FAST MOVING CONSUMER GOOD (FMCG) CONSUMER PACKAGED GOODS (CPG).

What are fast-moving consumer goods (FMCG) companies, and what do they have to do with financial inclusion?
FMCG companies sell household and personal products – such as washing detergent, groceries, and toiletries – that are high in volume, low in profit, and normally purchased regularly. These products sell quickly and are relatively low in price. To sell them effectively, FMCG companies have distribution systems that penetrate nearly all parts of the community, including the base of the pyramid. Ensuring that their products are in the right place and appropriate to the consumers’ needs is pivotal to their success.
Financial service providers may be able to learn from the FMCG companies’ tactics and experience. What’s more, by leveraging their extensive networks and strong consumer knowledge, FMCG companies may themselves be able to advance financial inclusion in a way that is beneficial and scalable, providing services for the last mile.
The right product. FMCG companies realize that a variety of product options need to be offered to cater to different consumers. A good example of this is single-use packages for cleaning products. FMCG companies have realized that many lower-income consumers will purchase small packages although they may not be able or willing to pay for a larger box that would serve them for a longer time. In this instance, the product has been tailored to reflect the market. 
The fast-moving consumer goods (FMCG) sector represents one of the largest industries worldwide. Also labelled the consumer packaged goods (CPG) sector, it is mainly characterised by companies that supply low-cost products that are in constant high demand. Products that are classified under the FMCG banner include food, beverages, personal hygiene and household cleaning utensils. The term “fast-moving” stems from the fact that FMCG products usually have a short shelf life and are non-durable. From a retailing perspective, FMCG is often cited as a low margin – high volume game. Seeing as profit margins are usually rather slim, firms operating in the FMCG sector mostly employ a strategy focused on driving top line sales. Within categories, FMCG products are often near-identical, and for this reason price competition between retailers can be intense. To boost profitability, companies use marketing and other techniques to establish loyalty to the product, which enables them to charge higher prices.
That said, managing input costs also remain vitally important, as small margin gains still have a significant impact on the bottom line due to the large volumes. Another important characteristic of the FMCG sector is that it generally does well in an economic downturn, with consumers rather cutting back on luxury products. Well known FMCG multinationals include Coca-Cola, Unilever, Procter & Gamble and Johnson & Johnson. The FMCG sector in Africa has significant scope to expand. Poverty levels in especially sub-Saharan Africa (SSA) are still quite high, with food and other necessities dominating consumer budgets. For this reason, the food sub-sector of FMCG has a very large market to cater for, while penetration rates in the other categories still have significant room to expand.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s