In the world of retail, you’re used to hearing and using the terms FMCG and CPG interchangeably. And for the most part, you’ll do fine spending a whole career using these two words that way. But is there a difference between these retail terms? And does it matter when it comes to sales?
If you want to impress the real industry sticklers, though, you should know that there are distinctions between “FMCG” and “CPG”. This may help you better understand the nuances of navigating the retail industry and enhance your next retailer pitch. Read on to learn more about FMCG and the difference between FMCG and CPG.
What is CPG? | CPG Meaning
CPG, or consumer packaged goods, are products that consumers purchase frequently, such as clothing, beauty products, and other household items. These products generally have a short lifespan and are intended to be used soon after purchase. Every CPG company deals with a highly competitive market and limited shelf space. However, the demand is high, so success can lead to quick revenue and increased market share.
What is FMCG? | FMCG Meaning
FMCG, or Fast-Moving Consumer Goods, refers to products that are sold quickly at relatively low cost. They are considered “fast-moving” because retailers need to restock the shelves regularly due to their high turnover rate. This is either because they are perishable or the demand is generally high.
Types of FMCG
As a general rule, FMCG refers to products that consumers use almost every day. Like products termed CPG, FMCG products are regular purchases. However, you can think of FMCG as a subset of CPG, as a group of products that sell faster than most. Here are a few product types that fall under the FMCG umbrella:
• Toiletries – Things like soap, shampoo, deodorant, and toilet paper
• Beverages – Like coffee, bottled water, soda, and juice
• Processed Foods – Like cereal, potato chips, microwave meals, and boxed pasta
• Health and Wellness Products – Like over-the-counter medicine, supplements, protein powder, health drinks, and lotion
Are CPG and FMCG the Same?
Some may claim that CPG is the same as FMCG, but there is at least one feature that sets them apart. Your first hint is that CPG is missing the “fast” part of the name. CPG brands, while still “fast”, are sold just a bit more slowly than brands technically termed FMCG.
For example, imagine you’re at your favorite local big box retailer. You stop in to purchase your weekly groceries but also wander into the cosmetics section and buy yourself a new nail polish color or face mask. It’s not as “fast-moving” a consumer good as, say, potato chips, or something that goes in your grocery cart every week. However, it is still relatively cheap and purchased with relative frequency.
What are the Main Differences Between CPG and FMCG?
One of the most important differences between CPG and FMCG is the way we talk about sales. If this is your area in the retail industry, you’ll need to be cognizant of the impact these differences have on sales velocity. For example, let’s say a manufacturer sells a million dollars worth of milk and a million dollars worth of cat litter. These are very different sales achievements. It’s a lot easier to achieve volume in milk sales—an FMCG used every day—than in litter sales.
Another way these terms differ is in their regional use. In North America, industry folks are inclined to use CPG. Internationally, FMCG seems to be the preferred nomenclature.
Bottom Line: Understanding FMCG and CPG is Key
Understanding the lingo of FMCG and CPG businesses can help you better understand the consumer and grow stronger relationships with retailers. You don’t want your pitch deck using the terms incorrectly and hurting your chances of getting more distribution.
At Goybo, your partner for FMCG growth and innovation, we highly recommend you reach out to our team. We can help you build a customized plan to optimize your FMCG sales. With our expertise, you’ll have sales data and much more available for any need that may come up.
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