The Overall Fmcg Market

The overall FMCG market is expected to increase at a compound annual growth rate (CAGR) of 14.7 per cent to touch US$ 110.4 billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7 per cent to reach US$ 100 billion during 2012-2025. The growth in rural FMCG is due to

1) Increase in rural income

Increase in rural income - Reasons

1. Based on the report by IBEF, Indian Brand Equity Foundation (IBEF), the rural regions were home to 75% of all new factories built in India in the last decade and accounted for around 70 per cent of new manufacturing jobs.

2. Increase in rural income because of government programs such as MNREGS, direct pension transfer under Jan Dhan Yojana and so on.

2) R & B Development plans to connect more villages through roadways

3) 19% annual increase on Per Capita Consumption over the last 3 years

Why is this important?

Over 70% of sales are made to middle class households today and over 50% of the middle class is in rural India. With an increase in their income FMCG sector is going to see a boom in near future.

Added reasons this time

• Reduced transportation cost

• Reduction in the number of shares available

• Increase in international exports to 5% of total revenues and entering into Joint Ventures

Britannia reported yet another strong performance in Q4FY15 with healthy revenue & strong margin beat. Key metrics are:

• Consolidated revenue at Rs 20.3bn, up 14.3% yoy with volume growth at 9-10% yoy.