Volume sales fail to recover: Circana's latest FMCG Demand Signals report breaks with market expectations

"Our latest report brings both good and bad news," comments Ananda Roy, Global SVP, Strategic Growth Insights, Circana. "Two years post-pandemic and the FMCG sector remains far from normal. Demand has yet to fully recover and we see more everyday categories becoming discretionary. Private labels continue to gain share from brands, and inflation-fatigued consumers are coping by buying on deal and shopping at the discounters. As global turmoil and uncertainty continue, we expect that FMCG demand will not recover before the second half of 2024.

"Our latest report brings both good and bad news," comments Ananda Roy, Global SVP, Strategic Growth Insights, Circana. "Two years post-pandemic and the FMCG sector remains far from normal. Demand has yet to fully recover and we see more everyday categories becoming discretionary. Private labels continue to gain share from brands, and inflation-fatigued consumers are coping by buying on deal and shopping at the discounters. As global turmoil and uncertainty continue, we expect that FMCG demand will not recover before the second half of 2024.

The good news is that a return to volume growth is possible and a clear playbook is emerging for how to achieve it. Growth and opportunity exists in the areas of innovation, sustainability and pricing, boosting resilience to future shocks."

Other key findings from the report include: 

Roy says: "Brands are understandably cautious about placing bets on risky, new-to-market NPD in the current climate, but retreating from NPD would be seriously short-sighted. The most enterprising brands are already zeroing in on the opportunity from the turmoil and finding new ways to drive demand."

Roy comments: "High inflation has acted as a catalyst for private label growth, but its success is not due to cheaper prices alone. Private label has become even more premium in recent months and as a result, the price gap between private label and national brands has shrunk - now averaging 15-20% in food categories, down from 28-40% two years ago.

In terms of packaging, sustainability is important, but it has become mainstream. In the past twelve months, when making a purchasing decision 55% of Spanish consumers chose a brand specifically for the packaging. In France, 51% of consumers claim to have switched brands or products because of concerns about the packaging and in Germany, 43% purchased more products in environmentally friendly packaging. In total, nearly half (48.3%) of European consumers have purchased less products packed in plastic in the past year.

Roy adds: "Brands that want to continue to get listings – especially prominent listings – will need to show they're taking sustainability seriously. Those that want to make sustainability square up with volume growth will need to focus less on isolated 'green' initiatives and more on showing how sustainability runs through everything they do."

Wrapping up Roy concludes: "At a time when consumers are challenging their own loyalty to existing brands, products and categories, brands and retailers are having to genuinely rethink their businesses and strategies."  

About FMCG Demand Signals

Circana is the leading advisor on the complexity of consumer behaviour.

Leveraging the vast data and expertise of its heritage firms and powered by the industry's most advanced technology platform, Liquid Data®, Circana tracks the purchase of more than 30 million consumer goods in 23 countries.

Circana's FMCG Demand Signals report unpacks the most commercially relevant FCMG trends and future outlook for growth. Tracking how consumer demand flows into value for FMCG brands and retailers across Europe's six largest markets (France, Germany, Italy, Netherlands, Spain and the UK).

This year's report is based on retailer sales data for more than 10 million SKUs over 230 food and non-food categories for the full year ending June 2023 compared to the previous year ending June 2022.

Circana's CREST panel data captures consumer information collected from Circana's online consumer panel in five European countries (France, Germany, Italy, Spain, and Great Britain) about commercially prepared meals, snacks, and beverages, and provides a detailed understanding about where consumers are eating, what they eat and how much they are spending. The data covers the year from January to end of August 2023.

About Circana 

Circana is the leading advisor on the complexity of consumer behavior. Through unparalleled technology, advanced analytics, cross-industry data and deep expertise, we provide clarity that helps almost 7,000 of the world's leading brands and retailers take action and unlock business growth. We understand more about the complete consumer, the complete store, and the complete wallet so our clients can go beyond the data to apply insights, ignite innovation, meet consumer demand and outpace the competition. Learn more at www.circana.com. 

Circana Contact:

Ananda Roy
Email:   [email protected]
Phone: +44 (0) 7730 912 077

Media Contact:

Nikki Alvey or Teresa Horscroft at Eureka Communications
Email:   [email protected]
Phone: +44 (0)1420 564346

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