Growth in FMCG brands in emerging markets has slowed significantly in the last12 months according to research from Kantar Worldpanel.
The research shows that sales have slowed from 8.8% in the 12 months to June 2013, to 7.5% in the corresponding time period ending June 2014 – equivalent to $8.3bn of lost growth – demonstrating the effect of a cooling in the global economy. The research also forecasts a further reduction by June 2015 to 7.0%.
The drop is largely driven by a slowdown of consumption in Asia where FMCG growth is now at 5.2%, down 3.6% compared with last year – some $15bn. The contraction was felt acutely in China where FMCG growth has fallen by a third in the past two years from 15.8%, in the 12 months ending June 2012, to 5.6% in the period ending June 2014. Latin America is now growing at 13.0%, versus 8.7% last year. While in some countries, including Ecuador and Colombia, this is driven by underlying growth in demand, in others it is the result of rising inflation.
Although still performing strongly compared with mature markets in Europe and North America, the reduction in emerging market growth is significant. Jason Yu, Managing Director at Kantar Worldpanel China, explains: “Slowing economic growth across many emerging economies has led to shoppers reining in their spending on everyday goods. We now face a new reality where FMCG growth is more moderate. Competition will become fiercer as the size of the prize shrinks. Brands will need to be even smarter when deciding which markets to target and when developing their approach within each country.”
