The unexpected factors in the FMCG business

The fast-moving consumer goods (FMCG), also known as CPG, is projected to nearly double in value over the next ten years, from about $ 8,000 in 2016 to $ 14,000 billion in 2025.

That philosophy is equivalent to forecasting that there will be about 81 corporations like Kellogg in the next decade. The fiercest competition in the industry, especially in the new big economies such as Russia, India, Brazil and China. How should companies in the industry make the solution?

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Three unexpected factors

 Experts have studied the markets of more than 2,600 large and small cities in the world and turned out to be the philosophical ideas that have long been wrong.
Firstly, brand new entrants who do not have enough financial strength have the wrong idea that it is too late to enter the Chinese or Indian market due to harsh competition. In fact, if they choose the major cities to be present, their ability to dominate the market will be large. For those industries with low minimum requirements, market access only in these markets (in some key cities) could also generate revenue equivalent to the coverage level. Nationwide in other emerging markets - even higher. For example, the fruit juice industry, in Shanghai alone, will triple and market size is greater than that of Malaysia.
Secondly, the US and Western European markets are not all that able to boom. Most CPGs believe that this is just a market scrambled distribution system to maintain market share. But not so, It's not just the skyrocketing, but the markets in many cities in the US and Western Europe are skyrocketing in comparison to emerging markets. Ignoring these markets, the CPG companies missed out on many opportunities at home. According to research, commodities such as anti-aging cream, beverages, mineral water, ... will double the current level of expenditure.
In addition, many cities in China and India are modernizing their distribution and retail infrastructure, making it easier to penetrate these markets in rural areas. See more: import export fmcg
Thirdly, the factor is quite contrary to the philosophy they have long believed, that consumers in emerging markets will not buy high-end products. In fact, in large cities in developing countries, the per capita income is as high as or even higher than that of similar cities in North America or Europe. The structure of the needs of local people in these cities is similar and is increasingly similar to the demand in the cities of developed countries. For example, products such as high-end cosmetics, baby food, pet food, etc. Companies that can meet these consumer needs will soon be positioned as consumers. Market leadership, even creating momentum for other needs. As an example, P & G entered China with baby diapers when the market was only used to cloth diapers, immediately becoming the first choice brand and quickly taking on the role. Navigating this segment in China.

Building strategies for micro markets

As a result of the report, researchers have suggested a different approach to developing country markets (especially new big economic groups) - to gain market share equivalent to or larger than the market. Other national schools. One example is the study of middle-sized cities with a population of 20,000 to 50,000 in Brazil, but averaging an average annual increase of about 7.5% and bringing about the same level of expenditure. about half of the total Brazilian population. Sunscreens or baking products can also bring you double or even more than 50% of your teeth. Meanwhile, in India, soaring markets will come from urban areas - concentrated in 70 of the most populous cities - accounting for about one-seventh of the country's population, contributing up to over 1 / 4 for the total value of the beverage industry from 2016 to 2025.

In order to penetrate these markets, experts suggest the following issues that the CPG Group is offering:

1. Hot spot analysis: Which top 100 cities should we build in order to achieve soaring ambitions?
2. Select the industry: Which major and minor industries have the potential to increase in those cities?
3. Market Testing: What specific market practices are we expecting?
4. Resource Allocation: Which geographical areas should be allocated more resources to ensure our future spurt?
For cities in developed countries where markets are more crowded and have a lower potential for growth, the following questions are important:

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Preliminary data analysis: Which cities or micro markets offer the best opportunity for our products?
Check for presence "How strong are we when we are present in areas where there are soaring foxes?
Market positioning: Where are the highs that our market share is below average?
Resource allocation: We have reallocated investments and human resources to sectors of the highest spike regions.
Answering these questions can provide the basis for decisions about product categories, market costs, labor resources, and the placing of factories or distribution centers for episodes. CPG delegation.