These are tough times for consumer brands: over the past decade, growth slowed and the focus of a lot of big companies shifted to cost-cutting and efficiency gains. Four megatrends are causing disruption – and will continue to do so in the coming years.
The bad news…
For more than 30 years, the FMCG industry was a beacon of confidence for investors, with average annual growth rates of some 9% at constant margins. But after 2010, that carefree success story came to an end and annual growth fell to around 2%. A consequence of, among other things, stagnating population growth, consolidation in the retail sector and changes in consumer behaviour, says McKinsey.
This was then followed by the pandemic and the inflation crisis, causing costs to rise, margins to shrink and volumes to fall. Consumers spend more but buy less. Many new growth opportunities are not presenting themselves and in terms of cost cutting, most companies have already done a lot. What is going on? Four megatrends are putting pressure on the sector. And the bad news is: over the next decade, those trends will only get stronger.
