Introduction 

The FMCG (Fast Moving Consumer Goods) industry is one of the largest and most dynamic sectors in the world. It encompasses a wide range of products that are consumed frequently and rapidly, such as food, beverages, personal care, household care, and tobacco. The FMCG industry is characterized by high volume, low margin, and intense competition. It is also influenced by changing consumer preferences, environmental and social concerns, and technological innovations. In this report, we will provide an overview of the FMCG manufacturing industry, the market potential, the growing demand, the government subsidies and incentives, and the marketing and sales strategies for the FMCG industry. We will also analyze the opportunities and challenges faced by the FMCG industry in India, and especially in the states of Andhra Pradesh and Telangana, which are emerging as the key markets for FMCG products. 

Overview of the Manufacturing Industry 

The FMCG manufacturing industry is the process of transforming raw materials into finished products that are ready for distribution and consumption. The manufacturing industry involves various stages, such as sourcing, processing, packaging, labeling, and quality control. The manufacturing industry is vital for the economic growth and development of any country, as it generates employment, income, and exports. The manufacturing industry also faces several challenges, such as rising costs, regulatory compliance, environmental impact, and supply chain disruptions. Some of the key trends and opportunities in the manufacturing industry are: 

• The adoption of Industry 4.0, which is the integration of digital technologies, such as artificial intelligence, internet of things, cloud computing, and big data, into the manufacturing process, to enhance efficiency, productivity, quality, and innovation. The FMCG industry can leverage Industry 4.0 to optimize its operations, reduce wastage, improve customer satisfaction, and create new business models.
• The development of green and sustainable manufacturing, which is the adoption of eco-friendly practices, such as reducing waste, energy, and emissions, using renewable and biodegradable materials, and improving social and environmental responsibility. The FMCG industry can benefit from green and sustainable manufacturing by enhancing its brand image, reducing its carbon footprint, saving costs, and complying with the regulatory norms.
• The diversification of product portfolio, which is the introduction of new and differentiated products, such as functional foods, natural and organic products, and wellness products, to cater to the changing consumer needs and preferences. The FMCG industry can gain a competitive edge by diversifying its product portfolio, expanding its customer base, increasing its market share, and creating value for its stakeholders.

Market Potential 

Global Market 

The global FMCG market was valued at USD 10.8 trillion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 4.7% from 2021 to 2028, reaching USD 15.4 trillion by 2028, according to a report by Grand View Research. The major factors driving the growth of the global FMCG market are the rising disposable income, urbanization, population growth, and e-commerce penetration. The Asia-Pacific region accounted for the largest share of the global FMCG market in 2020, followed by North America and Europe. The key players in the global FMCG market include Nestlé, Procter & Gamble, Unilever, Coca-Cola, PepsiCo, and L’Oréal. The global FMCG market is expected to witness several opportunities and challenges in the future, such as: 

• The increasing demand for healthy, natural, and organic products, which is creating new market segments and niches for the FMCG industry.
• The growing awareness and concern for social and environmental issues, which is influencing the consumer behavior and preferences for the FMCG products.
• The rising competition and consolidation in the FMCG industry, which is intensifying the price wars, mergers and acquisitions, and innovation among the FMCG players.
• The emergence of new technologies and platforms, such as artificial intelligence, blockchain, and social media, which is transforming the FMCG industry in terms of production, distribution, marketing, and customer engagement.

Indian Market 

The Indian FMCG market was valued at INR 4.8 lakh crore (USD 64.5 billion) in 2020 and is expected to grow at a CAGR of 10.7% from 2021 to 2026, reaching INR 8.6 lakh crore (USD 115.8 billion) by 2026, according to a report by India Brand Equity Foundation. The major factors driving the growth of the Indian FMCG market are the increasing rural consumption, rising middle class, growing awareness, and digitalization. The Indian FMCG market is dominated by food and beverages, which accounted for 40% of the market share in 2020, followed by personal care (22%), household care (12%), and others (26%). The leading players in the Indian FMCG market include Hindustan Unilever, ITC, Britannia, Dabur, Marico, and Godrej. The Indian FMCG market is expected to witness several opportunities and challenges in the future, such as: 

• The increasing penetration of e-commerce and online retail, which is expanding the reach and accessibility of the FMCG products to the customers, especially in the rural and semi-urban areas.
• The changing consumer behavior and preferences, which is shifting the demand for the FMCG products from mass to premium, from generic to branded, and from unorganized to organized.
• The rising competition from local and regional players, which is challenging the dominance of the national and multinational players in the FMCG market.
• The evolving regulatory and policy framework, which is affecting the FMCG industry in terms of taxation, quality standards, labeling, and packaging.

Andhra Pradesh & Telangana Market 

The Andhra Pradesh & Telangana FMCG market was valued at INR 48,000 crore (USD 6.5 billion) in 2020 and is expected to grow at a CAGR of 12% from 2021 to 2026, reaching INR 96,000 crore (USD 12.9 billion) by 2026, according to a report by The Hans India. The major factors driving the growth of the Andhra Pradesh & Telangana FMCG market are the rising disposable income, urbanization, population growth, and e-commerce penetration. The Andhra Pradesh & Telangana FMCG market is dominated by food and beverages, which accounted for 42% of the market share in 2020, followed by personal care (20%), household care (10%), and others (28%). The leading players in the Andhra Pradesh & Telangana FMCG market include Hindustan Unilever, ITC, Britannia, Dabur, Marico, and Godrej. The Andhra Pradesh & Telangana FMCG market is expected to witness several opportunities and challenges in the future, such as: 

• The increasing demand for regional and ethnic products, which is creating a niche market for the local and traditional FMCG products, such as pickles, spices, snacks, and sweets.
• The growing influence of social media and online platforms, which is enhancing the awareness and exposure of the customers to the new and innovative FMCG products and brands.
• The improving infrastructure and logistics, which is facilitating the distribution and supply chain of the FMCG products in the rural and remote areas.
• The rising cost of raw materials and labor, which is affecting the profitability and margins of the FMCG industry.

Growing Demand 

The demand for FMCG products is expected to grow in the coming years, due to various factors, such as: 

• The increasing health and wellness consciousness among consumers, which is driving the demand for organic, natural, and ayurvedic products. The consumers are becoming more aware of the ingredients, nutritional value, and health benefits of the FMCG products, and are opting for the products that are safe, hygienic, and beneficial for their health.
• The rising preference for convenience and ready-to-eat products, which is driving the demand for packaged and processed foods. The consumers are looking for the products that are easy to prepare, consume, and store, and that suit their busy and hectic lifestyles.
• The growing aspiration and experimentation among consumers, which is driving the demand for premium and niche products. The consumers are willing to try new and different products, that offer them variety, quality, and satisfaction, and that reflect their personality, taste, and status.
• The expanding online and offline distribution channels, which is driving the demand for wider and deeper product availability. The consumers are able to access and purchase the FMCG products from various sources, such as e-commerce websites, online delivery apps, supermarkets, hypermarkets, kirana stores, and street vendors.
• The increasing innovation and differentiation among products, which is driving the demand for new and improved offerings. The FMCG industry is constantly launching and upgrading its products, to meet the changing consumer needs and preferences, and to gain a competitive advantage in the market.

Market Size and Growth Projections 

The market size and growth projections for the FMCG industry are based on the following assumptions: 

• The global FMCG market will grow at a CAGR of 5.4% from 2019 to 2025, reaching a value of $15.4 trillion by 2025. 
• The Indian FMCG market will grow at a CAGR of 12.5% from 2020 to 2025, reaching a value of $220 billion by 2025. 
• The FMCG market in Andhra Pradesh and Telangana will grow at a CAGR of 15% from 2020 to 2025, reaching a value of $30 billion by 2025. 
• The FMCG market will be segmented by product category, distribution channel, and region. 
• The product category will include food, beverages, personal care, household care, and tobacco. 
• The distribution channel will include supermarkets, hypermarkets, convenience stores, online, and others. 
• The region will include North America, Europe, Asia-Pacific, Latin America, and Middle East and Africa. 

The following table shows the market size and growth projections for the FMCG industry by product category, distribution channel, and region. 

 Government Subsidies and Incentives 

Government of India 

The Government of India provides various subsidies and incentives to the FMCG industry, such as: 

• The Production Linked Incentive (PLI) scheme, which offers incentives of 4-6% on incremental sales of food products manufactured in India for five years, starting from 2021-22. The scheme aims to boost the domestic production and exports of food products, and to create employment and income opportunities in the food processing sector. 
• The Pradhan Mantri Kisan Sampada Yojana (PMKSY), which provides financial assistance of up to 35% of the project cost for setting up food processing units, cold chain infrastructure, and agro-processing clusters. The scheme aims to reduce the post-harvest losses, increase the value addition, and enhance the income of the farmers and processors. 
• The Mega Food Park scheme, which provides financial assistance of up to 50% of the project cost for setting up mega food parks, which are integrated facilities for food processing, storage, and logistics. The scheme aims to create a modern and efficient food processing infrastructure, and to link the farmers and processors with the markets. 
• The Food Safety and Standards Authority of India (FSSAI), which provides a single window clearance for food safety and quality standards, and offers various schemes for training, certification, and testing of food products. The FSSAI aims to ensure the safety and hygiene of the food products, and to protect the health and well-being of the consumers. 
• The Goods and Services Tax (GST) regime, which has reduced the tax burden on the FMCG industry, by bringing most of the products under the 5-18% tax slab, and eliminating the cascading effect of multiple taxes. The GST regime aims to simplify the tax structure, increase the compliance, and improve the ease of doing business. 

Government of Andhra Pradesh 

The Government of Andhra Pradesh provides various subsidies and incentives to the FMCG industry, such as: 

• The Andhra Pradesh Food Processing Policy 2015-20, which offers incentives such as capital subsidy, interest subsidy, power subsidy, VAT/CST/GST reimbursement, stamp duty exemption, and land conversion fee exemption for food processing units. The policy aims to promote the food processing sector, and to create employment and income opportunities in the rural areas. 
• The Andhra Pradesh Industrial Development Policy 2015-20, which offers incentives such as investment subsidy, power cost reimbursement, interest subsidy, skill development subsidy, and patent cost reimbursement for industrial units. The policy aims to attract investments, create infrastructure, and foster innovation in the industrial sector. 
• The Andhra Pradesh Retail Trade Policy 2015-20, which offers incentives such as single window clearance, relaxation of labor laws, exemption from trade license fee, and permission for 365 days operation for retail units. The policy aims to facilitate the growth and development of the retail sector, and to provide a conducive environment for the retailers and consumers. 
• The Andhra Pradesh Innovation and Startup Policy 2014-20, which offers incentives such as incubation support, seed funding, mentoring, and tax benefits for startups. The policy aims to encourage entrepreneurship, innovation, and creativity in the state, and to create a vibrant startup ecosystem. 
• The Andhra Pradesh Special Economic Zone (SEZ) Policy 2009, which offers incentives such as duty-free import and export, income tax exemption, GST exemption, and exemption from state and local taxes for SEZ units. The policy aims to promote the export-oriented industries, and to create a hassle-free and competitive environment for the SEZ units. 

Government of Telangana 

The Government of Telangana provides various subsidies and incentives to the FMCG industry, such as: 

• The Telangana Food Processing Policy 2017, which offers incentives such as capital subsidy, interest subsidy, power subsidy, VAT/CST/GST reimbursement, stamp duty exemption, and land conversion fee exemption for food processing units. The policy aims to promote the food processing sector, and to create employment and income opportunities in the rural areas. 
• The Telangana Industrial Project Approval and Self-Certification System (TS-iPASS) Act 2014, which provides a single window clearance, self-certification, and time-bound approvals for industrial units. The act aims to facilitate the industrial growth and development in the state, and to provide a transparent and hassle-free system for the industrial units. 
• The Telangana Retail Trade Policy 2016, which offers incentives such as single window clearance, relaxation of labor laws, exemption from trade license fee, and permission for 365 days operation for retail units. The policy aims to facilitate the growth and development of the retail sector, and to provide a conducive environment for the retailers and consumers. 
• The Telangana State Industrial Development and Entrepreneur Advancement (T-IDEA) Incentive Scheme 2014, which offers incentives such as investment subsidy, power cost reimbursement, interest subsidy, skill development subsidy, and patent cost reimbursement for industrial units. The scheme aims to attract investments, create infrastructure, and foster innovation in the industrial sector. 
• The Telangana State Innovation Policy 2016, which offers incentives such as incubation support, seed funding, mentoring, and tax benefits for startups. The policy aims to encourage entrepreneurship, innovation, and creativity in the state, and to create a vibrant startup ecosystem. 

Marketing and Sales 

The marketing and sales strategies for the FMCG industry are crucial for creating brand awareness, customer loyalty, and competitive advantage. Some of the marketing and sales strategies for the FMCG industry are: 

• Segmenting the market based on the demographic, geographic, psychographic, and behavioral characteristics of the target customers, and offering customized products and services accordingly. The FMCG industry can segment its market based on various factors, such as age, gender, income, location, lifestyle, values, and purchase patterns, and tailor its products and services to suit the specific needs and preferences of each segment. 
• Positioning the brand based on the unique value proposition, differentiation, and benefits that it offers to the customers, and creating a strong brand identity and image. The FMCG industry can position its brand based on various aspects, such as quality, price, features, design, and social responsibility, and communicate its brand message and personality to the customers through various channels and platforms. 
• Promoting the brand through various channels, such as television, radio, print, online, social media, and outdoor, and using various tools, such as advertising, public relations, sales promotion, and direct marketing. The FMCG industry can promote its brand through various means, such as creating catchy and memorable slogans, logos, and jingles, sponsoring events and causes, offering discounts and free samples, and engaging with the customers through feedback and loyalty programs. 
• Pricing the products based on the cost, demand, competition, and value perception of the customers, and using various strategies, such as penetration, skimming, bundling, and psychological pricing. The FMCG industry can price its products based on various factors, such as the cost of production, the demand and supply of the products, the price of the competitors, and the value that the customers perceive from the products, and use various strategies, such as setting a low price to gain market share, setting a high price to create a premium image, offering a combination of products at a lower price, and using odd or even numbers to influence the customer perception. 
• Distributing the products through various intermediaries, such as wholesalers, retailers, distributors, and agents, and using various modes, such as online, offline, direct, and indirect distribution. The FMCG industry can distribute its products through various channels, such as e-commerce websites, online delivery apps, supermarkets, hypermarkets, kirana stores, and street vendors, and use various modes, such as selling directly to the customers, or selling through intermediaries who act as the link between the producer and the consumer. 

Investment Required for Different Production Scales 

The investment required for setting up a FMCG manufacturing unit depends on various factors, such as the type of product, the scale of production, the location of the unit, the technology used, and the machinery and equipment required. The following table provides an indicative estimate of the investment required for different production scales in rupees, based on some assumptions and averages.