Further price increases expected in FMCG

Consumers have spent more money on their groceries over the past quarter, as prices have risen. Retailers and manufacturers will need to increase their focus on marketing and promotions in order to maintain demand.

 

Inflation pressure

Over the second quarter of 2019, European consumers have spent 3.4% more on their daily shopping. This is an increase of 0.9% compared to the first quarter, and is good news after three consecutive quarters of moderate growth. Volumes increased by 0.5% in the second quarter, while in the first quarter there was still a decrease of 0.5%, yet this is predominantly down to the calendar, as the Easter period this year fell in the second quarter. Rising inflation has resulted in consumers paying 2.9% more per product than in the same quarter of last year:
 

"Annual inflation in the Eurozone is 1%, almost the lowest level in three years, while energy price inflation decreases," said Johan Vrancken, Managing Director of Nielsen Benelux. "But as the prices of food, alcohol and tobacco, and services are rising more quickly, we expect to experience inflationary pressure on purchasing behaviours. In our opinion, prices will continue to rise in the coming years. Manufacturers and retailers need to consider the impact of this on consumer spending and the brands they choose when making purchasing decisions. They will also need to stimulate demand through an effective promotion and marketing strategy, since consumers will be cautious about spending across categories”.

 

Figures per country

Turkey continues to show the highest year-on-year growth (+19.4%), partly as a result of inflation, but there is a decline in volume growth, which is negative in the second quarter of 2019 (-5.4%). Other high growth countries include Hungary (+7.7%), Poland (+7.1%), the Czech Republic (+6.6%), Slovakia (+4.6%) and Portugal (+4.2%). Finland, on the other hand, experienced the lowest growth rate (0.3%), while Belgium ranks 17th out of 28 countries, with a nominal growth of 1%.
 

Among the five largest European countries, Italy was at the top with the highest FMCG growth (+4%) in the second quarter of 2019, followed by Germany (2.4%) and Spain (2.3%), while France and the United Kingdom recorded FMCG growth of 1.3% and 0.7% respectively in the second quarter of 2019.