In general, people aren’t feeling that the economic situation is improving, and their purchase confidence is at an all-time low (-4 pts vs 2017, -9 pts vs 2015). The number of protests is increasing and this is likely to impact growth in a critical period. Other factors which are impacting growth include:
- A drop in the birth rate
- Decrease in purchase frequency: -0.5% on FMCG as a whole and -1.3% on fresh foods
- Traditional drivers such as innovation aren’t proving as effective
- Promotion is no longer a driver for growth and the new French regulations (EGA) discourage volume deals even further
Some of the specific trends which are playing into the slowdown could also provide opportunities for those brands who can react quickly to consumers’ needs.
#1 Less is more
The trend of consuming less to consume better is borne out with a volume decrease of -0.8% on FMCG as whole and -1.9% on fresh food products in the first quarter of 2019. People are buying less in quantity but they do want better quality.
#2 The conscious consumer
Driven by the rise in nutritional apps and media buzz, consumers are looking for products that are cleaner (free of chemicals, organic) and more traceable (local, smaller producers). This is where brands can create more value: in the first quarter of 2019 organic grew volumes by 15% and plant-based, by 22%. Buying from small producers is also popular and we see an increase here of 1.7% in the same period.
#3 Fragmented consumption
Consumers now have a wider repertoire in terms of how they shop, where they shop and what they are buying. Shopping both online and offline has been well documented but people are also visiting a wider number of retailers (7.8 retailers in 2018 vs 7.1 in 2008)
Eating habits are changing significantly which impacts what is bought. There are now more meals eaten out-of-home (+13% vs 2014), more snacking at home (+9 million occasions per week vs 2014) and meals take a simpler form or are even skipped altogether. Delivery food and occasion marketing will be big drivers of growth in the future.
#4 Reducing impact
Consumers are becoming more aware about the impact of their actions and their purchase habits which is encouraging them to change how they consume. They want brands to support them with this, 86% of French households intend to adopt responsible consumption and this is a transgenerational phenomenon.
Responsible consumption can take different forms: ecology, plastic packaging, fairness, consuming better, local, animal welfare, etc. All are considered important by consumers, but the market and brand environments need to be taken into account to ensure the targeting is as accurate as possible.
To be successful in the future FMCG players need to be mindful of all of these trends, but as much as they can be challenges for the short term, they also provide opportunities for the future. In conclusion, the key ways that brands can react to consumer needs and grow are to:
- Reassure by being transparent, sourcing and making products as natural as possible
- Commit to CSR, the new brand strategy KPI to follow
- Broaden the scope of what is possible: distribution channels, moments of consumption, etc.
It might be a more complex environment but it is also a great opportunity to be creative and stand out from the crowd, provided this is done in an authentic and transparent way.