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Fast Moving Consumer Goods (FMCG)
Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover and relatively low cost. Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and so the cumulative profit on such products can be large.

Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs,batteries, paper products and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products and drinks, although these are often categorized separately.

The retail market for FMCGs includes businesses in the following International Standard Industrial Classification (ISIC) :

  • ISIC 5211 retail sales in non-specialized stores
  • ISIC 5219 other retail sale in non-specialized stores
  • ISIC 5220 retail sale of food, beverages and tobacco in specialized stores
  • ISIC 5231 retail sale of pharmaceutical and medical goods, cosmetic and toilet articles
  • ISIC 5251 retail sale via mail order houses
  • ISIC 5252 retail sale via stalls and markets
  • ISIC 5259 other non-store retail sale

Supplier industries for FMCGs include 1511 meat and meat products, 1512 fish and fish products, 1513 fruit and vegetables, 1514 vegetable and animal oils and fats, 1520 dairy products, 1531 grain mill products, 1532 starches and starch products, 1533 animal feeds, 1541 bakery products, 1542 sugar, 1543 cocoa, chocolate and sugar confectionery, 1544 macaroni, noodles, couscous, 1549 other food products, 1551 spirits; ethyl alcohol, 1552 wines, 1553 malt liquors and malt, 1554 soft drinks, mineral waters, 1600 tobacco products, 2101 pulp, paper and paperboard, 2102 corrugated paper, containers, 2109 other articles of paper and paperboard, 2424 soap and detergents, cleaning preparations, perfumes.

FMCG products can be thought of in contrast with consumer durables, which are generally replaced less than once a year (e.g. kitchen appliances).

Some of the best known examples of Fast Moving Consumer Goods companies are Reckitt Benckiser, Sara Lee, Nestlé, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars.

A subset of FMCGs are Fast Moving Consumer Electronics which contain innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems, cell phones and Laptops which are replaced more frequently than other electronic products mainly due to technolgy changes.

White goods in FMCG refers to large household electronic items such as refrigerators. Smaller items, TV sets, stereo systems etc. are sometimes termed Brown goods.

Unlike other economy sectors, FMCG share float in a steady manner irrespective of global market dip, because they generally satisfy rather fundamental - as opposed to luxurious - needs.

Characteristics of FMCG in India

  • Branding:Creating strong brands is important for FMCG companies and they devote considerable money and effort in developing bands. With differentiation on functional attributes being difficult to achieve in this competitive market, branding results in consumer loyalty and sales growth.
  • Distribution Network:Given the fragmented nature of the Indian retailing industry and the problems of infrastructure, FMCG companies need to develop extensive distribution networks to achieve a high level of penetration in both the urban and rural markets. Once they are able to create a strong distribution network, it gives them significant advantages over their competitors.
  • Contract Manufacturing:As FMCG companies concentrate on brand building, product development and creating distribution networks, they are at the same time outsourcing their production requirements to third party manufacturers. Moreover, with several items reserved for the small scale industry and with these SSI units enjoying tax incentives, the contract manufacturing route has grown in importance and popularity.
  • Large Unorganized Sector:The unorganised sector has a presence in most product categories of the FMCG sector. Small companies from this sector have used their locational advantages and regional presence to reach out to remote areas where large consumer products have only limited presence. Their low cost structure also gives them an advantage.