What is FMCG?
Fast-Moving Consumer Goods (FMCG) are products with a quick turnover, typically low-cost, and widely consumed. Examples include freshly baked goods, beverages, snacks, toiletries, and cleaning supplies. These products are characterized by high demand and short shelf life, often due to perishability or to their frequent use.
FMCG products dominate retail environments like supermarkets, convenience stores, and traditional trade outlets, where quick sales and replenishment are critical.
What is CPG?
Consumer Packaged Goods (CPG) refer to products sold in pre-packaged forms, usually for everyday use. While CPG encompasses FMCG, it also includes items with a longer shelf life, such as canned foods, boxed goods and personal care products.
CPG products are often distinguished by powerful branding, intense marketing, and the convenience of their packaging, which plays a significant role in consumer purchasing decisions.
What are the key differences between FMCG and CPG?
Speed of Sales
FMCG: High turnover rate as products are consumed rapidly and need frequent restocking.
CPG: May include both fast-moving and slower-moving items that have a longer shelf life.
Shelf Life
FMCG: Typically shorter due to perishability.
CPG: Broader range of shelf life, including durable goods.
Sales Environment:
FMCG: Primarily in traditional and modern retail formats.
CPG: Found in traditional as well as modern retail environments but products with a longer shelf life, such as mobile phones, food preparation items and household electronics are also found on e-commerce channels.
Why are they both important in Traditional Trade?
Traditional Trade—spanning informal shops, kiosks, and open markets—remains a critical distribution channel in many developing economies.
Traditional Trade is very much about convenience shopping and is dominated by FMCG products. The less expensive, non-FMCG, CPG products are also typically found in Traditional Trade and they are important to shop owners as they build consumer loyalty because of their product range.
Traditional Trade environments require tailored approaches for FMCG and CPG success, such as competitive pricing, availability, and understanding local consumption patterns.
Data on FMCG and CPG sales is not readily available in Traditional Trade and requires the services of a specialist market researcher to obtain this data.
The Importance of a Retail Census for FMCG and CPG
The first step for a market researcher in a Traditional Trade environment is to conduct a retail census. A retail census provides valuable insights into the landscape of outlets selling FMCG and CPG products. By mapping and profiling these stores, manufacturers and distributors can identify market opportunities.
The data, particularly the geo-mapping of Traditional Trade outlets, allows for the optimization of supply chain and distribution networks.
This data is especially vital for entering new markets or scaling operations in traditional trade.
Why a Route-to-Market Strategy is important for FMCG and CPG products
A well-defined route-to-market (RTM) strategy ensures efficient distribution, competitive pricing, and product availability.
A RTM strategy, tailored to traditional trade, is critical, because many of these outlets have no formal address, are often in either densely populated areas or in rural areas, and are also not easily accessible. The RTM strategy will rely heavily on the retail census for accurate data.
An effective RTM strategy leverages insights from retail censuses and on-ground market intelligence to connect brands with consumers in even the most remote areas.
Why Retail Tracking is important in Traditional Trade
Retail tracking monitors sales performance, stock levels, and consumer trends at the point of sale. In Traditional Trade, where shop owners keep few records and who obtain much of their stock from wholesalers, in shop retail data is not available to distributors and manufacturers.
Retail tracking, by a market research company, becomes critical for distributors and manufacturers to ensure product availability, preventing stockouts, and identifying fast-moving items.
It is also essential for tracking brand performance and gauging promotional campaign success.
Retail tracking supports dynamic decision-making, helping companies remain competitive in rapidly changing markets.
How Frontline Research Group can help you
While FMCG and CPG share similarities, their distinctions matter in crafting effective market strategies. Both categories are vital in traditional trade, and tools like retail censuses, RTM strategies, and retail tracking are indispensable for maximizing their potential.
Frontline Research Group are traditional trade experts and operate in Africa and Southeast Asia. The don’t just provide data but also help their clients leverage the data through critical analysis, insights and direction.
For more information, a quotation or a demonstration contact Vaughan Deacon on tel +27 (0)86 999 0407 or email vaughan.deacon@frontlineafrica.com.
