The fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and personal care accounting for 50% of FMCG sales in India. The main competition in this industry is between organized and unorganized/small regional players as they sell their products at 25% to 30% lower than the selling price of organized companies. But the rising inflation is promoting the increase in raw material costs due to which the margins of unorganized/small companies are getting reduced which ultimately helps the organized sector to gain the market share. Three major FMCG companies have gained significant market share.
Reasons provided by the company behind market share gains:
i) Introduction of implementing the ‘Bridge Gap’ technique across products categories
ii) Pricing power which the company enjoys over other players (HUL has taken more than 20% price hike since October 2021), the highest among other FMCG Companies). The company has also taken price hikes via Grammage cuts.
iii) Increasing direct & indirect distribution reach
iv) Clear focus on core strategy products
Market Share Gains across its product categories:
ii) Home & Personal Care:
iii) Food & Beverages:
Data Source (For Dabur): Dabur India Annual Report, Investor Presentation, and Earnings Call Highlights
What Should Investors Do?
There is a correction in these stocks more than the Nifty and Sensex as the FMCG sector has to bear the inflation for more than 2-3 years and they will continue to bear this. The correction in Britania is about 22% of their 52-week high, 24% correction in Dabur ltd., and 25% in HUL from their 52-week high whereas 15%-16% correction in the Nifty and Sensex. From the longest visibility point of view, investors should watch these sectors carefully and keep these stocks on the radar.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.
Originally Published On:https://blog.investyadnya.in/these-3-fmcg-stocks-are-continuously-gaining-market-share-should-you-invest%ef%bf%bc/