Consumer Currents
Navigating the tides of FMCG change
The pulse of the global Fast-Moving Consumer Goods (FMCG) industry continues to pound but the cadence of its heartbeat has changed.
When the world sought refuge within four walls in 2020 at the height of the COVID-19 pandemic, the industry boomed with a 10.6% growth, fuelled by the urgency of a homebound population. However, the most recent annual figures show a different path. The FMCG market growth of 2022, though nearly half of the 2020 peak, at 4.8%, still signals a significant climb from the 2.6% registered in 2021. Indeed, it is the second highest in the last decade.
This time, the engine driving this climb is not the flurry of demand triggered by enforced isolation but the forcing effect of inflation. Almost everywhere, save for Asia, food price inflation hovers above 10%. In other words, the growth is artificial.
Inflation, not demand, is pushing “value” numbers higher
To understand this difficult dynamic, we have shifted our lens to a long-term perspective, focusing on 4-weekly volume growth vis-à-vis inflation growth. In 2020, we witnessed a surge in volume growth driven by the retreat of eating and drinking habits into the home. However, the last two years have challenged this trend, manifesting continuous volume declines. In 2021, this reduction was the aftermath of the 2020 lockdowns. In 2022, it was the ascent of inflation that triggered the fall, with rates soaring to levels unseen since 2008.
Pivoting our lens towards consumer behaviour presents a more complex pattern. In 2020, lockdowns prompted shoppers to stock up, driving a spike in spend-per-trip figures. The following year brought a slight decline in shopping frequency and a modest rise in spend-per-trip as the industry sought to regain equilibrium. As 2022 rolled in, spend-per-trip figures once again surged, not from increased demand, but propelled by the winds of inflation.
Regional rationales
As is often the case, this narrative varies by region. The United States experienced a substantial increase in spend-per-trip in 2020, a trend that still endures. In contrast, Western Europe witnessed a recovery in frequency, but spend-per-trip figures remained static, until the latter half of 2022 as inflation took hold. Asia, least impacted by COVID-related demand and inflation, showed minimal fluctuation. Eastern Europe registered double-digit increases in spend-per-trip in both 2020 and 2022, though the frequency of shopping has yet to rebound. Latin America, meanwhile, maintained a balance between a recovering frequency and high spend-per-trip increases.
The stronger growth performance, combined with the buoyancy in the Food and Dairy sectors, forecasts a promising trajectory through 2023. However, the Beverage and Health & Beauty sectors have been slower to catch up with this pace.
