Fast-Moving Consumer Goods (FMCG) Definition
Fast-moving consumer goods (FMCG) are non-durable consumer goods that sell like hotcakes as they usually come with a low price and high usability. Their examples include toothpaste, ready-to-make food, soap, cookie, notebook, chocolate, etc.
These products are usually stacked up on the shelves of the supermarkets like Walmart. Less durability, high demand, and low price are some FMCG traits that enable them to be sold off quickly.
- Fast-moving consumer goods (FMCG) are non-durable by nature. They have a huge demand and are affordable by mostly everyone.
- The FMCG examples include processed foods, beverages, cosmetics, toiletries, health products, consumer electronics, etc.
- Less durability, high demand, and low price are some FMCG traits that enable them to be sold off quickly from the shelves of the stores. Sometimes, they are also called consumer packaged goods or CPG, as many are packaged goods.
- Proper planning, innovation, localization, diversification, and investment are some reasons behind many FMCG brands’ success. Some popular FMCG brands are Nestle, Coca Cola, P&G. The distribution channel is an important aspect of product delivery.
How does FMCG Work?
FMCG sector’s popularity is far-reaching. From packaged daily necessities that can be easily grabbed from a store to ready-to-make food, the fast-moving consumer goods industry provides affordable solutions to everyday problems. For example, hostel students prefer packaged food like instant noodles as it does not require elaborate cooking. Packaged food helps individuals who live alone and cannot arrange for home-cooked meals. Likewise, the industry has been helping consumers by providing medicines, masks, cosmetics, personal care, and hygiene products.
In 2017, the value of the Global FMCG market size was $10,020.0 billion, with its 2025 growth projections being $ 15,361.8 billion. Asia is one of the largest markets for these products. Many studies have found that FMCG brands have succeeded using innovation, localization, value-oriented products, better customer targeting and product diversification.
For example, this Mckinsey study explains how in China, Wrigley chewing gum quickly became a fast-growing product, acquiring over $2 billion using products designed especially for the Chinese consumers. It further explains how FMCG giant Nestle reduced prices by 30% in its ready-to-drink coffee segment in China to provide more value-oriented products.
A strong distribution channel plays a crucial role in the FMCG industry as it ensures that the products are delivered to the stores on time. An expensive supply chain will also add to the cost. As such, global brands try to find ways to source the resources locally. For example, Nestle offered discounted coffee in China by saving on the cost using a local supply base in Yunnan. Consequently, its sourcing became 99 % Chinese.
Moreover, the distribution model is divided into two parts, one part is direct, and another part is indirect. In the direct state, the transaction occurs between the manufacturers and clients without the interference of the third party. In the indirect state, the manufacturers sell the product through a distribution channel to its clients.
Many channels were disrupted, leading to losses in the aftermath of the pandemic. At the same time, the companies had to buckle up to meet the increased demands of consumer goods due to panic buying. Another challenge for the FMCG industry has been the changing consumer preference towards healthier alternatives. Moreover, the e-commerce boom has forced companies to offer their products using online platforms. Also, more and more consumers are turning price-sensitive. All these challenges have hurdled the growth of the sector.
List of Fast Moving Consumer Goods (FMCG)
The fast-moving consumer goods are bought on a need basis and sold frequently. The classification of the FMCG industry is done primarily by product type. Some of the types are listed below.
#1 – Processed Foods
They come in a package. Some serve as a cooking ingredient; some are ready-to-eat food, while some have nutritional value. For example, tinned vegetables, cereals, flavored yoghurt, cheese, tofu, canned beans, etc. Almost all kinds of food are processed. Some of them contain artificial flavors and preservatives to increase their shelf life.
Almost all kinds of food undergo some form of processing. For example, even a can of fresh diced tomatoes undergoes cleaning, dicing, and packaging. Also, sometimes vitamins are added to dairy products to boost their nutritional levels.
#2 – Beverages
This category includes fruit juice, drinking water, cold drink, shake, and soft drink. For example, a can of packaged orange juice that you grab on your way to work.
#3 – Dry Foods
Examples of dry foods are sugar, powdered milk, tea, rice, flour, etc. Had they not been available as a packaged food, people would have to head to a factory or a farmer’s cottage to purchase a bag of rice.
#4 – Fresh Foods
Fruits and vegetables are examples of fresh foods, but they are perishable by nature, so they have less durability.
#5 – Bakes Foods
Different types of cookies, biscuits, packaged cakes, doughnuts, and muffins, etc., come under this category. The fast-moving consumer goods companies keep coming up with innovative varieties of baked goods to entice customers. The products also come with a shelf life, and if they are not consumed by then, they become unfit for consumption.
#6 – Cosmetics and Toiletries
This category includes different skin moisturizers, facial makeup, hair colors, beautifying products, deodorants, etc. Examples of toiletries include soap, toothpaste, razors, shaving creams, etc.
#7 – Ready-to-Eat
They are ready to eat food and need to be consumed immediately. Examples include snacks, noodles, soups, etc.
#8 – Frozen Foods
Ice creams, sausages, etc., belong to this category.
#9 – Consumer Electronics
Electronic equipment is typically used in everyday life. Examples of this category include memory cards, headphones, laptops, etc.
#10 – Health and Hygiene Products
This includes different types of medicines, surgical masks, hospital gowns, tampons, etc.
#11 – Office Supplies and Stationery
They are the items that are regularly used for performing office work. The list of items includes a stapler, eraser, marker, highlighter, fountain, pen, sticky notes, folder, etc.
Examples of Fast-Moving Consumer Goods (FMCG) Companies
Let’s focus on some leading companies:-
#1 – Procter and Gamble (P&G)
The company was founded in 1837 by William Procter and James Gamble in Cincinnati, Ohio. It is one of the giant multinational consumer goods companies. They sell different types of beauty, personal care, health products, etc. P&G’s market cap is $326.64 billion. The brand is present in approximately 180 countries and territories.
#2 – Nestle SA
The Swiss company was founded in 1866 in Switzerland. It has its presence in almost 190 countries. It has a market cap of over $304.1 billion. Nestle boasts different product lines such as beverages, coffee, cereals, snacks, baby food, dairy, chocolates, pet food, food service, etc. Fast-moving consumer goods saw major profit during the frenzy food stocking phase of the Covid-19 lockdown, with Nestle outperforming many competitors.
#3 – PepsiCo
The popular company was founded in 1965 in the United States, and it has its presence in many countries. The wide range of foods and beverages are appreciated by many. The market cap of the brand is $199.18 billion. Post pandemic, the company also saw massive profit with the increased buying of packaged foods.