FMCG Penetration in India

Mr. X is working as a Marketing executive of an FMCG company in India. Mr. X is keen to launch a basket of FMCG products catering to the Indian Market. He has a vision and an ambitious growth plan charted out. One day, Mr. X happens to be part of an interseting meeting that includes some of the top leaders and decision makers of the company. The key area of discussion happens to be the extent of FMCG penetration in India. Remarks are being made about how heavily under penetrated the sector is in India. Mr. X is left to ponder on the group's remarks

'You are over-estimating the potential of FMCG in India. It is foolhardy to launch a big portfolio. I hope you are wise to choose what you offer.'

Now, I am a practioner of Marketing myself, and I know that seeds of skepticism have been sown in Mr. X's mind. But if I were to step back a bit and think aloud, I feel the reservations expressed by the 'top management' are completely baseless. I do not have the resources to conduct detailed studies on the extent of penetration and Market size of every category but I have something more basic as an indicator.

Scores of FMCG companies, across the Market Cap spectrum, have in recent times entered into multiple categories and segments with a range of product offers. What they essentially see is a huge opportunity and a chance to expand the pie. They have done their detailed studies, they have set up innovative distribution systems and they have drawn out an elaborate Marketing plan. Most importantly, they have realised that the rise of Modern trade in Metros/ Tier 1 and Tier 2 towns will automatically catapult the growth and conversion to FMCG. Going forward, the Modern trade is only going to become bigger and bigger. Assuming that the Modern trade players have a fundamentally sound business model, the FMCG players (more specifically the Market leaders in a certain category) only have semi-urban and rural markets to focus on for penetration of FMCG.

This to my mind is indication enough that the FMCG market is likely to grow significantly in the coming years. Now whether Mr. X chooses to 'wait and watch' or jump the bandwagon has to be entirely basis his gut. This is an option between wasting out on the opportunity to grow alongside the industry or fighting it out with many well-established players when things could get too late. Needless to say, this is going to require far more resources