Qualities of a True FMCG Business

FMCG is one of the most desirable & strongest business. This is because these are businesses that are driven by brands, they have pricing power, end demand is resilient & sticky and profitability & return ratios are strong.

But we believe that all FMCG businesses are not alike and cannot be painted with the same brush. There are two important qualities that we believe are needed for a business to be truly termed as an FMCG business-

Some of the FMCG categories like pulses, flour, edible oils, milk and most staples for that matter don’t augur well in the above two qualities.

These products are bought as a commodity and sold as a commodity without substantial value addition (except for primary processing) and are bought & sold in same measure of unit.

This reflects in the end profitability & returns that some edible oil and staples companies generate-

And the reasons why the profitability & return ratios are lower is because-

Read the complete blog here-

https://www.surgecapital.in/post/qualities-of-a-true-fmcg-business