COMMON GROUND: INFLATION
Navigating an unsettled marketplace in Europe
The common ground of Europe in 2022 was the arrival of soaring inflation and its stubborn hold on spending patterns. Other regions, particularly Latin America, were more used to dealing with inflationary conditions, so the impact was less obvious and more nuanced. But in Europe, shoppers were confronted with an ongoing pattern of rising costs, particularly for food, and compromises had to be made as they navigated the unsettled marketplace.
The French FMCG sector in 2022 experienced a notable evolution in consumer purchasing behaviours. Triggered by inflationary pressures, FMCG brands and retailers were faced with the challenging task of deciphering a terrain of changing brand allegiances and dynamic value perceptions.
Against this context, while stalwart brands like Herta, Fleury Michon, and Président continued to hold their ground in the French marketplace, a clear trend was discernible. FMCG stakeholders spotted a pronounced shift towards retailer-owned labels, marked by a 1.1-point rise in their market share.
This inclination towards value-driven options had cascading effects across categories. Brands anchored on organic propositions, for instance, saw a downturn with expenditure decreasing by 5.4%. Further, both brands and retailers recognised a burgeoning demand for more affordable product categories and compact packaging, reflecting the prevailing conservative spending trend.
However, it would be an oversimplification to state that the narrative was exclusively about cost-cutting. A significant 42% of brands improved their Consumer Reach Points, a clear indicator of their ability to still unlock growth avenues. Notable performers, such as Cristaline mineral water and Soupline detergent, harnessed their evident price benefits, witnessing growth in consumer reach by 15% and 13% respectively.
But price was not the only driver for those who found success. The frontrunners combined a myriad of tactics, encompassing robust brand equity cultivation, bespoke marketing to under-penetrated segments, and unwavering marketing backing. Aligning with contemporary consumer demands around pleasure, convenience, and value was also a stand out in France. Brands like Sodebo, with their frozen ready meals, and La Laitière, with their cream range, serve as model examples. They successfully expanded their market footprint by emphasising convenience and indulgence, resonating with older consumers, and bolstering their innovations with captivating promotions.
A more significant rise in the popularity of retailer-owned labels due to persistent inflation.
A resurgence in organic and sustainable brand preferences.
The emergence of new, local brands challenging the traditional stalwarts.
The repercussions of the pandemic are waning in Spain, at least in terms of brand performance. The top 10 brands in the country have returned to their pre-pandemic penetration levels, marking a promising recovery phase for the market.
Leading the pack are Coca-Cola, ElPozo, and Central Lechera Asturiana. While Coca-Cola clinched the top spot with 130.69 million Consumer Reach Points (CRPs), ElPozo boasted the highest household penetration at 73.6%. Asturiana made notable progress, being the only brand in the top 10 to increase its buyer household percentage from the previous year.
The food and beverage sector showed substantial dynamism. Lay’s dominated the out-of-home food consumption segment, and Coca-Cola continued its reign in beverages. Remarkably, 95% of the top 20 beverage brands for out-of-home consumption gained in brand interactions with consumers.
Several brands also made their entry into the top echelons of the list. The food sector saw the arrival of Alpro, Grefusa, La Casera, and Philadelphia in the top 50.
Brands are evidently harnessing the power of advertising and innovation to propel growth. An astonishing 100% of the most innovative brands either maintained or improved their rankings. Plus, brands amplifying their advertising investments saw a 20% more favourable evolution than their less promotionally-oriented peers.
