What Is FMCG? Understanding The Fast-Moving Consumer Goods Industry

One of the qualities that marks a successful grocery score is having a variety of goods in stock.    Grocery shopping isn’t just limited to fresh produce and baked goods. Packaged consumer products are essential items on most grocery shopping lists.

From ketchup bottles to spice packets, these types of fast-moving consumer goods (FMCG) are in high demand at grocery stores. This article explores the role of FMCG in grocery retail and how it should be represented in a store’s inventory.

 

What does FMCG mean?

FMCG stands for Fast-Moving Consumer Goods. It is a simple

descriptor for non-durable packaged consumer goods. These products have a short shelf-life, usually under a year, which means consumers have to buy them on a regular basis.

These items are priced at affordable rates so that they can sell quickly. Because of their low prices, FMCG products usually have slim profit margins. That’s why stores that sell FMCG products need high sales volumes to generate revenue.

Since FMCG items are usually cheap, consumable, or disposable, they tend to be low-involvement products from the customer’s perspective. Shoppers usually pick a brand that they favor and then keep purchasing from it for months or years.

FMCG products in grocery stores

The FMCG sector makes up the largest segment in the overall consumer goods industry. Furthermore, the FMCG industry relies heavily on grocery stores and supermarkets to sell its products to their customers.

Maintaining a healthy stock of FMCG products is extremely important for grocery stores. According to the Food Industry Association FMI, the average supermarket carries 31,704 items on its shelves. In most stores, nearly all can be classified as FMCG.

FMCG products that you will see in nearly every grocery store include the following:

- Fresh and frozen food items, including fruits, vegetables, nuts, seafood, and meat

- Processed foods such as cheese and pasta

- Beverages such as bottled water, energy drinks, sodas, and other carbonated drinks

- The items above can be reliably found even in small, locally-owned, independent grocery stores. 

 

As the size of the grocery store and the scope of its operations increases, additional FMCG products are added to its inventory, such as:

- Meal kits, which contain pre-prepared, ready-to-eat dishes

- Baked goods like bread, croissants, cookies, and cupcakes

- Alcoholic beverages, such as wine, beer, and liquor.

- Fresh meat from a deli counter

- The largest grocery stores and supermarkets don’t just limit themselves to food products. They also carry other FMCG items like:
 

 

Over-the-counter medicines, like aspirin and mild pain relief pills that do not require prescriptions

- Household supplies, including cleaning products like dishwashing soap, mops, and glass cleaner

- Cosmetic and self-care products, including shampoo, toothpaste, and make-up

- Tobacco products, including cigarettes

- Stationery and school or office supplies like pens, pencils, and notebooks

According to Statista, the FMCG industry’s output in terms of food totals $629.3 billion in the US alone. It’s clear that the average grocery store relies on a steady supply of inventory from FMCG manufacturers to keep shelves stocked.

Top FMCG companies

Grocery stores can get involved in the FMCG market by creating private-label products. However, most owners prefer to source items from established FMCG manufacturers. These include some of the largest and most recognized companies in the world — each with annual revenues in the billions.

Here are five of the most popular FMCG companies among American consumers.

1. Nestlé: Nestlé holds the title of being the largest food company globally. Every major grocery store stocks its products. Aside from the items named after the company, its product portfolio includes DiGiorno Pizza, Häagen-Dazs, Perrier, and Gerber.

2. PepsiCo: From the eponymous Pepsi soda to other wildly popular beverages like Mountain Dew and 7-Up, PepsiCo beverages are everywhere. Its snack portfolio also includes fast-selling items like Doritos, Fritos, Cheetos, and Quaker Oats.

3. Proctor and Gamble Company: Most of the best-selling health, personal care, and beauty brands in the US market are owned by Proctor and Gamble, another extremely successful FMCG company. Its top products include Gilette razors, Oral-B toothpaste, and Pampers diapers.

4. Unilever: In the same vein as Proctor and Gamble, Unilever owns brands related to health and beauty, as well as food and beverages. Some of Unilever’s well-known brands include Ben & Jerry’s ice cream, AXE body spray, and TRESemmé hair care products.

5. Tyson Foods Inc.: One of the US’s largest and most successful meat processing companies, Tyson Foods Inc. is responsible for some well-loved FMCG brands like Jimmy Dean and Hillshire Farms.

Understanding the FMCG industry’s trends

Taking the time to understand the trends shaping the FMCG industry can help grocery store owners optimize their inventory management processes. Adjusting the stock of FMCG products to match evolving customer demand can reduce costs and increase profit margins.

Here are three key trends influencing the market for FMCG products:

Ecommerce’s influence on FMCG

FMCG products are convenient by nature, so they pair seamlessly with the ease of online shopping. Grocery ecommerce stores should prominently feature FMCG products in their selection to encourage shoppers to purchase. By using an ecommerce platform like Wave Grocery, online stores can track real-time inventory, predict demand, and avoid stockouts that can lead to lost sales.

What customers look for in FMCG products

Modern consumers, especially millennials and Gen Z, are more conscientious about the brands they support. FMCG manufacturers that prize sustainability and ethical business practices will likely sell better in your grocery store.

Premiumization of the FMCG industry

While one of the defining characteristics of FMCG products is that they are inexpensive, this is gradually changing. Customers are willing to pay a premium for brands that meet their expectations when it comes to customer experience and sustainability.

This means selecting the right brands and suppliers of high-end FMCG products will lead to higher profit margins with every sale.

By integrating Wave Grocery’s data analytics tools, ecommerce managers can track which premium FMCG items are in demand and adjust stock accordingly.

Final thoughts on FMCG in grocery stores

FMCG products and grocery stores have a strong, long-lasting association. You could even say that FMCG products are the bread and butter of a grocery business, quite literally!

Learning about the FMCG industry and how it works is essential to run a grocery store that meets your customers’ demands.