, there will be both opportunities and risks for organizations conducting business in this sector.
FMCG Industry: Global Outlook
After global and national pandemic-induced lockdowns, there have been a lot of changes that have revolutionized the FMCG industry. The global pandemic has increased the demand for online consumer goods. This has compelled FMCG companies to opt for a direct-to-customer approach and digital channels for offering their goods.
In the US, online grocery sales have shown a growth of 17%, indicating that the demand for FMCG goods online will only rise in the coming time.
Moreover, in the last decade, consumer demand has shifted to a more sustainable and environment-friendly front. Thus, major FMCG businesses have been changing their approach in order to provide customers with more ethical and eco-friendly goods.
Also, the pandemic re-introduced the concept of conscious living, with more people making their physical & mental well-being one of their top priorities. Consumers are now looking for foods and beverages that, apart from providing nutritional value, shall boost their health.
For example, many consumers have moved away from dairy products and are considering vegan alternatives for maintaining better health. According to a report, since 2020, the number of vegans in the UK has risen by 40%.
As per FMCG industry experts, consumer behavior will keep on changing, and it is up to organizations to reflect on their concerns and adapt accordingly.
Focusing on India’s FMCG Industry for 2023
For FMCG companies looking to expand their operations, India has been emerging as a hotbed for new opportunities.
Market experts have predicted that the FMCG industry in this country is set to grow at a CAGR of 14.9%. This amounts to a market growth of USD 110 billion from 2020 to almost USD 220 billion by 2025.
In addition, improved connectivity in urban and rural areas is increasing the demand for FMCG products via e-commerce portals, thus fuelling this rising demand.
Furthermore, the e-commerce segment is predicted to be responsible for almost 11% of FMCG sales by 2030. Apart from this, the rise in disposable income among consumers in rural India offers massive potential for organizations to grow.
The Indian Government has made it easier for foreign companies to join the country’s FMCG sector by providing approval for 100% foreign equity in the case of single-brand retail. Moreover, for multi-brand retail, the rate is set up to 51%. Businesses will also get production-linked incentive (PIL) schemes that will provide them with an outlay of USD 14.2 billion, thereby boosting their exporting opportunities.
Furthermore, FMCG products are in demand throughout the year. From April 2000 to March 2022, there has been a steady FDI inflow amounting to USD 20.11 billion. It is quite evident that there is no dearth of investments in this sector.
There is also one factor that makes India stand apart in the FMCG market. It has a rising population that, along with increasing brand awareness and consumerist trends, is set to take the FMCG sector to a new high.
What changes can Businesses Expect in FMCG Industry in 2023?
According to market experts, between 2022 to 2026, the FMCG industry is all set to grow by USD 310.5 billion. It has also been predicted that consumer spending will rise to approximately USD 8.85 trillion by 2025. As a result of increasing consumer awareness and growth of organized retailing activities, companies can reap the benefits of this growth phase in the years to come.
Apart from these aspects, businesses can expect an increase in consumer goods because of global population growth. The rise in individual income, easy access to goods via e-commerce platforms, launching of new products, and effective advertising are all responsible for the exponential growth of this industrial sector.
In India, retail sales are slowly transcending to digital mediums. A lot of small brands are gaining customers via social media or e-commerce platforms. Their promise to provide hand-made, all-natural, chemical-free products will enable them to gain a substantial share of the FMCG market.
Furthermore, according to a market survey, up to 57% of consumers are purchasing products of a particular brand based upon recommendations on whom they can trust. Thus, social media influencers can help organizations build a community of loyal customers who can help drive up their sales.
How can Businesses prepare for the changes in the Industry?
India is a land of diverse languages, cultures, and religions. Thus, businesses planning to enter India’s FMCG industry must make multiple marketing efforts to take advantage of these aspects. Apart from localizing their products to meet the Indian consumer’s needs, they also need to set a price that can appeal across customer segments.
Moreover, firms also have to face a wide array of legal and regulatory challenges to set up their business in this land. So, they must join hands with the right people who have in-depth knowledge of the market and can help establish their company.
In this regard, partnering with reliable consulting firms like Tecnova proves to be one of the best action plans. They can deliver local expertise and professional guidance, enabling companies to enter the Indian market seamlessly and effectively.
Companies, like Tecnova, offer their clients collaborative solutions to help develop customised-India centric products and services. With an experience of 38 years, it helps businesses set their footprint and expand in India by using high-impact strategies. Moreover, their extensive knowledge of the Indian market helps their clients fulfill their business expansion objectives.
Reference
https://www.linkedin.com/company/tecnovaglobal/
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