Value and intention: The big trends reshaping global FMCG

The Cautious consumer

Around the world, FMCG spending is being constrained by economic uncertainty. Data from the OECD’s consumer confidence index shows that levels of confidence still lag pre-COVID benchmarks, and they have dipped sharply this year after conflict in the Middle East. Coupled with stagnation in real-terms wages, there is widespread caution, with many consumers inclined to save rather than spend. 

Economic indicators suggest that the outlook remains difficult. According to the International Monetary Fund, global growth will slow this year in well over half of countries, while nearly two thirds will see an acceleration in inflation. Amid anxieties about geopolitics and climate, people’s discretionary spending is likely to stay tight for some time to come. 

The meaning of value

This difficult backdrop is affecting behaviours in thousands of country-category combinations. Caution means that in most markets, growth is being driven by price rather than increased volumes. Global spend has increased by 4.4% year-on-year, but nearly two thirds of this growth has been driven by higher prices.  

It’s clear that consumers are paying more attention to value and shopping around for deals. In the majority of NIQ CPS countries, the frequency of visits has increased year-on-year, but units-per-trip have fallen. This trend is particularly apparent in North America and Europe, but patterns vary in other regions – a reminder of the need for FMCG suppliers to adapt strategies to different territories. 

Despite a challenging market environment, the latest data indicate that there is still headroom for demand growth. Demand was the primary growth driver in 39% of country-category combinations, with recruiting new buyers remaining the most powerful demand lever. To succeed, brands must earn relevance, rather than simply passing through inflation.

Category ups and downs 

The increasingly intentional mindset of many consumers is changing their interactions with FMCG categories.  

Shoppers are moving away from simply choosing the lowest-priced option or buying whatever is on promotion and are becoming more deliberate, evaluating and prioritizing the attributes that matter most to them. Health, Beauty, and Convenience are the leading drivers of global demand growth, followed by Everyday Essentials, while categories such as Beverages and Sweet Indulgence rank lower. 

Again, dynamics vary widely. For example, North America and Europe are driving the demand for health and convenience categories, while interest in indulgence is better sustained in South Africa.

The future for FMCG

Global demographic transformations, from an ageing population to the growing spending power of Gen Z, are set to further redefine demand in the years ahead. Brands that understand the distinct needs, preferences, and shopping behaviors of these consumer groups will be better positioned to drive growth, enhance performance, and stay ahead of future market trends. 

Consumers’ engagement with FMCG is changing at speed, and the high-inflation environment is making them more intentional about their spending than ever. But approaches to value are extremely complex, and one-size-fits-all strategies don’t cut it. Brands and retailers need much more granular intelligence about dynamics from category to category and place to place. NIQ’s solutions are an essential source of truth for this understanding, providing the platforms for volume as well as value growth in the years to come.