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FMCG space gears up for greater consumption


With the economy poised to grow at a steady pace this fiscal, it is hardly surprising that fast-moving consumer goods (FMCG) companies are trying to move into the fast lane in India.

India has one of the fastest growing consumption markets in the world, which is critical to the growth plans of multinational consumer companies with a presence here, more so, because of the lacklustre growth in the developed markets.

The acquisition of Paras Pharma by Reckitt Benckiser highlights this growing engagement of overseas companies in India. Many multinational companies, such as, Nestle, Unilever, Proctor & Gamble, Kraft, Gillette and General Mills have operations in India and, over the last couple of years, several others, like, United Biscuits and Excelsia have also made an entry. Besides the organic route, these companies may explore the option of taking the inorganic route to generate more revenues from India.

Local consumer companies are not lagging behind in their growth aspirations. As competition hots up in the Indian market with new product launches and brand extensions, Indian companies are looking at buying out competition and expanding outside of India. Many of them are scouting the emerging markets of Africa, Middle East and Latin America to acquire attractive targets.

Several Indian firms, such as, Amrutanjan, Vicco, Anchor’s FMCG business and Himalaya Drug’s over-the-counter products, are being viewed as potential targets by investment bankers and analysts. However, long-term profitability depends on how well the acquiring company integrates its acquired entities over the years.

Posted on: 14.1.2011
Source: www.economictimes.com