The Road Ahead: India’s FMCG Industry, Sector and Market Insights

The FMCG industry in India is the largest combination of diverse product categories, such as home care, health care, personal care & cosmetics, food & beverages, and others. The segment of personal care is expected to experience significant growth due to the rise in disposable income of consumers, which will allow them to spend a substantial amount on luxury personal care products.

Changes in lifestyle drive the development of the FMCG market in India significantly. In addition, the growth of the global population, the rise in consumer awareness of FMCG products, the frequent introduction of new products, and the effective advertising of FMCG brands all contribute to the expansion of the global FMCG market.

The rise in popularity of online purchasing, the development of new brands and products, and the expansion of FMCG networks in rural areas of developing nations are expected to create new opportunities for market participants in the future.

The global FMCG market is expected to reach $18,939.4 billion by 2031, at a CAGR of 5.1% from 2022 to 2031.

  • Higher the population, greater the demands: The world’s population continues to grow, leading to an increase in the number of potential consumers. More people with diverse needs and preferences contribute to the higher demand for FMCG products.  
  • Urbanization: Urbanization is on the rise globally, with more people moving to cities and urban areas. Urban lifestyles often lead to busier schedules, increased disposable income, and a preference for convenient and readily available FMCG products.
  • Changing Consumer Preferences: Consumer preferences are continually evolving. There is a growing demand for healthier, organic, and sustainable FMCG products, reflecting a shift toward more health-conscious and environmentally-friendly choices.
  • Income Growth: Rising income levels, especially in emerging economies, have contributed to increased consumer spending on FMCG products. As people’s purchasing power increases, they tend to spend more on convenience goods and non-essential items.
  • Convenience and Time Constraints: FMCG products are designed for convenience and quick consumption. In today’s fast-paced world, consumers prefer products that save time and effort, making FMCG goods more attractive.
  • Marketing and Branding: Effective marketing and branding campaigns by FMCG companies have significantly influenced consumer behavior. 
  • Globalization and Trade: Improved transportation and trade agreements have facilitated the global distribution of FMCG products. Companies can now reach new markets more efficiently, expanding their customer base.
  • Online Retailing: The growth of e-commerce and online retail platforms has made FMCG products easily accessible to a broader audience. Online shopping provides convenience and opens up new markets for FMCG companies.
  • Product Innovation: The consumer companies in India are continuously introducing new products and variants to cater to changing consumer tastes and preferences. Innovation attracts consumers looking for novel experiences and better choices.

Primary Forces Behind the Expansion of the FMCG Sector

The Development of E-Commerce: The technological revolution impacted India’s urban and rural areas. There has been a discernible shift in demand as a result of the availability of e-commerce across the country, whether in rural or urban areas.

It provides greater consumer convenience because customers can easily select and purchase their desired products via applications and websites. In addition, the option for home delivery will deliver the products to their homes.

Value Augmentation: The FMCG market in India is also driven by the retail sector in rural India and the rise in rural consumption. As a consequence, 36% of its total spending is allocated to FMCG.

The FMCG industry in India grew as a result of consumer-driven growth and higher product prices, particularly for necessities. Moreover, due to numerous government initiatives, including hygiene categories, high agricultural production, reverse migration, and packaged commodities, the market grew by double digits and reached 10.6%.

Multiple industries, including tobacco, food and beverage, domestic, and personal care, provide support for the FMCG sector in India.

The Importance of Technology: The FMCG industry places a strong emphasis on velocity, and technology can provide the consumer companies in India with access to this agility. As a result, the FMCG industry is preparing to leverage technology to improve operational efficiency, identify new opportunities, and manage complex supply chain requirements.

The FMCG industry relies extensively on market research in order to identify consumer behavior and field sales experts. Utilizing business intelligence, the cloud, and sophisticated field service management software, enterprises can enhance the efficacy of their sales operations.

Additional Directions: The rural market in India is expected to increase by over $220 billion over the next few years. This is because rural India’s consumption has increased, as increasing incomes have raised the aspirations of the average person.

Moreover, the increasing proportion of young people in India’s population is a significant factor that will increase demand for FMCG products.

The FMCG industry remains a vital and dynamic part of the global consumer market. By remaining accustomed to shifting consumer trends, addressing industry challenges, and capitalizing on emergent growth and innovation opportunities, consumer companies in India can position themselves for success in a dynamic and competitive environment. By prioritizing consumer needs, sustainability, and technological advances, the FMCG industry can continue to thrive and have a significant impact on the lives of consumers around the globe.

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