Consumer Packaged Goods (CPG) are often referred to as Fast Moving Consumer Goods. CPG market size is estimated to be close USD 80 billion in FY19 and expected to touch USD 100 billion by FY20. This sector employs over 3.5 million workers. Retail sales are delivered through a network of 8.8 million stores including retail chains or the modern trade as well as single-location family-owned stores. While the overall CPG sector is estimated to be growing at the rate of 20-25%, the rural market is estimated to be growing at a higher rate of 30-35%. Recent years has seen much faster growth of e-commerce channel in CPG though present more in Tier 1 cities and SEC A.
Indian CPG market is driven by the following factors:
- Lower per capita consumption
- Lower penetration in rural markets
- Value-added/innovative products in already penetrated markets
- Increased share of organized players
The above four-factor is demonstrated below in the Dairy Sector.
India is the leading producing country in the world but still, 50% of the production and consumption is estimated to be in the unorganized sector. Growth opportunities are summarized below:
Milk production is expected to grow at a rate of 4% per annum whereas the industry is expected to grow at the rate of 15% by value. The difference is due to an increased share of organized players and more value-added products.
Poised with high growth, dairy Industry is at a point of inflexion due to changing consumer preferences, distribution landscape, by-product management as well as challenges in procurement