fast-moving consumer goods (FMCG)

Everything About FMCG & IT Sector – Outlook in 2022

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Rising income and consumption to drive growth in the FMCG sector

India’s fast-moving consumer goods (FMCG) sector is estimated to reach INR 15.6 trillion by 2025. The three major segments of the FMCG sector are food and beverages, household and personal care, and healthcare. 50% of FMCG sales in India are contributed by the household and personal care, with the remaining 50% contributed by the other two segments. The semi-urban and rural segments are growing at a faster rate to achieve parity in revenue share with the urban segment at 50%.

FMCG is characterized by goods that are low-priced and sold quickly. Hence, high volume is important to achieve economies of sales for profitability. Sales and distribution are key drivers for gaining market share and competitive advantage.  

In a new-normal world post-COVID-19, FMCG is undergoing a technology-driven transformation in response to market requirements and changes in consumer behavior. Omnichannel sales channels have become integral to distribution strategy, with online channels becoming key sales drivers. 

You can expect a promising outlook for the FMCG sector after two years of a bumpy ride due to the COVID-19 disruption. As FMCG companies are expecting strong growth in 2022 with rising income levels driving consumption, you can see better growth in the year. You can expect the benefits of digitization, such as low inventory cost, to offset the negative impacts of supply chain issues and high commodity prices. The FMCG sector offers you a defensive investment opportunity with limited downside risks in adverse economic conditions. 

Hindustan Unilever Ltd(HUL) is the market leader in the FMCG sector in India. HUL share price, ITC share price, Nestle share price Dabur share price, and Britannia share price are dependent on FMCG sector growth.

Digital Transformation To Drive IT Sector Growth

The Indian IT sector will see double-digit growth in the coming decade driven by twin factors of digital transformation and offshoring. COVID has accelerated the digitization of businesses, leading to the growing demand for technology services. According to Gartner, worldwide IT spending will increase 5.1% in 2022 compared to the previous year. The mainstay of the Indian IT sector, IT services segment is expected to see second-highest spending growth. 

As organizations’ reliance on external service providers and consultants grows over the years, you can expect Indian IT companies to keep growing, translating into higher revenue and profitability. Indian IT companies are estimated to grow 20-30% in 2022. As enterprises increasingly adopt cloud computing, and leverage automation and artificial intelligence (AI) to digitize business processes, you will find demand for services and talent increasing. With a strong offshore base in India and a good talent pipeline, Indian IT companies are well-placed to take advantage of the emerging digital opportunities. You will also find these companies benefiting from the ‘Digital India’ initiative of the Government of India, and increasing digitization of citizen services.  

TCS share price, HCL share price, Wipro share price, and Tech Mahindra share price are dependent on the growth of the global economy in general and enterprise IT spending growth in particular. 

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