Switching from the problem to the solution

Reflecting on the past 12 months, one thing is certain: the fast-moving consumer goods market FMCG is and always will be resilient, It is after all, an industry that offers our basic needs, from food to personal hygiene.   

The journey and challenges faced by retailers and manufacturers over the past couple of years—against a backdrop of COVID, extreme weather events and inflation— has not been without challenges.   

Consumers are facing cost-of-living pressures that show little sign of easing any time soon. This begs the question: how can manufacturers and retailers best prepare for these inevitable challenges and remain agile?   

Our belief at NIQ: focus on consumer-centric solutions.    

There are three key consumer wants and needs that will take center stage for the New Zealand FMCG industry in the immediate future: 

Health and well-being

Consumers have been tested in more ways than one over the past year and beyond. Despite this, we are seeing their resilience emerge and a corresponding shift from survival tactics into long-term behavioral shifts. In particular, the increased focus on proactive health and well-being. Consumers are seeking a better lifestyle and are looking longer-term at the investment into their health.   

This year, expect continued polarization between the financially insulated and insecure and a renewed focus on planning for proactive health and retirement. Sourcing products with local ingredients and quality ingredients remains important and should be highly considered in any innovation planning.    

Sustainability

The latest NIQ data shows that sustainable consumption trends are bouncing back. However, while consumers increasingly show that they do pay attention to sustainability, they are not necessarily willing to pay a premium for it.   

Consumers’ sustainability-related purchasing behaviors and decision triggers are more nuanced than ever. As FMCG firms plan strategies for growth in 2024 and beyond, it is fundamental to understand the ‘Green Divide’ among consumers against a backdrop of historically high cost-of-living pressures. 

Value seeking and price consciousness

Some consumers are selecting the lowest priced product from a repertoire of brands, while others are going with the lowest priced product available. This trend was significantly apparent in NIQ’s 2023 vs. 2022 data.   

Almost half of New Zealand shoppers are waiting for the product they want to be on promotion, while 46% are seeking to buy the brand on promotion.  

However, there’s also room for high-priced items if the benefits or attributes justify the price. Based on reaction to price change alone, 32% of items that underwent a price increase compensated for the volume loss.  

FMCG players need to plan their pack-price architecture to make sure they have options for different consumer needs and budgets. However, investment in promotion should be done wisely to avoid going into the promotional spiral.   

What’s next for the New Zealand FMCG market

To best prepare for the road ahead, remain focused on solutions that are adaptable and agile. Build a strong foundation, innovate to drive growth and if nothing else, know your consumer and keep them at the core of each decision. 

About the Author

Simona Betiu is a data-driven strategist passionate about helping FMCG companies unlock sustainable revenue growth. With over 10 years experience in FMCG and Revenue Growth Management (RGM), Simona currently leads the Pacific Analytics business. She is passionate about helping clients to craft data-driven strategies that deliver measurable results for their business.