Vanishing act: FMCG industry buries recession in fairness cream

Looks-conscious consumers propped up sales of fast-moving consumer goods (FMCG) companies, who in turn rewarded loyalty by not raising prices of fairness, anti-ageing creams, bathing bars and their likes, although input costs have risen in an economy ravaged by drought and then floods

As the global economic crisis consumed nearly every sphere of business, one industry held out against recession through 2009 by promising to help Indians look fairer, younger and their teeth whiter, kids stronger and taller, and toilets cleaner, reports PTI.

Looks-conscious consumers propped up sales of FMCG companies, which in turn rewarded loyalty by not raising prices of fairness, anti-ageing creams, bathing bars and their likes, although input costs have risen in an economy ravaged by drought and then floods.

Instead, they downsized the packaging to balance costs and margins.

"The sector has coped well with recent challenges and grew by 15% over the last year," says the Federation of Indian Chambers of Commerce and Industry (FICCI). The FMCG market in the country is worth $25 billion (about Rs1,20,000 crore).

Year 2009 also saw modern retail format stores and aggressive marketing help home-grown FMCG firms wrest market share from leader Hindustan Unilever Ltd (HUL), according to market research firm AC Nielsen.

HUL's share in the estimated Rs8,000-crore personal care market fell to 44.5% from about half last year, as others like ITC Ltd, Godrej Industries Ltd and Wipro Ltd fought for space in markets like Uttar Pradesh, Bihar and Gujarat with a rural push, says AC Nielsen.

Mergers and acquisitions (M&As) were few and far between during the year, and Wipro's Rs210 crore acquisition of UK-based Yardley's overseas operations was a highlight.

As for foods and beverages (F&B), the Indian market proved to be the growth driver for the world's biggest players like Coca-Cola and PepsiCo, even as their US parents grappled with falling sales.

PepsiCo's optimism in the Indian market was reflected in the global major holding its board meeting in India for the first time this year. The company has stepped up investments by another $100 million, from the $500 million announced last year for the next three years.

Surging input costs remained a pain area this year for F&B firms in the foods and beverages segment, mainly on account of soaring sugar prices which doubled to almost Rs40 a kg in the national capital in a year. Companies like PepsiCo, Britannia, ITC and Parle seriously mulled increasing prices of products to mitigate the rising costs, but held back.

Elsewhere, Dabur and Emami completed consolidation and restructuring after their respective acquisitions last year of Fem Care and Zandu Pharmaceuticals.

While Wipro went premium with Yardley, FMCG companies went in for a big push in rural areas, upbeat on the government's thrust on agriculture and increase in allocation for rural jobs.

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  • Retail chains unable to control shoplifting; customers at the receiving end

    Are big retail chains like Big Bazaar treating customers like potential thieves?

    Women customers are furious at Big Bazaar’s new policy of sealing hand bags in transparent plastic. “One of the largest retail chains recently instituted humiliating and discriminatory practices in New Delhi and the National Capital Region (NCR) in order to protect its commercial interests,” said Nalini Juneja, who was subject to a humiliating procedure while shopping at a Big Bazaar store in New Delhi.

    On Sunday, 6 December 2009, she had visited the Big Bazaar store at Vasant Kunj, New Delhi. She said that she was shocked to see a notice on display that said: ‘Ladies’ hand bags inside the store are allowed only under the sealed transparent bags temporarily provided by Big Bazaar. This is in the interest of security & safety of our valued customers. Thanks for your cooperation’.

    Ms Juneja said that she was made to seal her purse in a transparent plastic bag even after it had been opened and checked. “On asking why, I was told that this was a new security measure to prevent shoplifting,” said Ms Juneja. The seal was subsequently opened at the cash counter, in order to enable Ms Juneja to pay for her shopping.

    To add insult to injury, this order was specific to women. Men could walk in and out of the store, even if they had shirts and pants with big pockets and bags of sizes similar to ladies’ purses, without having to undergo this humiliation. “Along with other ladies, I was expected to carry around my own purse inside this sealed cover throughout the shop, as though I was advertising the fact that I am a potential thief and cannot be trusted with my own purse. I asked the store authorities what position would I be in if I needed my spectacles, mobile phone, pen or even my visiting card?” Ms Juneja told Moneylife. She added that she was thankful that she did not use an inhaler—else, even that life-saver would have been locked out of her own use!

    Big retail chains in India are trying to adapt to Western trends of shopping, but it looks like they cannot control shoplifting. A cross-section of customers who had been through a similar, harrowing experience said that retail chains were getting away with such kind of policies under the garb of security measures so that they do not need to answer people. These aggrieved customers feel that the onus should be on the sales executives of these various chains, who are supposed to keep a watch on customers, to prevent shoplifting.

    Atul Takle, head, corporate communications, Pantaloon Retail (India) Ltd said, “It (the sealing of hand bags) is an additional security measure that we are taking. We took this step because of various reasons like guidance from the local police authorities, instances of shoplifting, plus reluctance of some ladies to have their bags searched, as well as reluctance to leave their bags at the baggage counter.”

    He also added, “The same system is followed in D-Mart and Haiko Supermarket (both based at Powai, a Mumbai suburb). We follow the same rules for men also in our stores. Men are allowed in with their wallets after they have gone through the same security measures. Items like jackets are passed through metal detectors and men with larger bags are also requested to leave them at the baggage counter.”

    However, customers are unwilling to buy this excuse of security. They say that the new security measures are tantamount to treating all women customers as potential thieves.

    Incidentally, other big retail chains like Shopper’s Stop, Spencer’s (the retail chain of the RPG group) trust customers and do not believe in sealing bags. “Our security measures are good enough to prevent shoplifting. We welcome our customers and give them a good shopping experience. We will never seal anybody’s bag to stop shoplifting,” said Malini Sharma, from the corporate communications department of Shopper’s Stop.
    “We check customers’ bags before allowing them inside the store. There have been instances where we faced a problem with a few customers during checking of bags but we handled it calmly. We do not seal bags for security reasons,” said Shakuntalal Sarkar, an executive from the corporate communications department of Spencer’s.

    Summing up, Indian retail chains have to install comprehensive security measures to prevent shoplifting. They should not humiliate consumers with such draconian measures and should instead try to create a comfortable shopping experience. This will be to the benefit of both customers and these large retail chains.

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