Introduction
The global FMCG landscape has been fundamentally reshaped by macroeconomic volatility, evolving consumer expectations, regional growth disparities, and multiple shocks from unprecedented geopolitical events that have affected both demand-supply dynamics and consumer buying behaviour.The latest force reshaping markets is the tariff regime from Trump’s second presidency. In just a week, it wiped $1.6 trillion from brand valuations and $10 trillion from global markets. Tech stocks led sharp losses as the Nasdaq Composite fell 6%, part of a $3.1 trillion market drop—the largest single day decline since the 2020 pandemic. Unlike his first term protectionist policies, which disrupted supply chains and raised costs, his second term measures were broader and more aggressive. These policies impose near-universal tariffs across imports, leverage emergency powers, provoke harsher retaliation from trading partners, and drive average tariff rates to historic highs with deeper consequences for global trade stability.
Client problem
As a result of these developments, our client, a leading FMCG major, faced multiple challenges:1. Import costs are driving margin erosion across product portfolios.
2. Retail price increases are triggering demand volatility. 3. Supply chain disruptions are extending lead times across key markets. The speed and unpredictability of tariff related impacts have exposed the limitations of traditional quarterly planning cycles, which cannot adapt quickly enough to trade policy shifts. This results in reactive decisions, missed market opportunities and gaps that competitors can take advantage of.
Mapping the key factors reshaping trade dynamics
The current environment has created a complexity in market dynamics that goes far beyond simple price adjustments. After analysing tariff impact across 15 countries and 25+ FMCG categories, we've identified five critical dimensions that illustrate how trade policy instability cascades through market systems:
Most forecasting tools rely on historical elasticity models, tracking how demand responds to price. But tariff shocks disrupt multiple dimensions simultaneously, creating cascading effects across the market.
The question remains: How do you plan effectively when the rules of the game are changing faster than your planning cycles can adapt?
Our solution
PrediKtor is Kantar’s advanced forecasting solution tool designed to help businesses navigate uncertainty and make data driven decisions. It forecasts brand performance over 2-5 years and simulates market scenarios under various pricing, distribution, and economic assumptions. This helps in identifying growth drivers, optimises strategies, and helps businesses adapt to external shocks like changing trade policies, pandemics, and inflation by modelling their demand impact.
How PrediKtor helped
– Impact Modelling: PrediKtor assessed the intensity of tariff changes in each market, considering factors like the percentage change and how dependent the economy is on exports. It classified markets as low or high impact and observed how category sales responded to these shocks.
– Indicator Integration: The solution incorporated key macroeconomic indicators such as consumer confidence, business confidence, market volatility, and stock market crashes into its analysis. These signals helped quantify the broader effects of tariffs on demand, pricing, and supply chains.
– Composite Curve Forecasting: PrediKtor built a composite curve using these indexes and ran models that generated tailored scenarios reflecting volatility due to tariffs. This allowed businesses to see how different tariff scenarios could affect their sales and market share.
– Scenario Simulation: Through its web-based dashboard, users could simulate the impact of various tariff scenarios on sales, pricing, and distribution. This enabled quick modelling of changes and the creation of multiple speculative scenarios to capture potential market movements.
Methodology flow
The Impact
Our solution has transformed clients' approach to navigating tariff friction, delivering:
1. Inventory optimisation: When import duty on packaging materials rose 10%, our client avoided excess stockpiling and achieved a 2% reduction in inventory carrying costs through better demand visibility.
2. Proactive pricing strategy: Consumer scenarios enabled proactive pricing adjustments where new regulations pushed retail prices 5-7%, helping protect 1-2 points of gross margin while optimising SKU portfolios.
3. Risk mitigation: For a client facing potential 15% tariffs on raw material imports, worst-case scenario planning helped avoid 2-4% revenue loss through early alternate sourcing.
This empowered leaders to make informed decisions whether to stockpile, diversify trade routes, or adjust pricing strategies. With trade tensions showing no signs of abating, FMCG companies that can accurately forecast tariff impacts and adapt quickly will capture market share.
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