MUMBAI: Multinational companies in the consumer goods market are losing share to their local Indian rivals, especially in the food sector, according to a new study.
The finding emerged from a Nielsen study of the top 50 consumer companies in the country which found that the combined share of the multinationals had fallen from 53% to 51% over the three years to 2013.
These leading companies account for some two-thirds of the country's consumer goods market and within that food accounts for more than half the total at 53%. Nielsen's figures show that the food sector is growing faster than non-foods, at 12% compared to 8%, and that local food companies are growing even faster, at 14% compared to 8% for foreign players.
"Local giants are more focused and prevalent in the food sector," Vijay Udasi, executive director at the insights provider, told the Economic Times. Regional availability and local taste were the vital ingredients that were helping local businesses grow 1.6 times faster than their international counterparts.
The newspaper observed that domestic brands had been successful in expanding their reach and product portfolio while closing a perceived quality gap with foreign products.
It highlighted two segments within food, dairy and biscuits, to illustrate the dominance that was apparent in some areas. The owner of the leading Amul brand of dairy products, for example, Gujarat Co-operative Milk Marketing Federation, registered sales double those of Nestlé India and triple those of the foods division of Hindustan Unilever.
And three Indian businesses – Parle, Britannia and ITC – had a combined 80% share of the biscuit market. "Global companies such as Mondelez India Foods, which sells Oreo, and GlaxoSmith-Kline Consumer with its Horlicks brand have just a token presence," the Economic Times noted.
Innovation and focus were important aspects of domestic business strategy, suggested Vivek Gambhir, managing director of Godrej Consumer Products, which has launched 12 products over the past 18 months, driving almost 40% of its incremental growth.
"Our focus on a few categories in home and personal care, where we have a competitive advantage and leading positions, allowed us to further strengthen our competitive position in these categories and gain share," he said.
Data sourced from Economic Times; additional content by Warc staff