FMCG (Fast Moving Consumer Sector) is the fourth largest industry in India. The three main segments in this sector are personal care & household (50%), healthcare (31%) and food & beverages (19%). Between 2011 to 2018, it has grown to US$ 52.75 billion from US$ 31.6 billion. Tata Consumer India Fund G, a thematic scheme, is highly affected by evolution in the consumer sector as its major allocation (around 80%) is in consumption-oriented sectors. If we want to analyse the performance of Tata Consumer India Fund till 2030, we have to consider various aspects which are going to affect the consumer sectors in India.
What Does History Say Regarding Consumer Sector?
When we look back a decade and half ago, we get to know the changes happened in the past to shift the trends. During that time, around 30% of the companies in the world were facing extreme poverty as compared to only 15% of today. Surprisingly, only 12% of people around the world owned mobile phones compared to 60% today. Facebook had no existence then, and today, the whole world know this social media site. The rapid trends in the past have changed the perspective of investors on shopping, living, and thinking. And, these all are going to continue in future as well. The consumer-packaged-goods and retail sectors have seen so many changes in last 15-years, and we expect it to continue in future as well.
What Changes Can We Expect till 2030 in the Consumer Industry?
Launched in Dec 2015, Tata Consumer India Fund has a long route to go forward. Making a research on consumer-facing firms, here are the main trends which are going to affect consumer sector and Tata Consumer India Fund Growth as well.
Evolving Consumer Spending Trend
The composition structure of the world’s population is changing so fast. The World Bank suggests that till 2030, 93% of the population of developing countries like India will belong to the middle-class category. And, favourably rich will become richer in a couple of years. Further, the aging population and women empowerment in the workplace will create different consumption trends in the industry. From 2005 to 2016, the average urban Indian household has reduced from 4.85 people to 4.44 people. We expect household size will shrink more and change the consumption trends.
With the changing spending trend, it is expected to triple by 2030. Hence, altered spending trends are inevitably going to affect Tata Consumer India Fund as well.
Changing Geopolitical Mechanics
The climate is going to change significantly, and this is certain. Apart from this, the economic interconnection is going to become stronger along with economic power shifts. With the advancement and reducing the value of money, commodity and labour costs are going to make a prominent surge in upcoming years. It is also expected that China’s GDP is going to cross GDP of the US in 10-years. So, we can expect massive changes in geopolitical mechanics. Overall, it is going to affect Tata Consumer India Fund profoundly.
New Experience in Personal Consumption
Some new patterns such as increasing health & wellness awareness, convenience, personalisation demand, changing discretionary spending, experience focused shopping, economy sharing, and simplification are going to impact the consumer economy to grow more than $300 billion by 2025.
Technology Up-Gradation
The involvement of mobile connectivity, 3-D, artificial intelligence, internet users, virtual reality, autonomous vehicle, digital profile, and some upcoming technology up-gradation are going to make a rapid shift in consumer prospects, and we expect it to affect Tata Consumer India Fund positively to generate higher returns in future.
Structural Shift in Consumer Sector
Apart from the outer shifts, the consumer industry is expected to make structural changes as well until 2030. Some of the changes can be a talent shift, consolidation, direct to consumer models, and activist investors.
Considering all the trends that are going to impact this scheme till 2030, we expect this industry to make a huge shift in investors earning as well. So, it is wise to invest in Tata Consumer India Fund for a long-term duration to get higher benefits in future.
This article explains the changing trends in consumer industry which are going to impact Tata Consumer India Fund till 2030.
Dishika is a financial analyst at MySIPonline with the keen interest in the thematic fund and their overall performance based on economic shift.