Navigating Growth and Challenges in the Indian FMCG Sector in India
In recent years, the FMCG sector in India has witnessed remarkable growth and transformation. With a booming economy, rising consumer spending, and technological advancements, the Indian FMCG industry is poised for further expansion. The FMCG, being the fourth largest industry, is predicted to grow at a 14.9% CAGR to $220 billion by 2025, up from $167 billion in 2023.
The industry employs a total workforce of 3 million, comprising 8.4% of the total factory employment, with women accounting for 13% of this workforce, equivalent to 390,000 individuals, and representing 18% of corporate leadership positions.
We’ll delve into the various aspects of the Indian FMCG industry, exploring its growth drivers, market trends, government support, technological advancements, and the critical role of the people supply chain.
Growth Drivers and Market Trends:
India’s economy ranks among the top in the world, with significant GDP growth and a burgeoning middle class India is expected to be the world’s third-largest consumer market by 2030. This growth has propelled the FMCG industry, with consumer expenditure projected to reach unprecedented levels. Tier 2 and Tier 3 cities are emerging as key markets, surpassing metropolitan regions in retail consumption. Mumbai, Bangalore, Chennai, Delhi, and Hyderabad are among the top five Indian cities that showcase a strong intent to hire for FMCG jobs. The top three functions experiencing significant hiring in the industry are sales, marketing, and information technology.
Additionally, the FMCG sector is witnessing robust growth in rural areas, driven by increased disposable income and improved living standards. Market segmentation reveals a diverse range of products, from Household and Personal care (50%), Food & Beverages (31%), and Healthcare (19%).
Government Initiatives and Support:
The Indian government has implemented several initiatives to support the FMCG industry’s growth trajectory. Schemes such as ‘Gati Shakti’ and the Production-Linked Incentive (PLI) Scheme aim to streamline processes, boost domestic manufacturing, and attract foreign investment. The Open Network for Digital Commerce (ONDC) and favourable FDI policies have further enhanced the industry’s competitiveness and market reach. In the next two years, it is expected that e-commerce will account for 25% of all consumer purchases in India, up from 8% now that it has reached 500+ cities and added more than 3+ lakh sellers/service providers.
Technological Advancements and Digital Transformation:
Technology is playing a pivotal role in shaping the future of the FMCG brands in India. From digital marketing and e-commerce to blockchain and AI-based analytics, companies are leveraging cutting-edge technologies to drive efficiencies and meet consumer demands. The rise of direct-to-consumer (D2C) models and the growth of online channels are reshaping traditional retail paradigms, offering new opportunities for market expansion and consumer engagement. It is forecasted that by 2040, a whopping 95% of all retail purchases will be made online.
Challenges and Opportunities:
Despite its promising outlook, the FMCG sector in India faces challenges such as data management, brand management, price wars, and catering to diverse demographics. In 2030, India will have 370 million Gen Z consumers with different purchasing priorities. FMCG businesses will need to keep abreast with the needs of the modern Indian consumer who is highly aware, exhibits a preference for health and nutrition, and has higher spending power.
The Role of the People Supply Chain:
As per the TeamLease Report on Empowering the Essentials : A Deep Dive into India’s FMCG Workforce:
- Gender share in FMCG: The proportion of male associates is over 90% of the outsourced workforce.
- The distribution of outsourced associates is highest in Uttar Pradesh (14%) followed by Maharashtra (13%) and Andhra Pradesh (9%).
- Male associates have an educational attainment of up to the 12th grade & below at a rate of 51%, while female associates exhibit a higher rate of 60%.
- The YoY growth rate of overall associates is 1.2%.
In the dynamic FMCG industry, success hinges on the efficiency and effectiveness of the people supply chain. Hiring the right talent, reducing attrition, and enhancing productivity are critical factors for business success. Leveraging technology-enabled tools, streamlining onboarding processes, and investing in employee development are key strategies for optimizing the people supply chain. Additionally, fostering a culture of diversity and inclusion and providing opportunities for career progression are essential for employee engagement and retention.
In 2024, the Indian FMCG industry is poised for transformation as stakeholders respond to heightened customer awareness of pricing, packaging, quality, and sustainability. Adopting AI-powered solutions like ML and NLP (Natural Language Processing), along with manufacturing automation, will be crucial for delivering excellence. While the adoption of technology may unlock the path to a better understanding of consumer needs and wants, insights can only be derived and delivered by a dedicated and skilled workforce that is responsive to the needs of the customer.
By leveraging government support, embracing digital transformation, and optimizing people in the FMCG supply chain, FMCG companies can position themselves for sustained growth and success. With a strategic approach and a focus on innovation and agility, the Indian FMCG industry is poised to capitalize on emerging opportunities and overcome existing challenges, driving growth and prosperity in the years to come.
Click here to download your copy of the TeamLease Report on Empowering the Essentials : A Deep Dive into India’s FMCG Workforce
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