Fast-moving consumer goods market to post 2.7% growth after Q1 slump
AFTER HITTING rock bottom in the first quarter tof his year, the fast-moving consumer goods market is swinging towards robust growth with a 2.7-per-cent increase expected for this whole year, according to Kantar Worldpanel, a leading market research firm.
“Based on in-home sales growth from 92 FMCG categories, this year’s figure is expected to be about a 2.7- to 3-per-cent increase from Bt443.6 billion, suggesting a sign of recovery after last year hitting the lowest point at 2.2-per-cent growth,” Gareth Ellis, commercial director, said yesterday.
On a quarterly basis, FMCG sales growth in rural areas had returned to positive territory with almost 2 per cent in the second quarter of this year after sliding almost 3 per cent in the first quarter.
In-home sales growth in urban areas and on the national level followed suit.
The recovery of consumption in rural areas was the result of an increase in the prices of agricultural products, the easing of the drought and the controllable level of household debt.
Another indication of this trend was that two-thirds of product categories or 68 per cent were witnessing bigger baskets, in terms of units per trip and volume per unit.
However, compared to urban buyers, rural shoppers were more likely to go for downsized products.
The study found that more than 80 per cent of urban buyers prefer to go for upsizing while almost 60 per cent of rural shoppers were likely to go for downsizing.
“Following this changed pattern of purchases, marketers and brands should learn how to deal with different groups of buyers in urban and rural areas with the right strategy regarding price point and pack size,” Ellis said.
Although the situation in the FMCG business seemed to be improving, the study also suggested that key brands were still budgeting more for promotions to boost sales.
Spending for this purpose throughout this year was expected to reach 34 per cent of total expenditures by brands at hyper/super markets, up from 31.9 per cent in 2015 and 30 per cent in 2014.
“However, increasing promotions has no guarantee of shopper-based growth,” Ellis said.
Besides sales growth in in-home products, advertising expenditures last month were also showing signs of recovery in the remaining months of this year.
Nielsen Thailand reported recently that ad spending last month dropped slightly by 2.5 per cent to Bt10.14 billion, leading to overall ad expenditures in the first eight months posting a decrease of 6 per cent to Bt76.88 billion.
Ad outlays in July ended up with an almost 9-per-cent drop to Bt9.77 billion.
