FMCG
Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are occasional or everyday consumer products that sell out fast and at a low price. Being an average consumer’s basic necessities, they have a consistent consumer demand and a short shelf life. Examples of FMCGs include bottled water, milk, cookies, toiletries, soda, beer, meat, confections, baked goods, over-the-counter drugs like aspirin, and many more.
Top FMCGs companies worldwide include Nestle AG, Johnson & Johnson, Procter and Gamble (P&G), Pepsi Co, and Unilever.
Understanding how FMCGs work
Despite generating exceptionally high volume sales, these goods typically have low profit margins as manufacturers attempt to win additional market share from an essentially static total market through pricing and promotions rather than increasing the number of times a consumer purchases, for example, aspirin. Nevertheless, they provide a habitual and almost predictable inflow of income for companies that manufacture them.
Almost everyone in the world uses FMCGs. They comprise the largest consumer goods category, and encompass almost all small-scale consumer purchases frequently made in a grocery store. Consumer goods are products an average person purchases regularly for consumption. With less than a year of shelf life, FMCGs fall among the non-durable consumer goods segment as they’re consumed immediately. Durable consumer goods, on the other hand, have a shelf life of at least three years.
Although a low investment purchase, FMCGs account for over half of all consumer spending. Their high consumption volume and frequency of purchase drive manufactures to create distinctive brands that create customer loyalty.
Although FMCGs can conveniently be purchased in-store, e-commerce perhaps offers even more convenient alternatives.
Types of FMCGs
Consumer goods are divided into—durable and non-durable goods. FMCGs falls under the non-durable durables segment and include:
- Fast food items
- Fruits and vegetables.
- Beverages including soft drinks
- Wine, beer, and spirits
- Cosmetics
- Cleaning products
- Over-the-counter medicines
- Paper products
What are the features of FMCGs?
From both the consumer and marketer’s perspective, a product must meet certain criteria or features to qualify as FMCG. For instance, from the consumer perspective, an FMCG must possess the following features:
- Low cost: Usually, the prices of FMCGs are low. It should be what an average income earner can afford.
- Fast consumption: Products like milk, fruits, meat, and soaps are used every day. Their rate of use is high and rapid.
- Short shelf life: FMCGs are classified as non-durable products. They are not only highly perishable but are also in high demand.
- Frequently purchased: Fast-moving goods are known to be purchased almost daily. They are necessities, hence the need for their daily consumption.
However, from the marketer’s perspective, we have:
- Comparatively low profit margins, often due to pricing pressures.
- High volume: FMCGs are usually produced and sold in high volumes.
The overall impact of FMCGs
Despite consumer demand’s constant downward pressure on wholesale costs, and resulting low profit margins, FMCGs:
- Satisfy the consumer’s basic needs.
- Provide a source of employment for manufacturers, distributors, retailers.
- Contribute to national GDP since FMCGs account for the major part of consumer spending.
