Trends in Consumer Spending: Annual Research Report
Coronavirus pandemic has had an unprecedented change globally. This research report aims to assess the impact on select sectors such as consumer goods of emerging economies.
Executive Summary:
COVID-19 Impact on Consumer Goods
Key Growth Challenges
COVID-19 has accelerated structural change in FMCG, including a shift in channel strategy towards e-commerce and focus on health & wellbeing, whilst arguably exposing weakness along the supply chain
Consumption shifted to inside the home and lower demand for discretionary goods
Evolving trends like sustainability, health and digital accelerated by crisis
Shift from ‘premium’ categories to ‘value’ as customers trade down albeit temporarily
Supply Chain Revival
Among other things, the pandemic has put world trade at risk. Moody’s Analytics warned about ‘dark clouds ahead’ because several factors make overcoming the supply constraints challenging. The key culprits this time include labour, overstretched shipping lines, and rising raw material and logistics costs.
The Pandemic Impact on CPG Sale
The COVID-19 pandemic has placed tremendous strains on the consumer-packaged-goods (CPG) industry, and the effects are likely to continue through 2021. CPG companies and retailers in North America face a challenging physical environment, supply-chain disruptions, and unprecedented volatility in demand—all while these businesses remain under pressure to get products onto shelves and keep employees and customers safe
Key Highlights:
“P&G reported an organic sales increase of 5% year-on-year as the coronavirus boosted consumer demand for products in its healthcare, fabricare and homecare categories”
“The CPG giant, witnessed US sales rise by 10% this quarter. The bump successfully offset the corresponding 8% decline in the Chinese market”
“P&G’s Q3 marketing spend was up 1.9% year-on-year, driven by increases in the beauty healthcare, and baby, feminine and family categories”
Where the Economy is Heading
The global economy continues to recover, along with trade, employment and incomes. But the revival is unbalanced, with countries, businesses and people facing very different economic realities. Recent improvements also conceal structural changes, which mean that some sectors, jobs, technologies and behaviours will not return to their pre-pandemic trends.
Economic Activity Indicators for India
Shifts in Spending Habits
The pandemic triggered a shift in consumption from services to goods, especially in the United States
Performance Patterns of CPG Companies
Market Outlook for 2022
The International Monetary Fund recently raised its projection for economic growth in 2021 to 6%, up from 5.5%, and projects 4.4% growth in 2022. The upgraded outlook is based on how well the pandemic continues to be controlled, the efficacy of fiscal policy in mitigating economic damage and global financial conditions.
Latest World Economic Outlook Growth Projections
Appendix and Citations
https://av.sc.com/corp-en/content/docs/FSA-Post-COVID-Implications-for-FMCG-Public-Version.pdf
https://av.sc.com/corp-en/content/docs/FSA-Post-COVID-Implications-for-FMCG-Public-Version.pdf
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/covid-19s-impact-on-demand-and-costs-in-the-cpg-industry
https://www.thedrum.com/news/2020/04/17/pg-ramps-up-marketing-amid-coronavirus-demand-not-time-go-air
https://www.oecd-ilibrary.org/sites/66c5ac2c-en/index.html?itemId=/content/publication/66c5ac2c-en&_csp_=9b4ecb1aafc11518f34da944ee244a5b&itemIGO=oecd&itemContentType=book
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/covid-19s-impact-on-demand-and-costs-in-the-cpg-industry
https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021