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      India’s FMCG contract manufacturing industry has emerged as a dark horse over the past 24 months and is now being perceived and valued as a quasi-consumer play. This shift can be partly attributed to the industry’s transformation from a fragmented, low-margin segment to large-scale operations, deep innovation capabilities, a diversified product and customer base, and exposure to exports markets – driving both growth and profitability.

      This thought leadership provides a brief overview of key trends and opportunities, the competitive landscape, global industry and M&A trends, deal activity, and potential M&A themes in India, thereby demonstrating our domain expertise and leadership in creating value for stakeholders.

      Key highlights of the report

      • Key industry trends

        Interconnected forces that are reshaping the industry and contributing to multiple growth vectors such as (i) rise of D2C brands and private label expansion by retailers leading to full outsourcing of product development and manufacturing, (ii) innovation outsourcing by large FMCG players is shifting the role of contract manufacturers from vendors to strategic partners, (iii) exports are becoming a major lever, as India emerges as a cost-effective and compliant alternative to China, etc

      • Key challenges and strategic opportunities

        Fundamentally, being a B2B business, the margin band is expected to remain range bound and inherent risk in the business is to sustain wallet share with the customer – the success could be driven basis factors such as (i) higher share of own formulations (ii) innovation in ingredients and processes, (iii) internationally accepted manufacturing facility backed by global certifications/licenses, etc

      • India competitive landscape

        Brief overview and competitive positioning of players in India across the dimensions of scale, profitability, and return on capital employed

      • Global manufacturing landscape and key trends

        Global contract manufacturers have evolved into vertically integrated, R&D-led solution providers, offering speed-to-market and co-development partnerships. There is a growing expectation globally that CMOs support not just manufacturing but also product development and agility-presenting a key opportunity for Indian players

      • Potential M&A themes and deal activity in India

        The sector has seen robust deal activity, reflecting consolidation and investor confidence in value creation. Four M&A themes are emerging – (i) PE backed diversified contract manufacturing platform plays, (ii) Global strategic partnerships, (iii) opportunistic asset acquisition opportunities, (iv) PE backed niche contract manufacturing plays

        With its structural growth levers, rising innovation capabilities, and emerging strategic interest from global investors, India’s FMCG contract manufacturing industry is poised to become a cornerstone of the global supply chain. Companies that invest in scale, formulation, and exports stand to become category-defining leaders in this evolving landscape

      FMCG contract manufacturing: Industry overview and M&A outlook

      Overview of key trends and opportunities, the competitive landscape, global industry and M&A trends, deal activity, and potential M&A themes in India

      Download the report (4.5 MB)
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      Key Contact

      Somika Agarwal
      Somika Agarwal

      Partner, Corporate Finance

      KPMG in India

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