The take-home FMCG industry's growth slowed between 2020 and 2021. But does the regional story reflect the global one?
The global FMCG slowdown
In 2021, take-home FMCG value growth slowed down across all regions – even moving into decline in Western Europe. The impact of COVID-19 was most pronounced in Latin America, MEA, and the US, although their 2021 performance was still higher than 2019.
In Latin America, despite a slowdown, +9.2% was the fastest growth recorded by any region in 2021. This is due to lockdown restrictions still being very present across the region, particularly in key markets such as Brazil – plus inflation has been higher than in any other region (which these growth figures capture).
The Asia region saw a minimal change across both 2020 and 2021, with a small acceleration followed by a small deceleration, however performance remains highly fragmented. Mainland China – the largest market in the region – saw FMCG slow significantly in 2020 but despite a mini-revival in 2021 their growth remains behind the pre-COVID levels of over +5%. Conversely, India saw one of the strongest growth rates in the region in 2020, but this almost halved in 2021, while Japan seesawed from being in decline, to growth, and now back into decline. The Philippines declined two years in a row, also seeing the biggest percentage fall in 2021, having had one of the strictest lockdowns in the region.
Shopping habits: a mixed bag
From very early on in the pandemic, we saw shopping behaviours and buying habits we’d never witnessed before in the industry. Stockpiling and shifting out-of-home spend into the home meant our spend per trip increased by over 20% in one quarter. Conversely, the impact of lockdowns and fear of interacting with strangers saw purchase frequency fall quarter after quarter.
Fluctuations in both these measures have slowed considerably in the second half of 2021, but it was spend per trip which saw the biggest fall and with it so has the value sales growth. Globally, take-home FMCG saw a 3% decline in both Q2 and Q4 last year.
How ‘normality’ impacted different categories
All five of the FMCG sectors saw a slowdown in growth, but with Beverages, Dairy and Food accounting for over 70% of FMCG value it’s perhaps unsurprising that these three had the biggest impact – slowing from over 10% growth to under 3% across the board.
Beverages fared slightly better than Food and was the fastest growing sector in 2021. This is down to Sports & Energy drinks being the fastest growing individual category in 2021, also helped by Carbonated Soft Drinks’ relatively robust performance in the last 12 months with >6% growth. The biggest driver of Beverages slowdown was Wine & Champagne which bucked the trend entirely, going from double-digit growth in 2020, to decline in 2021.
Every category within the Food sector saw a slowdown, with Flour, Canned Fish and Rice being three of the worst performing categories as shoppers moved away from baking and the need of long-life staples such as canned good and rice.
The Homecare sector was impacted with key categories such as Bleaches and Household Cleaners both moving from ~20% growth in 2020 to a small decline in 2021. More regularly purchased categories like Laundry Detergents have remained steady with a small but consistent growth across both years.
The Health & Beauty sector is an area where there is a little more nuance. Despite seeing the slowest growth of all, this fact alone doesn’t tell us the whole story. In fact, it makes most sense to consider everyday toiletries items separately from other Beauty categories for analysis purposes.
For example, Hand & Body Wash (which benefitted in 2020 from the increased awareness around hand washing) moved from over 13% growth to a small decline. But, as discussed in our recent paper On Trend: The evolving Beauty consumer, the Beauty-specific side of the sector is on the road to recovery.
This is best represented by the biggest category, Face Care, which moved from -4% decline to +4% growth. Even the hardest-hit categories in 2020, Make up and Fragrances (which experienced -22% and -11% decline respectively) saw their performance improve drastically in 2021.
Across all of the categories, it’s evident that their performance, both positive and negative, are due to the outcomes of the pandemic: the closing and gradual re-opening of bars, cafes and restaurants, the easing of restrictions and ‘stay at home’ guidance – and the impact this has on our social interaction.
The 360° view in 2021
Despite in-home FMCG sales hitting 10% in 2020, the complete picture – one that combines sales for both Out-of-Home (OOH) and in-home – shows a decline of between 2-5% for the food and beverages sectors (excluding alcohol).
Given how important OOH sales are for food and beverage retailers, manufacturers, and brands, we need this combined view in order to give us the true state of play. Again the picture is vastly different when we compare 2021 to 2020.
With OOH in recovery, we now see a vastly improved picture for GB and Spain. Based on in-home sales alone, Spain was seeing -7% decline which reduced to -1% when we include OOH. In GB the results are even more impressive, with OOH moving a flat performance to +6%. In France and Brazil where OOH is yet to recover to the same extent, this positive impact is not yet being felt.
OOH value sales grew for the last three quarters of 2021, increasing 34% in Q4 compared with a drop of 32% in the same period in 2020. While this overall picture is positive, looking at the evolution of OOH spend over a three year period provides valuable perspective: it was still 8% lower than it was in the fourth quarter of 2019, before COVID-19 hit.
