What is FMCG?
FMCG (fast-moving consumer goods) refers to products such as non-durable household goods that are purchased frequently, consumed rapidly, priced low and sold in large quantities. Essentially, anything you can find in the supermarket will come under FMCG.
‘Fast moving’ goods have low-profit margins and high-volume sales whereas ‘slow-moving’ goods have a longer shelf life and are purchased over a longer period, they tend to have higher profit margins and lower-volume sales. An example of Slow-Moving Consumer Goods is furniture.
Understanding FMCG
Products are considered “fast-moving” as they are quick to leave the shelves of a store or supermarket; this is because they are used by consumers regularly. Sales of certain goods can be increased by factors such as discounts being offered by the store or during holidays/ seasonal periods.
FMCG products are divided into 3 sections: durable goods, non-durable goods and services. Every day, nearly everyone in the world uses fast-moving consumer goods. This use accounts for more than half of consumer spending. Durable goods have a shelf life of three years or more while nondurable goods have a shelf life of less than one year.
What types of products are classed as FMCG?
Fast-moving consumer goods are divided into 3 main categories, including:
- Food – Ambient, Bakery, Baby, Confectionery/Snacking, Chilled, Desserts, Food to go, Fresh, Fresh Produce, Tinned, Fresh, Frozen
- Drinks – Soft Drinks, Hot Drinks, Beer, Wine and Spirits
- Non-food – Health & Beauty, Consumer Electronics, Toys, Personal Care, Household/Cleaning, Hygiene, DIY, Houseware/Cookware
- These products are either branded or own-label goods,
Branded – Coca-Cola, Irn Bru, Warburtons, Walkers, Right Guard, Loreal
Own Label – Products manufactured by a supplier to then sell as the Retailers own Brand. E.g – Morrison’s tinned Beans.
Which are sold in different channels
Off Trade (Take Home, off Premise)
- Top 4 Grocery/ Grocery Multiples – ASDA, Morrisons, Tesco and Sainsburys
- Grocery – Coop, Waitrose, Booths
- Discounter – Two areas in this space.
- European Discounter – Aldi or Lidl
- UK Discounters/Hard Discounters – Iceland, Home Bargains, B&M, Poundland
- Off Trade Wholesale – Booker, Costco,
- Convenience – Nisa, Spar, Costcutter,
- High Street – Boots, Superdrug, WHSmith
- Foodservice – Brakes, Bidfood, Merlin,
- Online – Two different areas (below)
- PurePlay – Amazon and Ocado
- Retailer – Morrisons.com
On Trade (Out of Home, On-Premise)
- National Pub Groups/Managed Retail – M&B, Stonegate, J D Wetherspoons
- Casual Dining – Restaurant Group, Wagamama’s, Prezzo
- HORECA (Hotels, Restaurants, Catering) – Hilton, Marriot, Sodexo
- MOG’s – Multiple Operating Groups – Arc Inspirations, Tokyo, D&D Group
- Independents – Independently run bars, restaurants, cafes, pubs
- On Trade Wholesale/ RTM – Matthew Clark, LWC, Molson Coors, Venus, Enotria, Amathus
Within the fast-moving consumer goods industry, the competition for market share is high, therefore companies focus heavily on packaging not only to attract customers but to preserve shelf life and demand for the product.
FMCG companies manufacture products which include all of the above the top 10 FMCG companies include:
10) L’Oréal – Includes cosmetics, makeup and beauty products with over 34 global brands
9) Cola-Cola – The company markets four of the world’s top five non-alcoholic soft-drink brands that are Diet Coke, Coca-Cola, Fanta, and Sprite
8) Tyson Foods – World’s largest processor and marketer of chicken and meat products and exports the largest percentage of meat outside the United States.
7) Ab InBev – The company was originally formed with the big companies that came together to form today’s AB InBev and are now considered the world’s largest beverage company
6) Unilever – Unilever owns more than 300 brands worldwide spread across various product segments
5) JBS – Has food processed and maintained with international standards, backed by well-known brands sold in more than 150 countries
4) Pepsi Co – PepsiCo Inc is an American multinational food and beverage company
3) Procter & Gamble – The company’s product portfolio included foods, snacks, and beverages
2) Nestle AG – The company has whopping 2000 total brands worldwide, Nestle manufactures and distributes baby food, medical food items, bottled water, cereals, coffee, tea, confectionery, frozen food, etc
1) Johnson &Johnson – Johnson & Johnson has mainly captured the premium segment for all of its products and its wide global distribution such as baby products, Clean & Clear face wash, Tylenol medications, Band-Aid brand line for bandages etc.
Future of FMCG
By 2025, the industry Is projected to reach around £15 trillion, therefore for global brands to face the future of FMCG they must understand the evolving threats and consumers around them such as E-commerce.
E-Commerce
Grocery is officially the fastest-growing e-commerce category in the UK. The challenge FMCG faces in e-commerce are giants like Amazon are replacing physical shopping experiences with high standards of quality, delivery and customer-centricity. An effective strategy for Amazon was converting the 100’s of millions of Prime members to online grocery shopping; they did this by offering exclusive memberships and discounts.
Strategies have evolved over the years to appeal to larger consumers by resembling the experience of supermarkets and grocers, discounters are now using price promotions, loyalty programs and stronger advertising to put them ahead of leading supermarkets.
Sustainability
With the awareness of the environmental impact plastic waste is going to have on our future, brands are starting to think about what they can do to effectively reduce the impact. Things like rethinking their approach to material selection which has already led to vast improvements across the industry.
Waitrose has created a unique approach, being the first of the nation’s household name brands to experiment with a new retail experience called ‘Waitrose Unpacked’.
The service design is simple, Waitrose has provided in-store dispensers which allow customers to fill and refill jars/pouches on a day-to-day basis.
The quantity of plastic waste being removed from the average consumer basket is early evidence of how the FMCG future could be, if taken seriously by similar-sized brands, it could pave the way for a new, sustainable retail landscape.
FMCG is growing and will continue to grow as demands for these goods will remain consistent.
Although there’s lots of competition in the market, FMCG has managed to maintain and hold top rank through customer satisfaction; providing quality products at reasonable prices whilst achieving a high turnover rate for themselves.
We can expect FMCG companies to continue solid growth, forever, essentially. Next stop: The Metaverse.
