what are fast moving consumer goods fmcg 
fast moving consumer goods fmcgs are products that sell quickly at relatively low cost fmcgs have a short shelf life because of high consumer demand e g soft drinks and confections or because they are perishable e g meat dairy products and baked goods they are bought often consumed rapidly priced low and sold in large quantities they also have a high turnover on store shelves the largest fmcg companies by revenue are among the best known such as nestle sa nsrgy 99 32 billion in 2023 earnings and pepsico inc pep 91 47 billion from the 1980s up to the early 2010s the fmcg sector was a paradigm of stable and impressive growth annual revenue was consistently around 9 in the first decade of this century with returns on invested capital roic at 22 1the industry s success has been attributed to its tried and true formula of building strong brands expanding into and with new markets and consumer channels and avidly managing costs while cultivating worldwide brands the past few years have seen the first declines in memory in the sector s sales growth a contraction blamed depending on the source on post pandemic supply chain issues inflation competitive pressures including online retail the rise of private labels and perhaps most long term changes in consumer tastes in 2023 for example american consumers spent 10 more on groceries but bought 4 fewer items that said the industry still posted a remarkable 27 average roic 234 below we take you through this most recognizable of industries how it works and who the big players are investopedia nez riazunderstanding fast moving consumer goods fmcg to understand fmcgs it s worth setting out terms that can be confusing to those from outside these industries fmcg s are products with relatively low cost and high turnover rate they are within the category of consumer packaged goods durable and nondurable which is a part of all consumer goods consumer nondurable goods are fmcgs plus gasoline clothing shoes etc here s a table differentiating terms commonly heard when discussing fmcgs heads up there is some overlap among these classifications durable goods have a shelf life of three years or more while nondurable goods have a shelf life of less than three years 56 fast moving consumer goods are the largest segment of consumer goods they fall into the nondurable category as they are consumed immediately and have a short shelf life everyone uses fmcgs daily they are the small scale consumer purchases we make at the produce stand grocery store supermarket or the local cvs on the way home examples include milk gum fruit and vegetables toilet paper soda beer and over the counter medications like aspirin nondurable goods including fmcgs account for more than half of all consumer spending but tend to be low involvement purchases 7 consumers are more likely to show off a durable good such as a new car or beautifully designed smartphone than a new energy drink they picked up for 2 50 at the convenience store types of fast moving consumer goodsfmcgs include several subcategories slow moving consumer goods which have a longer shelf life and are purchased over time include items like furniture and appliances 10 largest fast moving consumer goods companies by revenuethe 10 largest fmcg companies in the world are the following all figures in u s dollars as of mid 2024 fmcgs ecommerce and changing consumer habitsin the past popular goods for online purchase were related to travel entertainment or durable goods such as fashion and electronics however the online market for groceries and other consumable products is growing as companies redefine delivery logistics efficiency and shorten delivery times thus the fmcg industry has been significantly influenced by the rapid growth of ecommerce and evolving consumer habits 4 the widespread adoption of online shopping has transformed how consumers buy their daily necessities leading to a shift in the traditional retail landscape 2 ecommerce platforms have supplied consumers with the convenience of 24 7 shopping vast product choices and competitive prices forcing fmcg companies to adapt their strategies 17while nonconsumable categories will likely continue to lead consumable products in sheer volume for online shopping efficiency gains in logistics have increased the use of ecommerce channels to buy fmcgs 1 the continuing rise in online shopping has prompted fmcg companies to invest heavily in their digital presence including developing user friendly websites mobile apps and partnerships with leading ecommerce platforms fmcg companies have also had to rethink their supply chain and logistics networks to ensure prompt delivery of products to consumers via the main online retailers in addition changing consumer habits have driven fmcg companies to diversify their products today s consumers are increasingly health conscious environmentally aware and socially responsible leading to a growing demand for organic natural and sustainable products in response fmcg companies have launched new product lines that cater to these preferences such as plant based alternatives and eco friendly packaging as ecommerce continues to grow and consumer habits evolve fmcg companies must remain agile to stay competitive in the market 3 this involves investing in digital technologies such as ai and big data analytics so that companies can dig deeper into consumer behavior and preferences further companies are at least advertising how they prioritize sustainability and social responsibility to align with the values of their customers here are some other challenges in this area of the economy 