Over the past five years, the FMCG industry has been in a period of ‘survive, revive, thrive’. We’ve navigated the disruptions of Covid lockdowns and, most recently, inflation and the pressure of price increases, which led consumers to purchase less. As such, 2024 kicked off with renewed hope that slowing inflation might revive performance, especially as brands sought the opportunity to counter the growing popularity in private-label products and reclaim much-needed volume growth. What unfolded, however, has been mixed. Inflation did indeed ease mid-year, yet consumers remained cautious, leaving brands with a tough challenge ahead. However, as we look to the end of the year, nominal growth in Q4 at the grocery multiples is projected to be close to 3%, with volume growth at just under 1% – much better than a year ago, when FMCG volumes were in decline.
Fifty per cent of consumers say they are still adversely affected by the cost of living, and budget tightening remains prominent for half of the population. However, there has been some green shoots of revival. Branded unit sales began to show signs of recovery and since April, they have been growing faster than private label despite the retailer brands still maintaining a dominant share. The revival is evident yet remains fragile. There has also been a reliance on promotions to drive branded sales.
To ensure this revival continues, the industry will need to stay agile. We already know there will be cost challenges on the horizon. Combined with continued consumer uncertainty, the need to differentiate and remain relevant is ever more important.