It is still too early to make any conclusions about the long-term impact COVID will have on preferences and behaviour. As is often the case, we tend to overestimate short-term effects while underestimating the true structural changes that will be revealed over time.
Currently, we are observing three behaviours in almost every country in the world:
People are shopping less often, whilst buying more per visit.
Consumers' personal care routines have changed – or been “paused” – driven by fewer social interactions.
Digital has accelerated, with e-commerce competing with big store formats and home delivery replacing the out-of-home consumption occasion.
These shifts are further complicated by changes in disposable income, but we know that FMCG is resilient.
When we adopt the brand lens, we learned that the potential for performance is highly dependent on the category performance. Brands are five times more likely to be growing if the category in which they play is growing. This truth is as important as ever.
Weekly category performance
FMCG categories have broadly fallen into four ways of performing while a market is in lockdown:
Source: Kantar, UK FMCG Purchase Panel Weekly data
We’ve closely analysed the weekly spend within the above four categories in the UK. In each, we have seen that the biggest brands have disproportionately won, with the top five brands being chosen at a faster rate than the category. Even in Deodorants, the top five fell at a slower rate than the category’s overall decline.
However, within each category there is a different story to tell for the individual brands.
Household Cleaners
All the top five brands in the category saw strong growth, but it is Dettol which saw the biggest step-change—doubling its CRPs in the last eight weeks. Dettol, a brand known for its antibacterial qualities, is now the clear number one in the category and will remain so for the foreseeable future. This is an example of both a category and brand which we believe will see a long-term shift in sales.
Beer & Lager
With slightly slower category performance (vs. Household Cleaners), only four of the top five brands are growing CRPs faster than the average. What makes this category so interesting is the long tail of sizeable brands. It displays that when a category is winning, if there are lots of brands there will be lots of winners—with twelve of the top fifteen growing faster than the category.
Fabric Detergents
This category has a very different look, with two-thirds of brand choices made within the top five brands, and with a much slower CRP performance (+8%), we only see two of these outperforming the category. Given the shape of the category curve, it could be expected that brands won or lost at the stockpiling stage. And yet this actually happened in the lockdown period. The number one brand, Persil, was selling at a similar level of promotions during lockdown as before, whilst others appear to have pulled back, showcasing the importance of short-term marketing levers during a period of less demand.
Deodorants
This last category, with a -6% CRP decline, has also seen declines for three of the top five brands. Each brand in this category is bought by specific demographics for specific purposes, so it is easy to understand the different performances. Market leader Sure (or Rexona as it is known in most markets outside the UK) is known for its efficacy. But with a combination of less people going to the workplace and less exercise generally, short-term demand for the brand has fallen. The brand has reacted well to the lockdown in the only way possible currently, trying to create demand through more usage occasions with its campaign #MoveMoreAtHome.
If we look to the market which has been through the full lockdown and is now on the other side, do we see a different picture of brand choice? We know that during the Chinese lockdown period, FMCG moved into decline—and pre-lockdown there was not as intense stockpiling. But despite the different overall picture, at a category level there were still winners and losers with most falling into one of the four shapes already described.
All the big brands in Household Cleaners saw strong CRP growth during Q1 2020.
But again, it was the brands offering immediate protection which doubled how often they were chosen—Aitefu, Walch and Dettol all growing by over 100%.
At the opposite end of the spectrum, Shampoo, a category which saw reduced at-home consumption. Like with Deodorants in the UK, the top brands have suffered (in-line with the category), but there is still hope with one of the top five managing to find growth.
There are two key conclusions to take from behaviour during this lockdown stage:
1. It is the biggest brands who are currently winning, particularly within the growing categories which have seen a surge in demand. 2. Traditional marketing levers are as important as ever to ignite demand in certain categories. It is still possible to win if your category is performing slower than others, or is even in decline.
It’s important to remember that the category patterns displayed here are strictly related to lockdown. New patterns will arise as long-term changes are revealed.
We have probably never seen so many people trying something new, whether it’s a new retail channel, new routines (whether in cooking, eating or personal care), or new brands. What we need to do is observe and understand how many, if any, of these behaviours will stick as restrictions are lifted.
