Understanding the issue of CPG vs FMCG may be difficult because the distinctions between CPG and FMCG may be obscure the first time you look for them. Both are products that need to be replaced or replenished regularly, as well as commodities that are consumed daily. But there’s no need to be concerned; we’ll shed some light on the subject and make everything clear for you. Come along with us!
There are many queries about CPG vs FMCG, such as “are they the same?” and “what is the difference between them?” Firstly, it’s crucial to understand that in the entire market, it’s perfectly acceptable to use both names interchangeably. If you look up CPG and FMCG, you’ll notice that they’re both used to describe goods with similar characteristics: they’re sold quickly for a low price, they have a short shelf life, and they’re both in the same nondurable product category – But why are there so many distinct names for the same thing? The answer to that query can be found in this blog.
So, if you want to impress the true industry purists, you should understand the differences between “FMCG” and “CPG.” This may assist you in better comprehending the complexities of managing the retail market. It might be useful for your next retailer pitch.
Continue reading to understand more about CPG vs FMCG.
What is the Full Form of CPG?
CPG’s full form is Consumer packaged goods; these are items that people buy regularly, such as apparel, cosmetics, and other household items. These items have a short shelf life and are designed to be used as soon as possible after purchase. Every consumer packaged good (CPG) company must contend with a fiercely competitive market and limited shelf space. However, because demand is great, success can swiftly result in revenue and increasing market share.
What is FMCG?
Fast-moving consumer goods, or FMCG, refer to products that can be sold fast and at a low cost. Because of the high turnover rate, retailers are required to refill the shelves frequently. This is either because they are perishable or because there is a strong demand for them in general.
Types of fast-moving consumer goods
FMCG refers to products that are used (nearly) every day by consumers. CPG products are purchased regularly. FMCG, on the other hand, can be thought of as a subset of CPG, a collection of products that sell a little faster than the others.
Here are a few examples of products that fit within the FMCG category:-
- Toiletries – Soap, shampoo, deodorant, and toilet paper.
- Beverages – Coffee, water bottle, soda, and juice.
- Processed foods – Cereal, potato chips, microwave meals, and boxed pasta.
- Health and Wellness products – Over-the-counter medicine, vitamins, protein powder, health beverages, and moisturizer.
CPG vs FMCG
Some may argue that CPG and FMCG are interchangeable, but we’re here to point out that they differ in at least a few ways. Your first clue is that CPG’s name is noticeably devoid of the word “quick.” While CPG companies are still “quick,” they sell at a little slower pace than FMCG brands.
Consider the following scenario: You’re shopping at your favorite local big-box retailer. You go in to get your weekly groceries, but you also stray into the cosmetics aisle and buy a new nail polish color or a face mask for yourself. It’s not a “fast-moving” consumer commodity like potato chips or something you buy every week at the supermarket. It is, however, still reasonably priced and is purchased regularly.
What are the primary distinctions between CPG and FMCG?
The way we talk about sales is one of the most significant contrasts between CPG and FMCG. If you work in the retail industry, you must be aware of the influence that these disparities have on sales velocity. Let’s imagine a dairy company sells a million dollars worth of milk. Let’s imagine a million dollars worth of cat litter is sold by the same company. These are two completely distinct sales accomplishments. It’s a lot easier to sell a lot of milk — an everyday FMCG – than it is to sell a lot of litter.
Another difference between these names is what is their usage in different parts of the country. You may observe that industry professionals in North America prefer to utilize CPG. Internationally, however, FMCG appears to be the preferred abbreviation.
Finally, it’s beneficial to be aware of the variations in how to use these terms. However, you are unlikely to be prosecuted if you choose one over the other. The most important thing to keep in mind is that both CPG and FMCG brands are:
For a consumer
For a marketer
Lesser contribution margins
Short shelf life
High inventory turnover
How to use retail data in the FMCG and CPG industries
Retail analytics is one of the most essential ways a CPG manufacturing company may improve sales of both CPG and FMCG items. You risk slipping behind if you don’t know which products are selling the fastest and in which countries. Investment can be made strategically to boost sales velocity and obtain additional distribution if you know one of your goods sells faster than others. Also, You need to know how much to adjust to consumer wants and retailer sales skills, depending on your product line and how to use this knowledge in your strategy.
The bottom line: It’s critical to understand FMCG and CPG
Understanding the jargon used by consumer packaged goods companies will help you better understand your customers and build stronger partnerships with retailers. You don’t want to make a mistake in your CPG pitch deck that will hinder your chances of acquiring greater distribution. Both are non-durable products, however, the key distinction between them is their sales velocity. As a result, it’s understandable that in the CPG Vs FMCG analysis FMCG sells a little faster than CPG. If we examine how quickly one product could be sold over another, we can go even farther in our imagination and establish two categories inside the nondurable things. However, it’s vital to remember that CPG and FMCG are both terms for the same product category.