The global fast moving consumer goods market is projected to register a CAGR of 6.60% during the review period. The market's growth can be attributed to the rising demand from the food and beverages industry. Market players are expected to witness profitable growth opportunities in the global market due to the increasing demand of fast moving consumer goods from global consumers in the market. The FMCG has remained heavily fragmented with tier-1 players accounting for less than one-fourth of the market and market continues to see newer entrants continuing to try and consume a revenue pie from the ever growing FMCG industry.
The key players operating in the global fast moving consumer goods market include Nestle SA, PepsiCo Inc, Coca Cola, Unilever, Tyson Foods, P & G, JBS, Kraft Heinz. The tier-1 players have a global reach and diverse product portfolios. Nestle SA, PepsiCo Inc, Coca Cola, Unilever are some of the players dominating the global market due to brand reputation, product differentiation, financial stability, and diversified regional presence. The market players are focused on investing in research & development and adopting strategic growth initiatives such as product launches, joint ventures, patent approval, acquisition, expansion, certifications, partnerships, and investment to strengthen their market position and capture a large customer base.
Threat Of New Entrants
The global fast moving consumer goods (FMCG) market is large and highly competitive. The initial investments required are quite moderate to high and differ with the country where the business is about to be started, the country’s ease of doing business, the type of manufacturer whether by a local manufacturer or a foreign entity, the size of an entity, the range & variety of products, etc. For instance, the capital required to start an FMCG business in India requires around Euro 105.15 million for foreign investors, states the Invest India portal, and around only Euro 5.26 million to Euro 15.77 million as per the African Development Bank estimates. Further, the costs incurred in acquiring the license & approval for the business and logistics for supply chain movement of the raw materials & finished goods involve a considerable amount of capital.
The technical expertise for procuring the right quality raw materials and planning the production schedules is considerably high which requires the hiring of suitable and well-qualified professionals. Owing to the increasing need for a variety of fast moving consumer goods, especially the food & beverages, consumer electronics, and personal care products market, requires a pool of well-experienced research and development personnel to develop and design innovative products. Further, the fast moving consumer goods (FMCG) products are moderately differentiated among their peers based on the quality, nature of the good (in the case of food & beverages and personal care products), technology involved, ease of operation (in the case of electronics), intended application, etc.
Hence, the threat of new entrants in the global fast moving consumer goods (FMCG) market is expected to be moderate.
Bargaining Power Of Suppliers
The raw material suppliers for fast moving consumer goods (FMCG) are the manufacturers of food ingredients, chemical ingredients, semiconductors, electrical components, paper, rubbers, plastics, wood, metal, glass, ceramics, etc. Sweeteners, spices, flavorings, oils & fats, fruits, vegetables, grains, and milk are some of the most commonly used ingredients in food & beverage production. The global suppliers in fast moving consumer goods (FMCG) are inundated with several players including tier-1, tier-2, and small-scale suppliers of varying quality that provide a competitive advantage for the manufacturers to choose between the wide range of options. As the raw materials pose low differentiation in character but are quite minimal, this reduces the manufacturers’ switching costs. Moreover, the market players enter into partnerships and agreements with raw materials producers and suppliers to ensure uninterrupted supply.
Hence, The Bargaining Power Of Suppliers In The Global Fast Moving Consumer Goods (FMCG) Market Is Expected To Be Low.
Threat Of Substitutes
The potential substitute for the fast moving consumer goods (FMCG), in the case of the food & beverages segment, is homemade products that are generally made using natural ingredients without any addition of preservatives. Natural products like essential oils and shea butter, DIY products, and homemade products are potential substitutes for personal care products. Similar is the list of options in healthcare products like homemade remedies. Generally, in homemade and DIY food & beverage products and personal care products, there’s no use of preservatives like in industrial products which limits the shelf-life of the product and hence its use. Also, the increasing urbanization and hectic work schedule leave little room for the preparation of homemade and DIY products for a significant proportion of the population across different age groups and regions. The above said factors result in a lower propensity to substitute supplements with regular FMCG products.
Hence, the threat of substitutes in the global fast moving consumer goods (FMCG) market is expected to be low.
Bargaining Power Of Buyers
Several well-established fast moving consumer goods (FMCG) manufacturers in this perfect competition market result in wider product breadth and availability which ultimately reduces the switching costs for the buyers. There are several buyers of FMCG products in the global market including the individual buyer and corporate/commercial buyers for the purpose of household use and commercial purposes. The buyer concentration is high compared to the overall industry concentration. Also, brand awareness and identification of fast moving consumer goods (FMCG) are quite high with the established brands and low with the small and new manufacturers, resulting in moderate brand awareness among consumers. Thus, all these factors are expected to affect the bargaining power of the buyers significantly.
Hence, the bargaining power of buyers in the global fast moving consumer goods (FMCG) market is expected to be moderate.
Intensity Of Rivalry
The market is highly competitive, marked by competition among the market players in terms of product quality, form, and pricing. The established players are engaged in expanding their customer base through various initiatives including production facility expansion, acquisition, distribution channel expansion, etc., thus intensifying the competition among the manufacturers. For instance, in 2022, Procter & Gamble acquired a range of companies including Tula Life Inc., a leading skincare brand that uses probiotic extracts majorly; Farmacy Beauty, a cruelty-free skincare brand that uses natural ingredients, Ouai Haircare, a company involved in the sales of hair, body and fragrance products. Also, as the industry is expected to grow at a CAGR of 6.60%, the manufacturers are focusing on research & development and strategic partnerships to strengthen their business in the market.
Hence, the intensity of rivalry in the global fast moving consumer goods (FMCG) market is expected to be high.
