EFFECT OF DUPLICATE PRODUCTS IN THE FMCG INDUSTRY

SUBMITTED TO:- Asst Prof TRIPTI SHRAMA

SUBMITTED BY:-

V.SATYA DEEPAK VIKRAM SINGH TAUSHREE BARAL SHEFALI GARG SHIPRA SINGH RICHA SHARMA

CONTENTS Introduction to FMCG industry. INDIA as a market for FMCG.Domestic vs. International players.Facts of the FMCG industry.Porter’s 5 force model & relation to duplicacy.FMCG as a lucrative industry.Duplicacy in day to day life.Examples of duplicate products.Causes of duplicate products.Losses.Duplicate product markets in INDIA.Measures to counter the dupicacy.

INTRODUCTION TO FMCG INDUSTRYAlso known as Consumer Packaged Goods (CPG)Products with quick turnover &relatively low costLess thinking by consumersAbsolute profit made on FMCG products is relatively small but

they sell in large quantity & earn large profits.Durable Products; E.g. Soaps, Cosmetics, teeth cleaning

products, shaving products etc. Non-Durable Products; E.g. Glassware's, bulbs, batteries,

plastic goods etc.

INDIA AS A MARKET FOR FMCG1. Large Domestic Market

2. Large Consumer Goods Spender

3. Low Penetration & Low per Capita consumption

4. Changing Lifestyles

5. Retailing – New growth area

6. Demand & Supply Gap

GROWTH OF THE FMCG INDUSTRY

All figure in US $

DOMESTIC VS INTERNATIONAL PLAYERS

1. Britannia India Ltd. (BIL)

2. Dabur India Ltd.

3. Indian Tobacco Corporation Ltd. (ITCL)

4. Marico

5. Nirma Ltd.

6. Hindustan unilever ltd.(HUL)

1. Cadbury India Ltd. (CIL)

2. Colgate Palmolive India

3. Coca-Cola

4. H.J. Heinz Co.

5. Nestle India Ltd.

6. Procter & Gamble

FACTS OF THE FMCG INDUSTRYIncreasing per year with the growth rate of 9 percent. - mint newspaper 23rd Jan 2010 In 2008-09, the sector turnover was estimated at Rs. 65,300 Crores.The Indian FMCG sector with a market size of US$13.1 billion is the

fourth largest sector in the economy.Cost of machinery required for consumer goods are less then durable

goods.At present, urban India accounts for 66% of total FMCG

consumption, with rural India accounting for the remaining 34%.Rural India accounts for more than 40% consumption in major

FMCG categories such as personal care, fabric care, and hot beverages.

PORTER’s 5 FORCE MODEL & DUPLICACY

Threat from duplicate products

Threat from duplicate products

FMCG AS A LUCRATIVE INDUSTRYAbundance of raw materials.

There is a large raw material base suitable for food processing industries. India is the largest producer of livestock, milk, sugarcane, coconut, spices and

cashew India is the second largest producer of rice, wheat and fruits &vegetables. India also produces caustic soda and soda ash, which are required for the

production of soaps and detergents. Availability of these raw materials gives India the location advantage.

Presence across value chain  Indian companies have their presence across the value chain of FMCG sector. This brings India a more cost competitive advantage. Example:- Amul supplies milk as well as dairy products like cheese, butter, etc. 

FMCG AS A LUCRATIVE INDUSTRYLABOR COST COMPARISON

This makes an investment in the FMCG as a lucrative affair.

“Actually I am very glad that people can buy Armani - even if it's a fake. I like the fact that I'm so popular around the world”

Giorgio Armani. 

DUPLICACY IN DAY TO DAY LIFEA raid by MUMBAI police found a person in by-lanes of

Bhandup.His investment??? Plastic bottles, stove, white petroleum gel &

the solution made from this was sold as Vaseline. This made him fetch 15% profit. Source TOI

An automobile parts dealer procures sub standard & duplicate parts. Packs them in TELCO wrappers & makes 25% profit.

A grocery store in Ahmadabad sells “SUNMILK” instead of the original brand “SUNSILK”.

Fake medicines are estimated to occupy 15-20 % of the total market

40% of music industry’s production ends up being copied & distributed illegally.

DUPLICACY IN DAY TO DAY LIFE contd..

10% of major soft drinks sold are fake.10-30% of the cosmetics, toiletries & packaged foods are

counterfeited.Over 60 companies have their names starting with

“NIKE”.217 companies have their names starting with “INTEL”.136 companies have their names starting with “TATA”.400+ companies have their names starting with

“RELIANCE”. Source (Tribune news services)

EXAMPLES OF DUPLICATE PRODUCTS

DUPLICATE PRODUCTS MAKING PROCESS….

A process of making duplicate home sanitizer is being shown here

CAUSES OF DUPLICACY

Lengthy supply chains (toothpastes, chips, mobiles ,etc)Profit margins vary from 10-60% (milk products in festive

seasons).Easy to fake a real product at a less price.Huge gap in demand & supply.Desire for getting good brands at a less cost.Price of these products which are sold at 40 to 45% lesser

value than the original

LOSSES DUE TO DUPLICACYOn an average music industry looses 600 crore Rs.2009-10 sees the music industry loosing a record Rs763crores.Acc. to AC Nielsen 30 FMCG companies lost a 2600 crores

revenue to duplicity.Brands like ARMANI , D&G lost a massive 17% revenue loss

due to duplicity.61% of computer software and 40% of music sold are pirated.Rs 10,000 cr revenue is lost to the fakes industry annually.Mobile companies loosing a 7% revenue due to cheap

chinese handsets in the market.Sales of Vicks Action 500 fell by 5 per cent in a few months.

LOSSES IN THE MEDICAL INDUSTRY

LOSSES contd….P&G's Health care division sales were impacted up to

15%.The Nielsen report revealed that eight out of 10 customers

who purchased such products were cheated unwittingly.Dabur seized personal and healthcare products and

medicines worth about Rs 2 crore (Rs 20 million) in a raid.

Source HT jan 2008 edition

Top jewellery brands losing a revenue of 20% every year on an average.

DUPLICATE PRODUCTS MARKETS IN INDIA

Gaffar market, Delhi.Palika bazaaz, Delhi.Zaveri bazaar, Mumbai.Poorna market, Vishakhapatnam.Old basti, Hyderabad.Janpath, DelhiThere are many more such markets across India.

MEASURES TO COUNTER DUPLICATE PRODUCTS

Putting up 3-d holograms on the products.

Printing bar codes across the products(chips covers, pet bottles,etc).

Stringent laws on the piracy & copying.Frequent raids by the police on all the

illegal activities (making of the fake products).

More promotion campaigns that lay emphasis on genuine products.

QUERIES???