Post-COVID Boom: India's FMCG market to double by 2025 to $220 billion

The fast-moving consumer goods (FMCG) market in India is doubling in size between 2020 and 2025, as per a report. The market size of India’s FMCG sector was $ 110 billion in 2020 and is now expected to touch $ 220 billion by 2025 - riding on the demand for premium goods and boosted by rapid inflation, apart from consumer demand.

According to a report by Teamlease Services, growing at 14.93% CAGR (compound annual growth rate) between 2020 and 2023, the FMCG market in India stood at $167 billion in 2023. The size is further expected to grow to $192 billion by the end of 2024 and reach $ 220 billion in 2025.

Out of the total, 50% is comprised of products from the household and personal care category, while food & beverages contributes 31% to the total FMCG sales in India. The rest 19% comes from healthcare-related items.

Employing 3 million people, the sector is one of the largest among organised corporate sectors in the country, while 8.4% of them are employed in factories. Cities like Mumbai, Bangalore, Chennai, Delhi, and Hyderabad are among the top five Indian cities that showcase a strong intent to hire in the FMCG sector.

According to the report, metros have the highest attrition rates (27%), followed by Tier 1 and 2 cities (26%). People in Tier 3 and 4 cities have lower attrition rates than those in metros, which is a reflection of the relatively lower level of demand in rural markets.

The report highlights that the average age of active associates is over 36 and that of the attrited ones is nearly 34, indicating that younger employees tend to attrite more. Correspondingly, the tenures of active and attrited associates are 1.7 and 1.1 years respectively.

The report also categorises attrition into two distinct types: 'regrettable' and 'non-regrettable'. Regrettable attrition, accounting for 21% of departures, involves employees whose exceptional performance resulted in incentive earnings that exceeded the company's average incentives.

On the other hand, non-regrettable attrition, which represents 39% of the attrition rate, occurs in cases where employees do not earn any incentives. Teamlease Services also reports that the average CTC for current and attrited associates is the highest in southern India.

Notably, while the gap between the salaries of active and attrited associates is negligible, the gap in incentives earned is significant. This indicates that incentives are a much stronger predictor of attrition rather than salaries, as salaries seem quite inelastic.