Introduction.
In this article, I am aiming to bring a traditional distribution business idea that anyone can start. We will evaluate whether a Glucose powder distribution business can be a feasible trade in today’s FMCG supply chain ecosystem. Will write detailed information and explain why I think this business can be a phenomenally successful trade if implemented correctly. After reading the article, if you want any additional information you can write to me. I promise to get back in a week.
Why this distribution business?
Yesterday I have explained a business opportunity that is developing due to the insanely rising temperature in India, which becomes a common phenomenon across India. Yes, there are some hilly terrains still not got affected but they are comparatively hotter than in previous years, which indicates an onset. This year India has experienced the hottest day in 121 years, as recorded by the Indian Meteorological Department. It is also estimated that this trend will continue in upcoming years.
Several state governments and central government office has published advisory to save citizens from this scorching hot weather and heat waves. The advisory is not to get exposed to sunlight, to wear proper cloth, and take adequate water to keep the body hydrated. While intake of enough water stands as the most important thing in summer, that very often turns into consuming different cold drinks and flavored beverages.
In the Indian household, the most common and quick solution to this is taking glucose water in assorted flavors. And when the choice of an alternative of aerated cold drinks comes children prefer glucose powder mixed in chilled water, which is quick in preparation, and inexpensive too.
Seeing this preference of Indian households for ready mix cold drinks I see a big opportunity for the Glucose powder distribution business.
Market of glucose powder distribution business.
Currently, there are three major brands marketing glucose powder in the form of Glucose-D energy drink powder. They hold the majority of the market share. We know India is a country of 140 crore people, here sometimes feeding the entire nation becomes impossible due to different technical reasons. In India, in many cases the consumer market never gets exhausted by two or three players. Eventually, the small and local players evolved. The Glucose powder market is no exception, there are local and regional players doing well when compared according to their capacity, size, width, and breadth of operation.
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As an energy drink, glucose powder is always the first choice for an Indian household due to its quick preparation time, taste, and affordability. With prolonged summer and ever-increasing temperature in the Indian climate, I see the glucose powder market grow to skyrocket in upcoming years.
It is projected that the energy drink market will grow at a 9.22% CAGR till 2025 and glucose powder will make a large contribution to it. In the glucose powder market in India, the top three brands contribute 87% of the market share and the rest 13% is controlled by others.
What I suggest here is to get associated with this product line in any form (as per one’s financial capacity) because growth in this business is well destined.
Business Model.
The type of business one can be involved in is tying up with established brands as their supply chain partner like distributors, and wholesalers. But we know getting a distribution assignment from an established brand may not be so easy. On the contrary, the small players keep their doors open for new market penetration, so as the white-label manufacturers where one can get an easy entry and establish own brand or distribution.
The small players are very much willing to penetrate new markets and increase their market share hence getting their dealership or distribution in new markets would not be a challenging task. Also, their affordable price band is a favorable aspect for channels, and that gives a unique selling proposition to the business which lacks (in terms of pricing) in case of branded companies.
You can explore the opportunity in different B2B platforms where you will get plenty of manufacturers who are open to white label business associations. Apart from that you can also look into the franchisee platform (I am not taking the name here; you can search the internet with keywords like “franchisee platform in India”). There you will get the companies offering distribution for various areas and region.
Investment required to start glucose powder distribution business.
If you want to go for manufacturing of glucose powder, then the investment will come to around twenty-five crores for a 30 MT/Day production capacity which is quite high, wherein taking distribution will not be a big investment game but the challenge is with the branded company as they do not give distribution rights for a specific product. Hence my suggestion is to go for distribution with small companies who are solely into glucose-related products or with a limited range of products or with a white labeling company to create your own brand.
These entry options will not cost that high, and I am sure that they can be managed within five lakhs to ten Lakhs rupees.
I have seen people; especially first-time entrepreneurs, jump into the distribution business without prior distribution experience and pump heavy investment as lured by the company’s push sale strategy. Please keep note of taking a calculated risk when opting for an association with any small FMCG company and for a good, one must do a lot of footwork in the targeted market.
Things to keep in mind while starting FMCG distribution business.
In the Indian market, an FMCG distribution business is a good deal and high chance most succeed. FMCG business has a checklist that one should follow without taking any shortcuts before getting into it. Also not to bind in a blindfolded agreement with the company’s terms and conditions. My suggestions are as below.
- Understand the product and its demand in the market, for that you need to speak to customers directly.
- To seek an opinion about the products, contact retailers.
- Evaluate competition in terms of availability, prices, SKU size, and quality.
- Give a secret visit where the company’s market is strong, and gather retailers’ feedback on supply, customer feedback, margin, and support from distributors. If possible, visit a distributor too.
- Evaluate the company’s terms and conditions based on the knowledge you gathered.
- Understand their “Go to Market” strategy for new markets or marketing strategy for the existing market.
- Understand the marketing support that the company will extend to your market.
- Always deal through the bank.
- Understand credit cycle and facility.
- Understand the schemes.
- Understand return/damage policy.
Glucose powder market is ever-growing.
Before I close, let me assure you that the Glucose powder market is ever-growing in India because of its geographical position on the earth, our country is located near the equator in the tropical region where the sun’s rays shine most directly from March to September, that results into extreme hotness of weather during that period.
With these seven months of business feasibility, we may consider this business as a seasonal trade hence I will strongly suggest that parallel to glucose powder distribution always get into the distribution of other FMCG products to keep revenue inflow intact throughout the year.
Hope you have understood this FMCG distribution business model, if you want more information you can write to me.
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