FMCG is one of those loosely defined, easily misunderstood sectors
that everybody collectively pretends to understand. Fast Moving Consumer Goods, how hard to define could it be?
Through erratic and often convenient macroeconomic factors, somewhat relevant policy undertakings, fin-fluencer garbage, or VC musings, it gets difficult to recalibrate on the true definition of FMCG, let alone scour the depths of the sector. FMCG is a living impression of the health of an economy. Especially India. Think the Retail Revolution of the 2010s, or the D2C Dominance of the 2020s, or the Quick Commerce uprising - these models are all built on the performance of the same goods. Fast. Moving. Consumer. Goods.
Experimental Advisory, in this edition, explores the definition, depth, and taxonomy of FMCG in India.
Note: There are multiple hypotheses listed in this primer. These hypotheses represent learnings, mental models, and frameworks that may or may not apply in any given condition. Reader discretion for such implicit content is advised. (#iykyk)
Index
FMCG: The Basics
Taxonomy
Startups vs Legacy
FMCG: The Basics
FMCG is exciting, FMCG is sexy, but what exactly is it?
Definition परिभाषा
Error: 404 Not Found.
Encompassing a diverse range of products is too generic to arrive at any conclusion. A diverse range of what products? Purchased by who? How often?
Getting Somewhere.
FMCGs reflect goods that are:
Non-durable,
Mass consumption products, and
Available off the shelf.
Bingo.
Taxonomy
Here’s a breakdown of how the NSE classifies FMCG as a sector:
Source: https://static.nseindia.com//s3fs-public/inline-files/nse-indices_industry-classification-structure-2022-11.pdf
The Taxonomy provides a solid base to interpret the variety of goods present in the market today, that may qualify as fast-moving.
Startups vs Legacy
A lesson from history.
FMCG is dominated by startups, because it arguably has the lowest barrier to entry. If you’re able to navigate the MCA portal and launch a company, congratulations, you’re officially a startup. If you replicate grandma’s achaar in a jar, congratulations, you’re officially an FMCG startup.
In fairness, it’s not difficult to conceive FMCG dominance in public markets. FMCG has been around for decades, with unparalleled loyalty from consumers, going all out for their beloved brands. Humans are like dogs that way - loyal. Deathly loyal.
Enter Goliath
Its 11th Century BC, the Israelites are under attack from the Philistines. Everyday, Goliath, a giant from the Philistines army would challenge the Israelites for a one-on-one combat. None are able to muster the courage to take on the mighty Goliath.
Every Legacy brand has one thing in common: Loyalty. Driven through powerful narratives over time, a lifestyle to aspire to, and a product that fulfills the quest for mankind’s search for happiness.
The rise and dominance of The Coca-Cola Company depicts a well-crafted narrative over the years. Formed in 1892, The Coca-Cola Company, founded by John Pemberton, an American Civil War soldier, created Coke to substitute his Morphine addiction. Lo and behold, the years were kind to the company, which found itself seeping more and more into public consciousness. Come WWI, the Exchange Officer of the 55th Infantry Exchange at Waco, Texas wrote a letter to the bottling company pleading for the company to send more bottles of Coke.
The officer then ensues a spectacular guilt trip about competitors, stating how hard it will be to introduce a substitute, pleading with the company to send more bottles of Coke.
Hypothesis: Legacy isn’t just created over spreadsheets. If soldiers on the battlefield demand your product, you don’t just have PMF, you have something special.
In another fascinating incident of what is now known as the most memorable marketing blunder of all time: The Coca-Cola Company launched the New Coke (or Coke II) in April 1985. New Coke was the second coming of Coke, a new and improved formula, designed to last the ages.
Print Statement "False"
New Coke received a lot of backlash. Thousands of calls and letters criticizing the company for its …. betrayal. Records suggest that millions mourned it as the loss of a family member. Consumerism took grief and anger out on company executives. Even Goliath doesn’t stand a chance if the Philistines don’t support him. Just like that - after 79 days, Coca-Cola announced the return of the Original Coke, which then went on to outsell its competitors for months and years to come.
Enter David
A shepherd boy, with faith in the Lord and a desire to free his fellow Israelites from oppression.
David represents the underdog. The undying spirit resonated through startups, those that portray resilience, but more importantly: Faith. Faith in their ability to succeed, challenge, and defeat the hardest of obstacles that come their way.
The story of Prime Hydration is the perfect depiction of a modern-day David standing up to Goliath. Started just over 12 months ago by cult YouTubers KSI and Logan Paul, Prime Hydration is a beverage company selling energy drinks. Its numbers are staggering: it is the fastest-growing beverage company on the planet. Reportedly $250million in retail sales and it is the official beverage for Arsenal FC and UFC. For context, its prime competitor Goliath Gatorade generated $6.5bn in 2022 from the US alone. Prime Hydration is only available in UK and USA, with nowhere near the production capacity Pepsi Co has at its disposal for Gatorade.
David vs Goliath
David, with faith in the lord, fights off Goliath without a sword and armor, and only a slingshot and marbles. The Philistines flee, the Israelites rejoice. That is the story of David vs Goliath, an underdog taking on legacy, and defeating it with sheer faith and determination.
Today, FMCG is ripe for disruption, through underdogs fighting for customer attention and loyalty against Goliaths, who’ve been around for decades. It’s a fight for the ages, and a healthy bout of competition likely to benefit all parties - especially consumers in the long run.
Here’s a map of promising Davids Startups in FMCG today:
Thank you for spending the time to read through this edition. We hope you enjoyed consuming our content, as much as we enjoyed creating it. Stay tuned for more!
You have successfully experienced our Experimental Lab! 🧪