Have FMCG brands benefited from the inflation?

As the grocery sales volumes and profit margins have been put under pressure with the rising inflation, some have started to focus on the results of the FMCG brands. During the last week, many big FMCG brands reported strong revenue growth. This led some to argue that big FMCG brands have benefited from the situation.

Many FMCG brands have seen strong revenue growths and, for some, even strong volume growths. At the same time, almost all grocers saw revenues decline. Willy’s in Sweden (and possibly Aldi and Lidl) has been an outlier with growing volumes.

For big FMCG brands, one has to remember that they operate globally. The top-level numbers don’t reflect the whole picture when comparing them to European grocers. Inflation in Europe has also significantly influenced FMCG brands.

FMCG companies have been much more succesful in going international. That is now paying off as they are not as vulnerable to economic hardships in one individual market (Europe).

The revenue growth of the FMCG brands has been significantly lower in Europe than in other markets. The image gets clearer with the volumes. Most big brands also saw volumes drop, more in Europe than in other markets. The confectionery sales are an outlier in this, as the makers of the snacks, Hershey and Mondelez, also reported robust volume growth. Customers seem unwilling to cut back on buying sweets during difficult times.

Better performing European grocers (S-Group and Carrefour) have seen similar volume decreases as many big FMCG brands in Europe. The other story is the quality-oriented grocers that have struggled most with inflation. They have seen the most significant declines in volume.