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Strategy Briefing - Global FMCG Trends in 2009 and 2010: Legacy of the Downturn Price
Euromonitor International, Sep 2010, Pages: 75
About this Report:
- The economic crisis that began in 2008 had a severe impact on sales of fast-moving consumer goods (FMCGs) across the globe in 2009. However, indicators suggest a return to economic growth for most markets for 2010.
- Emerging economies such as China, Brazil and India (though not Russia) were less affected by the downturn and have been quicker to recover. In many of these markets, credit growth is accelerating once again.
- A common theme across all FMCG markets in 2009 was trading down as consumers became more thrifty, turning to less expensive brands and private label at the expense of brands; seeking out special offers, using coupons and shopping through discount channels.
- Fierce competition and downtrading put tremendous pressure on market prices, causing many FMCG sectors to contract in value in 2009, even as volume sales continued to progress.
- While spending increased in 2010, a degree of frugality, a legacy of the recession, is likely to persist into the future, as the days of lavish spending appear to be over. However, this is likely to have a greater impact on non-essential purchases than everyday FMCGs.
- Private label was a definite winner during the recession and is expected to continue to do well. Consumers who ‘traded down’ to private label are impressed with the higher standards in packaging, innovation, premiumisation and choice that increasingly characterise such products.
- While price and value were top of mind for consumers during the recession, environmental concerns did not fade into obscurity, and sustainability and fair trade issues became even stronger in 2010 as economic conditions improved.
- Health continued to be a priority for many during the recession and was a continuing focus of FMCG manufacturers in 2010, especially in the light of recent food scandals and the swine flu (H1N1) virus that surfaced during 2009.
- Other recent safety issues, such as product recalls in the US and food contamination scandals in China also had a bearing on market growth in a number of sectors, making consumers more cautious about quality and the origin of ingredients.
- Changing demographic patterns continued to impact several FMCG sectors in 2009 and 2010. Lower birth rates and ageing populations affected eating and drinking patterns, health spending and consumption of beauty and personal care, and tissue and hygiene products.
- The number of children worldwide aged 0-14 years fell by an average annual rate of 0.1% over the decade between 2000 and 2010. Nevertheless, a mini baby boom in 2009 had a positive impact on baby-related sales, such as baby food (milk formula in particular) and baby care.
- The recession caused the trend towards cocooning to intensify, as people aimed to save costs by staying at home. This benefited the retail market for products such as basic food, alcohol, home care and certain at-home pampering and beauty treatments.
- As consumers sought to stretch their grocery dollars in 2009, they began to eschew upmarket supermarkets in favour of hard discounters such as Aldi and Lidl, mass merchandisers such as Target and Wal-Mart, and online stores such as Amazon.com and eBay.
- As with private label, consumers have become accustomed to lower prices and have continued to shop at discounters as conditions have improved. Supermarkets are fighting back with increased promotions, special offers and coupons.
- The development of supermarkets and hypermarkets has been a key factor in the growth of FMCG markets in developing countries such as China, India and Brazil, as they offer convenience, quality and a wider range of products.
- Most FMCG markets were affected by regulatory changes in one way or another in 2009 and 2010, including packaged food, consumer health and tobacco. Furthermore, government health campaigns have had an impact on the way people eat, drink and behave.
Summary of Drivers and Constraints Across FMCG Markets in 2010
Drivers:
- Global economic recovery is underway, leading to a return to growth for many FMCG markets in 2010
- Strong economic growth in China and other emerging markets is driving global FMCG sales
- New product development – especially combining greener and healthier attributes with convenience – driving sales in developed markets
- The premiumisation trend that was in evidence across all markets before the recession has begun to re-emerge
- Private label and discount retailers were winners during the recession, and are set for further growth as consumers have become accustomed to lower prices
- Health remained a priority during the recession, helping maintain sales of OTCs, functional foods and other health-related FMCGs
- Ageing populations led to higher spending on certain categories, including vitamins and dietary supplements, anti-ageing creams and incontinence products
- Intensification of the cocooning trend during the recession benefited certain sectors, e.g. packaged food, alcohol, home care, home beauty treatments
Constraints:
- Economic uncertainty persists in many markets; there is a threat of a ‘double dip’ recession for some, and sovereign debt crises in others
- Unemployment remains high, making consumers cautious about overspending
- Many developed markets are saturated, and FMCGs still face severe price competition, despite innovation
- Shoppers have become more thrifty as a result of the credit crunch, and frugal ways are expected to continue into the future
- Supermarkets have fuelled FMCG growth in emerging markets but face increased competition from discounters and mass merchandisers in developed ones
- Safety issues such as product recalls and food contamination scandals impacted negatively on certain markets
- Ageing populations reduced demand for other categories, such as baby-related products and feminine hygiene (although a mini baby boom in 2009 helped maintain sales in that year)
- Regulatory changes continued to undermine sales of certain packaged foods, tobacco and other products
The Global FMCG Trends in 2009 and 2010: Legacy of the Downturn Strategy Briefings is a series of reports that alert you to global trends predicted to influence consumer markets. They offer insight to changing market conditions and the opportunities and challenges companies need to consider to maintain a competitive advantage
Why buy this report:
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive environment
Regional coverage:
- Western Europe; Eastern Europe; North America; Latin America; Asia-Pacific; Oceania; Africa and the Middle East
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