Double-digit growth will not be seen at a global level for a very long time – if ever again – and certainly not this year.
As we have seen, the quadrupling of FMCG growth was an effect of the restrictions on movement around the globe and not a trend. Double-digit growth will not be seen at a global level for a very long time – if ever again – and certainly not in 2021.
As with any forecasting, there are several unknown factors that are very hard to predict. When will lockdowns end and restaurants reopen? And even when this happens, how quickly will consumers return to their old habits? Even when populations have the freedom to move, eat and drink like they did pre-COVID, how many people will remain working from home, either full-time or part-time?
Given this uncertainty, we have forecast two potential scenarios:
1. What would growth look like if we remained in complete lockdown through the whole of 2021? 2. What would growth look like if restrictions eased from Q2 onwards?
Both represent a slowdown in FMCG growth. With scenario one, we forecast +5.2% growth and scenario two +2.2% globally.
As always, the forecast varies by the market conditions. Returning to Mainland China, which, unlike most other regions, witnessed a slowdown in growth in 2020, a return to lockdown-free living would represent a faster return to pre-COVID trends and an acceleration in FMCG growth.
Lockdown anniversary During the 12 weeks to 21 March 2021, take-home grocery sales rose by 7.4%, a marked slowdown compared with previous months as supermarkets start to annualise sales against the extraordinary spending in 2020. Sales in the most recent four weeks were down by 3.0% versus the same period last year.
The anniversary of the first national lockdown means we can begin to compare grocery sales against the record-breaking levels seen in the early days of the pandemic. And growth has, perhaps not surprisingly, dipped over the past four weeks as a result. This time last year, Brits were adjusting to schools and offices closing and making extra trips to the supermarket to fill their cupboards for lockdown.
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With so many new shoppers trying online for the first time in 2020, one big question needs to be answered: how many of these will remain? According to our COVID-19 Barometer, 45% of consumers say they will continue shopping with online stores they found during the pandemic.
We have applied the same forecasting model to the online channel globally, and whilst this shows that online will slow this year, growth will remain considerably above that of the market. Based on the same two scenarios, online will grow at 38% if we remain in full lockdown and at 28% if we have a partial lockdown.
Either of these growth rates will result in the channel being well over 8% by the end of 2021.
A significant proportion of this online growth will come from Asia and Mainland China. Beyond 2021 the channel's real challenge – particularly in Europe – is driving further loyalty and winning its fair share amongst lower spend trips.
However, as our interview reminded us, the growth of online squeezes profitability for retailers and manufacturers. And this squeeze will become an even bigger issue for retailers if consumers move to do their online shopping for these lower value trips, whilst the expectation on free and cheap delivery will remain the same.
Key takeaways
FMCG will continue to grow in 2021, albeit at a much slower rate than previously—between 2.2% and 5.2%. This slowdown is already happening in GB, where despite being significantly higher than pre-COVID level, March 2021 sales were much lower than the record-breaking month of March 2020.
Ecommerce growth will remain far higher than the market average, and the channel will continue to gain share this year. Any potential slowdown is likely to occur beyond 2021 as some shoppers will not return, and issues with profitability and winning smaller baskets become more prominent.
