Fast-moving consumer goods (FMCG) is a very special sector, both in terms of its weight in the global economy and the specificities of its operations. This article explains a number of key concepts, and there are some surprises in store for you in the presentation that follows!
Whether you're a student of marketing or working for a consumer goods company, here are a few key points to help you get to grips with the world of consumer goods.
Enjoy your reading!
Fast-moving consumer goods (FMCG) are goods intended for a wide public, generally for everyday consumption, and sold in large quantities. These are products frequently purchased by households, such as food, beverages, hygiene products and household goods. These products are often distributed via mass-market channels (supermarkets, hypermarkets, etc.).
FMCG products are characterized by their necessity, short life cycle and relatively low price per unit. The chronic purchase of FMCG leads to a high turnover rate among retailers.
These products, which are frequently purchased and generally at a relatively low price, are known in English as FMCG (fast-moving consumer goods), in reference to their turnover rate on the shelves. FMCGs are a sub-family of CPGs (Consumer Packaged Goods).
There are many examples of consumer goods: fruit, rice, soap, washing powder and toothpaste are all common products that consumers buy regularly to meet their daily needs.
FMCGs can be found on the shelves of all types of stores, but it's in large and medium-sized supermarkets that the French buy the most. Here, they are displayed as self-service products.
Decree no. 2019-1413 of December 19, 2019 lists products classified as fast-moving consumer goods. These are products considered to be non-durable:
The FMCG sector is a huge economic breeding ground. LSA Conso reminds us that the top 50 FMCG brands represent sales of $1,337 billion (2022)! Mass retail accounts for some 190 billion euros in annual sales in France. This represents around 11.4% of French GDP.
Employment figures are equally impressive. For example, L'Oréal employs 88,000 people worldwide. As for Danone, the figure is closer to 100,000. Overall, the retail sector is the largest private employer, with 1.84 million employees.
Of the world's top 50 FMCG groups (in terms of 2022 sales), 4 are French: L'Oréal, Danone, LVMH and Pernod Ricard.
In France in 2023, the top of the ranking was occupied by food and beverage brands. While Cristalline water took first place, sales of alcoholic beverages were particularly impressive!
The frequency of consumer goods purchases makes them particularly sensitive. The French shop regularly, and generally have prices in mind (which is not the case for more exceptional purchases). As a result, price variations are often poorly received, and households generally worry that the price of the shopping cart will rise faster than their wages or savings. This constraint is well known to brands, but they too are impacted by rising raw material and energy costs. For example, the price of cocoa has risen by over 160% in ten years. In the last three years alone, its price has tripled. In response, brands are using two mechanisms: a change in pricing policy, raising prices by an average of 15 to 24%, and shrinkflation.
Ultimately, consumer product inflation is influenced by multiple factors, such as production costs, supply chain disruptions, economic policies, imbalances between supply and demand, and international events.
The main measure of consumer inflation in France is the Consumer Price Index (CPI), calculated monthly by INSEE. The CPI tracks changes in the prices of a representative basket of goods and services consumed by households, making it possible to calculate the inflation rate.
Governments have a number of levers at their disposal to contain consumer inflation:
In France, the various versions of the EGAlim law aim to regulate relations between food producers and retailers, which have a considerable impact on the agricultural sector, considered strategic for the economy.
This is a matter of national sovereignty (producing the food we consume rather than importing it), but the aim is also to guarantee French consumers access to staple products, avoiding the shortages that could result from too great an imbalance between food production and the income it generates.
Fast-Moving Consumer Goods (FMCGs) are fast-moving products, i.e. they sell quickly, at low unit cost and with a high purchase frequency.
In English, the term "fast-moving" is used to describe the short lifespan of fast-moving consumer goods, the fact that they require frequent replenishment and generate a high volume of sales with low unit margins but high cumulative margins.
This definition corresponds perfectly to the sales model of supermarkets, which are the main channel for selling FMCG, with a strong need for merchandising and negotiating listings.
The supermarket referencing model is based on national or regional referencing via buying groups, with annual negotiations representing the majority of referenced products, and the possibility of direct referencing in stores.
Supermarkets include hypermarkets (Carrefour, Auchan, E.Leclerc...), supermarkets (Intermarché, Carrefour...), hard discounters (Lidl, Aldi...à and food drive and e-commerce (Leclerc Drive, Carrefour Drive...).
In the family of food outlets, you can also ask for children, with local networks and mini-markets (Carrefour City, Franprix, Monop'...) that are adapted to occasional and urban purchases, with fast logistics and more flexible local referencing. Listing is therefore often centralized at national level and via groups, but adapted to frequent local needs and store size.
These two types of network are the best known in the FMCG world, but not the only ones:
FMCG is a sector in its own right, and all the major brands have their own FMCG departments or dedicated subsidiaries (Unilever FMCG Company, Pepsico FMCG, Nestlé FMCG, L'Oréal FMCG, etc.).
The specific nature of the retail world has given rise to a number of key professions and functions within companies, particularly in the retail sector:
Let's take a closer look at FMCG marketing, which has some very special features!
💡 So as not to drown you in too much information, we've provided succinct definitions and given you access to denser resources on topics you'd like to delve deeper into.
Here are some key points about FMCG marketing:
1) Trade marketing: this technique involves working with distributors to optimize product presentation, distribution and promotion at points of sale, in order to improve sales and visibility.
2) Category management: a strategic approach which consists of managing product categories as independent management units to optimize their performance and profitability within the framework of distribution channels.
→ Discover category management
3) Point-of-sale advertising: POP refers to communication strategies and media used to promote products directly in stores, in order to attract consumers' attention and stimulate sales at the point of purchase.
→ Discover branded POS in supermarkets
4) Assortment management: this involves selecting, organizing and optimizing the products available in store to meet consumer needs, while maximizing sales and profitability.
5) Positioning and differentiation from private labels: FMCG brands must succeed in creating a unique identity for their products. This means distinguishing them through specific characteristics, quality or added value, in order to stand out from private labels, which are often perceived as cheaper alternatives.
→ Discover how to position yourself against private labels
6) Promotions: FMCG brands use a wide range of promotional techniques to boost their appeal in supermarkets: temporary price reductions, discount coupons, free samples and in-store events to grab customers' attention.
→ Successful promotions in supermarkets
7) Marketing activation: this activity covers concrete actions taken to engage consumers and promote a brand, product or service, often through events, promotions or interactive activities that create memorable experiences.
→ Discover marketing activation
8) Sales promotions: in supermarkets, these generally include special events such as product tastings or demonstrations, competitions and games to engage customers, temporary promotions, and presentations of innovative or seasonal products to attract attention and encourage purchases. These activities are designed to boost sales, attract customers to the store and reinforce product visibility.
9) Marketing mix: this includes product management in terms of design, quality and packaging, pricing strategy with adjustments and promotions to remain competitive, effective distribution through various channels to guarantee product availability, and promotions which encompass communication and advertising activities to attract consumers and stimulate sales.
→ Discovering the marketing mix in supermarkets
10) Retail execution: implementation and management of marketing strategies and point-of-sale operations to ensure optimal product presentation, effective customer service and consistent execution of in-store promotions and brand initiatives.
The FMCG sector plays a major economic and social role in France. Its influence extends far beyond simple retailing: it shapes jobs, consumption and supply throughout the country. It is impacted by changes in society and consumer habits, but holds the levers to push towards more responsible commerce. In fact, this is one of the main trends impacting this sector: societal and regulatory pressure on the environmental footprint of products (plastic packaging, carbon footprint, food waste) has led to the development of organic, natural or local products, recycled, recyclable or refillable packaging, and more present CSR communication. Carrefour and Auchan, for example, have extended their private label zero waste and bulk ranges.
As mentioned at the top of this article, inflation and consumer trade-offs are having a major impact on FMCG sales. The sharp rise in prices (raw materials, transport, energy) has put pressure on purchasing power, driving consumers to opt for first-price or private-label products, and promotions.
Food e-commerce and the digitalization of society are also forcing physical stores to change their approach. As a result, we're seeing growth in drive-through and express deliveries, and strong growth in quick commerce. Quick commerce is delivery in less than 15 to 30 minutes, mainly for FMCG (beverages, snacks, fresh produce, hygiene), and is based on the dark store model (small urban warehouses closed to the public, optimized for express order preparation). This type of consumption is favored by a young, urban population.
The latest trend concerns those working in the FMCG sector: automation and AI in the supply chain and sales, notably via the optimization of sales rounds in the field, more refined demand forecasts to reduce out-of-stock situations, and the automation of shelf analyses and in-store readings. These technologies are used to meet growing demand for operational efficiency in a context of pressurized margins.
