Fast Moving Consumer Goods (FMCG).

China and India are the emerging market leaders in the region, and the differences between their fast moving consumer goods (FMCG) sectors is instructive.

In a revealing series of reports, "From Sao Paulo to Shanghai-New consumer dynamics: the impact on modern retailing," the consulting/accounting firm PriceWaterhouseCoopers (PWC) (New York), took a look at developments in several emerging economies. The information PWC developed on the FMCG sectors in China and India provides a real direction for thinking about FMCG in the region as a whole.

FMCG consist of three large product categories. They are: Packaged foods; cosmetics and toiletries, and household care products.

According to PWC (citing the market research firm Euromonitor as its source) the 2004 total market for packaged foods in China was us$5.2-billion, an increase [presumably] from 2003 of 9.0 percent.

PWC says further that, as with most FMCG products, packaged foods are more popular with higher income consumers in the top-tier cities. The acceptance of packaged foods goes against traditional Chinese food buying patterns. The tradition is firmly rooted in fresh foods.

But urban consumers are changing their habits because of speed and convenience, as they are in other emerging markets. The higher incomes of urban consumers is also a factor.

Rural consumers are not part of this change, however. The central reasons are low incomes, poor infrastructure, which makes distribution problematic, and the low rural market segment penetration of refrigeration and microwave ovens.

In India, sales of consumer goods generally are expected to grow robustly. Market forecasts show sales increasing slightly less than three times from us$11.6-billion in 2003 to us$33.4-billion by 2015.

The FMCG sector is experiencing share of wallet competition from durables, luxury goods, and automobiles, says PWC. But February 2006 FMCG sales showed the biggest increase since 2001 with a rise of 10.6 percent, measured year-on-year.

Apparently, the growth occurred across all major product categories with the exception of packaged tea.

Whereas in China where rural FMCG sales are dampened by tradition and infrastructure problems, FMCG rural sales in India are expected to grow. Total FMCG sales will grow at a compound rate of 10 percent by 2012, and over half of the total will be accounted for by rural sales.

CONSUMER MARKET INSIGHTS: