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| "Bimaru" states to prop Indian FMCG sales: Study |
| Press Trust of India / New Delhi Jul 18, 2010, 12:19 IST |
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The Indian FMCG sector, pegged to reach a size of $43 billion by 2013, will see a major chunk of its growth coming from Bihar, Madhya Pradesh, Uttar Pradesh and Rajasthan in the next two years, according to a study by brokerage firm Indiabulls.
The report by Indiabulls said, the four states, jointly addressed as "Bimaru" accounted for 24 per cent of the total FMCG consumption in India at present.
"We note that the four Bimaru states contribute about 36 per cent of India's population, but just 24 per cent of FMCG consumption, clearly highlighting the scope of opportunities for FMCG growth in these states," the study said.
The study also highlighted that 40 per cent of the consumers in these states comprise youngsters and 40 per cent are the rural masses.
As per a Ficci study, the Indian FMCG sector is expected to grow at a compound annual growth rate (CAGR) of around 12 per cent over the next few years to reach a size of $43 billion (Rs 206,000 crore) by 2013 and $74 billion (Rs 355,000 crore) by 2018.
The Indiabulls report pointed out that per capita income in the four states has started to grow at 13 per cent, matching the national average as against a poor average of 5 per cent in the past.
It said the four states will provide leading FMCG firms like Nestle, GSK, Marico and Dabur, opportunities to penetrate and gain market share from smaller players in the next two years.
"These states offer three kinds of opportunities -- penetration, usage and market share from smaller players. Penetration opportunities are significant in foods, oral care, skin care and feminine hygiene," it said.
During the last fiscal, smaller players, including local and regional players, had eaten into the shares of multinational companies particularly that of HUL.
"We believe in FY10, smaller players (local/regional) gained market share across categories. But with competition intensity increasing among larger ones, we believe smaller players will be losing out to larger players significantly," the study said.
As per the study, growth of soap and the shampoo segment will be driven by volume growth in these states, where penetration of the product is still low.
"Huge penetration opportunity exists in Rajasthan and Madhya Pradesh, among these states, which together contribute about 34 per cent of shampoo volumes," it said.
The study said penetration in rural north India increased from 9.5 per cent in 2000 to 46 per cent in 2008 due the companies' initiative to sell in small packets or sachets.
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