FMCG Industry

Definition: The Fast-Moving Consumer Goods, or FMCG, industry is a part of the retail industry that revolves around the many consumer products that tend to sell quickly (hence the “fast-moving” part of the name). Examples of FMCG market goods include food, drinks, toiletries, and other household products.

fmcg fast moving consumer good big text word and people around with modern isometric style vector illustration

What are Fast-Moving Consumer Goods?

Fast-moving consumer goods are non-durable or perishable products that are sold and consumed quickly. They are often sold at low prices, and consumers typically use and replace them regularly. Key points about the FMCG industry and products:

Some of the world’s best-known brands operate in the FMCG sector, such as Nestlé, Unilever, and L’Oréal.
Examples of FMCG products include food and drinks, like meat and dairy products, as well as cosmetics, toilet paper, laundry detergent, and cleaning sprays.
The FMCG industry offers products that sell rapidly and have a short shelf life, with high levels of consumer demand.
As a leading driver of consumer spending, the FMCG industry plays a significant role in the economies of many countries.
In the United Kingdom, for example, the FMCG market generates over £134 billion annually.
This industry is vast, competitive, and dynamic, with product prices that shift rapidly. Businesses wishing to see success must be agile, making use of retail analytics and other tools to get ahead.

Chart outlining the Top 10 FMCG Companies in the World 2024 by revenue

Global FMCG Trends

The global FMCG market surpassed a valuation of $14 trillion in 2024 and is expected to reach nearly $19 trillion by 2032, representing a compound annual growth rate (CAGR) of 3.8%.
The United States has the largest FMCG industry in the world, contributing approximately 6% of the country’s total gross domestic product. America is also home to some of the largest and most successful FMCG companies, such as PepsiCo and Johnson & Johnson.
Sustainability is an increasingly important area of focus, with more consumers favouring brands that invest in eco-friendly FMCG manufacturing and packaging.
Health and wellness trends are also gaining significance in the field over time.

UK FMCG Brands

Valued at £134 million, the FMCG sector is one of the largest sectors of the UK economy:

Food and beverages account for the majority of revenue in the UK FMCG sector, with an estimated value of £104.4 billion.
The FMCG industry in the UK is more valuable than the automotive and aerospace industries put together.
The UK market has shown consistent growth, with sales revenue rising by an average of 2.9% each year, despite a slight decline in the number of consumers.
Due to the impressive performance of the FMCG sector, leading UK supermarkets like Tesco and Sainsbury’s have seen profits rise year after year.
It is estimated that the FMCG industry will hold a 12% market share in the UK by the end of 2025, twice as much as it had in 2023.

Understanding the UK FMCG Industry

The aforementioned supermarkets, along with Asda, Morrison’s, Aldi, and Lidl, are some of the major players in the UK FMCG retail world. Smaller convenience stores also operate in this sector, along with the many UK brands that produce FMCGs like food, drinks, etc.

Many of the FMCG trends seen in the UK mirror those witnessed in other countries. Inflation has helped drive increased spending, while advancements in technology, such as the rise of online shopping, have fueled the expansion of the FMCG sector. The industry has also benefited from the rise in popularity and accessibility of home delivery services and “click and collect” options, making it easier for consumers to get the goods they need, without even necessarily needing to leave their own homes. Some of the leading FMCG brands in the UK include:

Warburtons
Heinz
McVitie’s
Hovis
Walkers
Coca-Cola
Cadbury
Muller
Birds Eye
Kingsmill

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Type of Fast-Moving Consumer Goods

To better understand what is FMCG sector, it is important to look in detail at the exact types of products that FMCG brands make and sell, and how they compare to those in related but separate sectors. Examples of FMCGs are:

Food: Including both perishable and non-perishable food items that are consumed on a daily basis, like fruits, vegetables, dairy products, packaged snacks, meat, and more.
Drinks: Such as carbonated beverages, like sodas and energy drinks, as well as non-carbonated drinks, like bottled water and fruit juice.
Toiletries: Products such as toothpaste, shampoo, conditioner, makeup, skincare solutions, and deodorant also fall under the category of the FMCG sector.
Pharmaceuticals: Including over-the-counter, non-prescription drugs and health products, like painkillers, cold medicine, vitamins, and supplements.
Household Goods: Such as household cleaners, detergent, paper products, kitchen and bathroom supplies, and home accessories or tech-related items, like batteries.

The key characteristics of FMCGs are their short shelf life, high purchase rates, low prices, high sales volumes, and low profit margins per item sold. In many of these aspects, FMCGs differ from the products in other retail sectors, such as slow-moving consumer goods (SMCGs) and consumer packaged goods (CPGs):

SMCGs are those with a longer shelf life and lower purchase frequency. They are typically more expensive and the kinds of items that people expect to last for years of usage, such as TVs, kitchen appliances, and luxury goods.
CPGs are more closely related to FMCGs, with FMCGs almost a sub-category of the larger CPG group. However, CPGs may also include items that have a longer shelf life and lower purchase frequency than FMCGs, such as clothing and certain consumer electronics.

The unique characteristics of FMCGs also influence the way the industry operates, causing elevated levels of competition and the need for more rapid, agile evolution for FMCG providers. Consumers buying these goods have many options, shop frequently, and often seek the lowest prices; providers must adapt their marketing and sales strategies to meet this demand, while also responding to changing customer needs, such as the rising desire for sustainably sourced goods.

FMCG Industry Trends

In this section, we will take a closer look at some of the core trends shaping the present and future of the FMCG industry.

Expansions into e-commerce & online shopping

The e-commerce industry is booming, particularly in the United Kingdom, which has the most developed online shopping market in Europe. E-commerce penetration in the UK is close to 85%, while the European average is below 50%, demonstrating the significant adoption of digital stores by UK shoppers.

This is particularly important in the FMCG industry, as consumers want to be able to buy the daily essentials like food, drinks, and household goods quickly and conveniently online, or via mobile apps. Many also favour delivery to their door or “click and collect” options for convenience. Brands have to adapt to this and can find cost-saving and market share expansion opportunities through investment in e-commerce.

Increased focus on customer retention and experience

Competition is fierce in the FMCG sector, and customers have numerous options to choose from when shopping for everyday essentials. But the most successful and ambitious brands cannot afford to lose large numbers of customers to their rivals and are therefore focusing on improving the customer experience to drive additional retention and loyalty.

Approximately 73% of modern customers say that their buying experience matters when it comes to making purchase decisions, and studies suggest that only a 5% increase in retention can improve profits by up to 25%. To achieve improved retention, many brands are offering more digital services, making it easier for customers to find and purchase products, while also implementing rewards schemes and enhancing their service.

Challenges Facing the FMCG Industry

Challenge	Solution
Competition	Use retail intelligence and strategy to get ahead of your rivals.
Wastage	Optimise inventory, using relevant tools and solutions to avoid overstocking.
Changing trends	Adopt an agile, adaptable approach and remain aware of customers’ changing expectations.
Low margins	Invest in the customer experience to improve loyalty and sales.

While the FMCG sector can be a highly profitable one in which to operate, brands face numerous barriers to success. Competition is arguably the most significant challenge. With so many other retailers offering the exact same goods, all at similar or even lower prices, providers have to be incredibly agile, dynamic, and innovative to develop an impactful market penetration strategy.

They must also be proactive in their usage of tools and techniques, like retail competitor analysis, to avoid falling behind. The short shelf life of many consumer goods can pose challenges to inventory management and cost efficiency. Products may go to waste if they are not purchased in time, causing unnecessary losses for the provider. In addition, brands have to be highly reactive and adaptable to suit the changing, evolving trends and needs of their consumers.

FMCG Retail Research

Many of the major challenges faced in the FMCG industry can be at least partly resolved through effective research and intelligence-gathering tools and strategies. Leading names in this field often turn to third-party agencies, like Assosia, to assist them. Assosia specialises in gathering accurate, real-time data across the retail industry, helping FMCG brands understand changing customer behaviours, competitors’ pricing tactics, and other key insights that inform future decisions and strategies.

Using a range of quantitative and qualitative techniques, both in-store and online, we deliver clear, actionable insights to our clients. All of our research is conducted in accordance with the client’s needs and expectations, and we boast a proven track record of helping FMCG companies uncover valuable business opportunities to remain competitive and get ahead of their rivals with our pricing tool.

Case Study

A leading dairy company operating in the FMCG sector turned to Assosia for assistance as it was struggling to obtain the accurate, first-hand price and promotion data it needed to make informed decisions. After demonstrating the capabilities of our pricing tool, Assosia agreed a deal with the client to provide them with price and promotion data, along with category insights, giving them the powerful information they need for long-term, sustainable growth.

FAQs

How are FMCG companies leveraging AI?

Many FMCG companies are turning to AI-powered analytical tools to help them analyse their own pricing and sales data as well as that of their rivals, in order to spot patterns or trends that might help them grow.

How are FMCG companies addressing the competitive threat of private labels?

Private labels are a growing threat in the FMCG and wider retail worlds, particularly with younger generations like Gen Z, who prefer authenticity and personalisation in the products they purchase. Many FMCGs are exploring ways to counteract this threat by improving the customer experience and finding ways to better meet the changing needs of their diverse audiences.

What are the long-term implications of regulatory pressures on sustainable packaging for FMCG companies?

In the long term, as regulatory pressures rise, it is likely that FMCG companies will need to invest much more heavily in sustainable packaging, abandoning the likes of single-use plastics. This may lead to rising costs for the consumer, unless cost-effective, sustainable packaging innovations emerge to replace the less sustainable options of the past.

What strategies are leading FMCG brands adopting to balance quality with affordability?

This is an ever-present challenge in the FMCG retail field. Many brands are exploring supply chain optimisation strategies to help cut down costs, like sourcing goods locally, or investing in dynamic pricing techniques that help them price their products in the most optimal ways to drive sales and revenue.