FMCG companies to limit their global reach, want to serve billion in India

Indian FMCG companies that had expanded their global reach are now questioning themselves as the ones that had done that are now suffering as their international wings continue to perform badly of course barring a few. This may make them revisit the thought that it doesn’t make sense to scout growth abroad when a company has more than a billion potential customers to cater to.

The venture overseas has unfortunately exposed these businesses to currency fluctuations, exposure to regional economic and political headwinds, and increase in leverage in some cases. However, inspite of all this, India constitutes the dominant share of revenues and profits. As a result, growth overseas has not been able to offset the impact of a slowdown in local demand.

Indian FMCG companies have remained India centric while restructing their international operations, after the acquisition spree that peaked in 2016. Some of them went ahead and sold off their non-performing ventures overseas.

Last year, Godrej sold over their company’s UK business, calling it a part of the company’s strategy to focus on emerging markets in Asia, Africa and Latin America. The company earns more than half of its revenues from India, a quarter from Africa and 15 per cent from Indonesia. But it earns three-fourths of its profits from India, 19 per cent from Indonesia and 7 per cent from Africa, as per data from Bloomberg.

Around the same time, Tata Global Beverages restructured its international operations by merging its business in Canada, America, Australia, UK, Europe, Middle East and Africa regions into a single unit. The company is now focusing more on India and select overseas markets. It is exiting operations in non-core overseas markets such as Russia, Sri Lanka and China.

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