FMCG sector growing by leaps and bounds

July 24, 2018

Krishana Prasain, The Kathamandu Post, 24 July 2018

The fast-moving consumer goods (FMCG) sector has recorded remarkable growth over the past few years due to a growing middle class, manufacturers said. Business has grown in double digits due to brand awareness and a changing lifestyle.

According to a manufacturing sector profile of Investment Board Nepal (IBN), the FMCG sector has been growing at around 20 percent annually. “While urban markets account for the greatest share of total revenues in the consumer sector, there is a lot of scope for growth in rural markets, with consumption expected to grow in these areas as the penetration of brands increases,” it said.

Parash Shakya, executive director of the Bhuramal Lunkarandas Conglomerate (BLC), estimated the growth rate of the domestic FMCG sector at 10 percent annually. Similarly, the FMCG market for multinational companies in Nepal is growing at the rate of 10 to 15 percent, he said. “Domestic FMCG industries such as alcohol, dairy, tobacco, paper and juice are doing well.”

Multinational companies like Unilever, Carlsberg, Coca-Cola, PepsiCo, ITC and Dabur have been able to excel in the FMCG market in Nepal, generating stable incomes, according to IBN. “In a country where urbanisation is taking place rapidly and where rural demand is set to increase with rising incomes, FMCG is an attractive sector for investment, particularly for quality products and products specifically created for rural markets.”

The Chaudhary Group, BLC, Sharda Group, Khetan Group, Kedia Organization, TM Dugar Group and Laxmi Group produce a wide range of food items and beverages.

Nepal Thai Foods, manufacturer of the popular Wai Wai noodles, is the market leader in the precooked noodles segment. The CG Foods subsidiary was established in 1984. According to the company, CG Foods holds a 50 percent market share for noodles and has an annual turnover of Rs6 billion.

Dabur Nepal is one of the leading multinational manufacturers of FMCG. “We stand in the second position in most segments that we represent here including fruit juices, health supplements, personal care, home care, digestives and the consumer health division,” said Abhaya Prasad Gorkhaly, senior manager marketing of Dabur Nepal.

The company has an annual turnover of Rs10 billion. Fruit juice is a major export item, he said. Dabur Real Juice, Real Activ and Real Burrst are the company’s best selling products. About 1,000 people are employed at Dabur Nepal. Dabur Nepal exports its products to India and third countries. BLC’s annual production is valued at about Rs2.4 billion. The company’s biscuit, dairy products and baby food sales are worth Rs1 billion, Rs1 billion and Rs400 million respectively.

Its best selling products are Sarbottam Lito, Soaltee and sugarfree cracker biscuits, delicious milk, yoghurt, butter, ghee and paneer, Executive Director Shakya said. BLC plans to launch new products in the FMCG segment like formula milk, instant drinks, solid chocolates, cereal flakes and ice cream, he said.

The company employs 2,000 people directly and indirectly. The recent tax hike and revised Labour Act is a big concern for BLC. It said that the new policy would increase costs by 15 to 20 percent. Though the company is focused on the domestic market, BLC plans to export its products to India and the Gulf countries in the future. Likewise, Asian Biscuit and Confectionery (ABC), a joint venture of Sharda Group and Jaju Group, produces a range of Goodlife biscuits and confectionery. Tikendra Shivakoti, sales manager at ABC, said that the FMCG market was growing at the rate of 12-15 percent. ABC’s growth rate is about 10 percent annually, he said.

ABC produces 6,000 tonnes of biscuits annually. It has an annual turnover of Rs850 million from biscuits and Rs250 million from confectionery, he said.

Rumpum Salt and Sweet Biscuit, Digestive Wheat Biscuit, Top Butter Cracker Biscuit and Treat Cream are the best selling products from ABC. The company plans to bring Cheeza and Treat Cheese Ring Snacks in the market soon. The company has 520 employees.