Monday, 11 February 2013

Sector Snapshot - Consumer Goods

Consumer goods consist of items that we use daily or periodically. Soaps, toiletries, other FMCG items, processed food items, health drinks, home appliances, electronic goods etc. come in the consumer goods category. We all use these items in our day-to-day life. It is a huge sector and with a lot of potential. India is a consumer driven economy and the consumer goods sector has been the direct beneficiary of the affluence of the Indian public.

From the days of start of the economic liberalisation to the present day, the consumer goods sector has grown by leaps-and-bounds. The sector catered to the demand arising out of the new middle class, post-liberalisation. Just the demand which rose from the cities and metros alone has led to the growth of the sector as a whole in the past years which we are witnessing today.

So, did we miss the bus? Has the sector peaked or is there anything left in it for the new investor? Well, as the income levels of the working class grows and accessibility to rural and remote areas of the country is increased in the future, this sector will certainly see further growth in the coming years. There are certainly some good stocks to invest in this sector.

Potential for Growth :

As rural India integrates more into the mainstream in the coming years due to the increasing geographical and electronic accessibility, the market for consumer goods will become wider and the sector will need to play another catch-up game to cater to this increased consumer base. The sector will increase its reach to as yet untapped markets giving rise to further growth. So, the growth story in this sector is still not over and it has yet to deliver its biggest punch!

That is the reason we have chosen the consumer goods sector as the story of our sector snapshot in this post. In our opinion, good stocks in this sector are worth for the long-term bet and investors can expect reasonable returns overtime. This sector should certainly be part of our investment portfolio.