FMCG are products that sell quickly at relatively low cost. These goods are also called consumer packaged goods.
FMCG have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods). These goods are purchased frequently, are consumed rapidly, are priced low, and are sold in large quantities. They also have a high turnover when they're on the shelf at the store.
Consumer goods are products purchased for consumption by the average consumer. They are divided into three different categories: durable goods, nondurable goods, and services. Durable goods have a shelf life of three years or more while nondurable goods have a shelf life of less than one year. Fast-moving consumer goods are the largest segment of consumer goods. They fall into the nondurable category, as they are consumed immediately and have a short shelf life.
Nearly everyone in the world uses fast-moving consumer goods (FMCG) every day. They are the small-scale consumer purchases we make at the produce stand, grocery store, supermarket, and warehouse outlet. Examples include milk, gum, fruit and vegetables, toilet paper, soda, beer, and over-the-counter drugs like aspirin.
FMCGs account for more than half of all consumer spending, but they tend to be low-involvement purchases. Consumers are more likely to show off a durable good such as a new car or beautifully designed smartphone than a new energy drink they picked up for $2.50 at the convenience store.
As mentioned above, fast-moving consumer goods are nondurable goods, or goods that have a short lifespan, and are consumed at a fast pace.
FMCGs can be divided into several different categories, including:
Because fast-moving consumer goods have such a high turnover rate, the market is not only very large, it is also very competitive. Some of the world's largest companies compete for market share in this industry including Tyson Foods, Coca-Cola, Unilever, Procter & Gamble, Nestlé, PepsiCo, and Danone. Companies like these need to focus their efforts on marketing fast-moving consumer goods to entice and attract consumers to buy their products.
That's why packaging is a very important factor in the production process. The logistics and distribution systems often require secondary and tertiary packaging to maximize efficiency. The unit pack or primary package is critical for product protection and shelf life, and also provides information and sales incentives to consumers.
FMCGs are sold in large quantities, so they are considered a reliable source of revenue. This high volume of sales also offsets the low profit margins on individual sales as well.
As investments, FMCG stocks generally promise low growth but are safe bets with predictable margins, stable returns, and regular dividends.
Shoppers across the globe increasingly purchase things they need online because it offers certain conveniences—from delivering orders right to the door to broad selection and low prices—that brick-and-mortar stores can't.
According to a 2018 report by Nielsen, the most popular goods for online purchase are related to travel, entertainment, or durable goods, such as fashion and electronics. However, the online market for groceries and other consumable products is growing, as companies redefine the efficiency of delivery logistics and shorten their delivery times. While non-consumable categories may continue to lead consumable products in sheer volume, gains in logistics efficiency have increased the use of ecommerce channels for acquiring FMCGs.1
Consumer packaged goods are the same as fast-moving consumer goods. They are items with high turnover rates, low prices, or short shelf lives. Fast-moving consumer goods are characterized by low profit margins and large sales quantities. Products that fall within this group include soft drinks, toilet paper, or dairy products, for example.
The three main categories of consumer goods include durable goods, nondurable goods, and services. Durable goods, such as furniture or cars, last at least three years. Often, economists will watch durable goods spending to track the health of the economy. Nondurable goods are items with a shelf life of under one year, and are consumed rapidly. Fast-moving consumer goods fall within this category. Finally, services include intangible services or products, such as haircuts or car washes.