What are 'Consumer Goods'
Consumer goods are products that are purchased for consumption by the average consumer. Alternatively called final goods, consumer goods are the end result of production and manufacturing and are what a consumer will see on the store shelf. Clothing, food and jewelry are all examples of consumer goods. Basic materials such as copper are not considered consumer goods because they must be transformed into usable products.
BREAKING DOWN 'Consumer Goods'
There are three main types of consumer goods: durable goods, nondurable goods and services. Durable goods are consumer goods that have a long life span and are used over time. The life span is typically three years or more. Examples include bicycles and refrigerators. Nondurable goods are consumed in less than three years and have short life spans. Examples include food and drinks. Services include repairs and haircuts.
Consumer goods are also called a final good, or end product. These items are sold to consumes for use in the home or school or for recreational or personal use. Consumer goods exclude motor vehicles.
Fast Moving Consumer Goods
One of the largest consumer goods groups is called fast moving consumer goods. This segment includes the nondurable goods like food and drinks. Companies and retailers like this segment as they are the fastest-moving consumer goods from stores, offering high shelf space turnover opportunities.
Consumer Goods ETFs
The largest consumer goods ETF is the iShares U.S. Consumer Goods ETF (IYK). This ETF, founded in 2000, has 115 stock holdings and more than $900 million in assets under management. The fund tracks the Dow Jones U.S. Consumer Goods Index, also created in 2000. Top holdings are Procter & Gamble, Coca-Cola, Philip Morris, PepsiCo, and Altria Group.
Beyond the U.S. Consumer Goods Index, several of the largest companies are missing. The largest consumer goods company in the world is Nestle, with brands like Gerber, Toll House, Stouffer’s, Lean Cuisine, and Purina.
Privately Traded Consumer Goods
The index also doesn’t include privately traded consumer goods companies. Two of the largest private consumer goods companies are Mars and SC Johnson. Mars is famous for its candy and gum brands. SC Johnson is a consumer goods company focused on the home with brands like OFF, Pledge, Raid, Ziplock and Windex.
The Consumer Product Safety Act was written in 1972 to oversee the sale of most common consumer goods. The act created the U.S. Consumer Product Safety Commission. This group of five appointed officials oversees the safety of products and also issues recalls of existing products.