FMCG top on options at B-schools

Call it the meltdown effect. In a reshuffle of preferences, the fast moving consumer goods sector (FMCG) has emerged as the most popular industry of choice for the 2009 batch of management graduates.

Other industries which form the top five most popular sectors for students include, management consulting (35%), software/IT consulting (23%), foreign banks (22%) and retailing (22%). These are the results of the latest Nielsen Campus Track B School Survey.

The FMCG sector seems to have finally joined India Inc’s growth party by posting surprising double-digit growth in sales in the past couple of years. The industry’s future prospects look bright, considering rising household incomes and the spread of modern retail. However, the per capita income level in India is still very low compared to the developed world. Besides, the penetration level of many products is also relatively low and several categories remain fairly unbranded. All these factors provide a huge untapped potential for the industry.
The top five FMCG companies constitute nearly 70% of the total revenues generated by this sector. Multinational FMCG companies like Hindustan Unilever, ITC, Nestle, Procter & Gamble and GlaxoSmithKline Consumer Healthcare traditionally comprise the first category of FMCG companies. They tend to spend nearly 10% of their revenues on an average on advertising and promoting their products, which is the highest ad spend figure in the industry. Justifying their high product pricing, these companies largely tend to capture value by addressing a felt need.
FMCG companies can also be segregated according to the product categories in which they exist. Various products have different demand drivers; hence, the growth of companies tends to be different. For instance, paints makers witness growth during a housing boom. But the same may not be the case with soap manufacturers, which may witness some down-trading by consumers. With the market in a bearish phase, the FMCG sector has found flavor among investors. The sector’s defensiveness is demonstrated by the stability in returns generated even during times of slow economic growth. While the Sensex is down by 29% since the beginning of this year, the ET FMCG index comprising the top 20 stocks in the sector has fallen only by 12.5%.

Preferences seem to have shifted in favor of large business conglomerates and the IT sector as a consequence of the current global financial turmoil. In particular, students are opting for FMCG companies over the financial sector.

Indeed, considering the current financial job market, the security offered by the FMCG industry has become a major attraction for graduates.However, the sector which has shown greatest promise for the future in the survey is retailing. Others include management consultancies (27%) entertainment & media (25%), FMCG (21%) and investment banking (19%).

In its ninth year, the Nielsen Campus Track B-School Survey gauged student’s perceptions of companies and their considerations as they evaluate prospective employers. Over 1,300 soon-to-be graduates from the top 40 management institutes were interviewed.

According to the Nielsen survey, the ‘Dream Company’ for students includes the likes of McKinsey & Co, Google, Hindustan Unilever, Accenture and Procter & Gamble, while their most admired role model was Ratan Tata more than one in four(27%) students surveyed voted for him.

The retail industry has been growing in popularity with graduates over the past few years. Changing government policies and the influx of foreign banners in the sector, along with the entry of big Indian banners, etc. have combined to form a strong pull for the industry.

Among the various factors considered by students before joining a company, personal growth and independence in decision-making topped the list. As for average salary expectations, more than half the respondents have scaled back their expectations because of the market environment, particularly those specializing in finance.

According to the survey, graduates tend to stay in their first job for two to three years and expect to move on in search of better career options (65%), better salary and better designation (40%).