The fast-moving consumer goods (FMCG) sector is a resilient and profitable segment of the Indian economy. It comprises products consumed frequently and have a short shelf life, such as food, beverages, personal care, household items, etc. The FMCG sector
accounts for about 50% of the total consumer spending in India and may compound to 12% from 2020 to 2025.
However, not all FMCG companies can take advantage of the growth opportunities in the market. Some have more robust competitive advantages, better product portfolios, more efficient operations, and higher profitability than others. Today, we will compare and contrast the strengths and weaknesses of some of the key FMCG stocks in India using various competitor analysis frameworks and tools. We will also provide some stock market advisory tips based on our analysis.
One of the most popular and straightforward frameworks for competitor analysis is the SWOT analysis, which helps to understand the internal and external factors affecting the performance and potential of a company. Here is a SWOT analysis of four leading FMCG companies in India: Hindustan Unilever (HUL), ITC, Nestle India, and Britannia Industries.
● Dependence on biscuits and bakery segment for revenue and profit
● High dependence on raw material imports and fluctuations in commodity prices
● Intense competition from local and global players
● Regulatory and legal challenges
● Slowdown in discretionary spending due to COVID-19 pandemic
In a nutshell SWOT analysis indicates:
HUL leads among the four companies with a diverse product range, robust distribution, strong brand, and sustainability focus. Challenges include fluctuating raw material prices and tough competition.
ITC’s varied business faces hurdles in its tobacco segment but has room for growth in new segments and digital platforms.
Nestle India, a global F&B leader, seeks expansion opportunities in India amid challenges like competition and market slowdown.
Britannia dominates in biscuits but faces challenges like competition and market fluctuations, eyeing expansion and digital avenues.
Investment-wise, HUL stands as a blue-chip stock, offering consistent growth and lower risk due to its dominant market position and diversified portfolio. ITC, a conglomerate, faces hurdles in its tobacco segment and struggles in efficiency and digital presence.