European FMCG Companies Bank On Promotions To Support Sales

The economic headwinds blowing across Europe have largely suppressed the indulgent streak in consumers, turning them into bargain hunters and forcing fast-moving consumer goods (FMCG) companies on the continent to increase promotional activity to protect their sales. I came across this piece of news in a Warc article, which cites the findings of a study conducted by SymphonyIRI.

According to the market research company, the past three years have seen a steady increase in the share of grocery products offered at discounted prices. The proportion has now reached 25.6% of FMCG sales in Europe, and nowhere is it as high as in the UK where it stands at 56%. In contrast, the respective figures for France and Germany are 17.9% and 11.6%. Given the nearly universal love for all things sweet, it is interesting to see that the confectionery sub-category is the one where promotions are most common, with discount sales representing 29.2% of the total.

The UK also leads the rankings in terms of FMCG inflation, which SymphonyIRI estimates at 5.1%. As if depressed consumer spending was not enough of a problem, FMCG companies also have to deal with surging commodity prices and the resulting inflation, which the report puts among the main future threats to revenues. Overall, annual price increases in the food products category amount to 3.2%, while non-food prices are rising at a rate of 2%.

SymphonyIRI also notes in its report that the prevailing mood of frugality is making online grocery shopping an increasingly attractive option, with consumers using price comparison websites to grab the best offers available.