US Growth Reporter - Q1 2017 · Austria Czech Republic Estonia Latvia Lithuania Belarus Ukraine...

Europe Market Dynamics

Sujoy Ghosh

GROWTH REPORTER

INTRODUCTION

Compares overall market dynamics (value and unit growth) in the Fast Moving Consumer Goods

sector across Europe.

Is based on the sales tracking Nielsen performs in every European market.

Covers sales in grocery, hypermarket, supermarket, discount and convenience channels

Is based on the widest possible basket of product categories that are continuously tracked by

Nielsen in each of these countries and channels

Reports on the 1st Quarter of 2018

Week 01, 2018 till week 13, 2018

ECONOMIC GROWTH SLOWS IN EUROPE

After a strong end to 2017, FMCG performance in Q1 weakened slightly with volume growth receding to +0.9%

(down from +1.7% in Q4). However this is still close to the underlying trend of the last 12 months.

Nominal sales across Europe increased by +3.7%, down from +4.4% in Q4. There was also a growth upside in Q1

from an early Easter in 2018.

Inflationary pressures continue with unit value growth of +2.8%. At the moment there is no indication across most of

the bigger European economies, that FMCG spend is being impacted by the continuation of moderate inflation.

Looking ahead, Q2 will be better indication of both consumer sentiment and shopper behaviour for the rest of the

Context

European Union (EU28) GDP growth slowed at the start of 2018 after a stronger than expected 2017.

The more sluggish economic growth (+0.4%) in Q1 was related to some degree by cold weather but the consensus

is that this is that start of a normalization of growth after a number of years of monetary stimulus by the ECB.

Fast Moving Consumer Goods market dynamics

Europe Growth numbers are restated from Q2 2016 as some of country restated their growth numbers

Europe - Austria, Belgium , Czech Rep., Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland,

Turkey, UK.

0.8% 1.1% 0.5%0.9%

2.3%2.7%

0.6%0.9%

2.8%1.6%

2016 2017 MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Volume change Unit value change Nominal Value Growth

REGIONAL SUMMARY – EUROPE

Q1 2018 GROWTH RATES PER COUNTRY (VERSUS Q1 2017)Fast Moving Consumer Goods market dynamics

-1.3%-1.3%

-1.0%-1.0%

-1.8%-0.7%

0.2% 0.6%1.8%

1.1%0.8% 0.9%

4.7%3.9%

2.3%0.7%

1.9%1.8%

2.0% 3.0%2.1% 3.4%

2.0%0.3% 2.0%

2.6%1.5%

3.0%3.6% 3.7%

0.6% 0.8% 1.0% 1.2% 1.4%

2.6% 2.8% 2.9% 3.0% 3.1% 3.1% 3.2% 3.3%4.1% 4.4% 4.6% 4.6% 4.8%

Volume growth Unit value Nominal Value Growth

Denmark

Finland

Poland

France

Germany

SpainPortugal

Greece

ItalyTurkey

Switzer-land

Austria

CzechRepublic

Estonia

Latvia

LithuaniaBelarus

Ukraine

RomaniaHungary

SlovakiaMoldova

Bulgaria

Russia

Ireland

Great Britain

Monte-negro

Serbia

Slovenia

Croatia Bosnia-Herze-govina

Mace-donia

Albania

Norway

Nether-lands

Belgium

Sweden

Nominal Growth

Q1 2018 GROWTH RATES PER COUNTRY (VERSUS Q1 2017)

Growth Rate above Europe Average

Growth Rate between “Zero” and Europe Average

Growth Rate below “Zero”

Denmark

Finland

Poland

France

Germany

SpainPortugal

Greece

ItalyTurkey

Switzer-land

Austria

CzechRepublic

Estonia

Latvia

Lithuania

Belarus

Ukraine

RomaniaHungary

Slovakia Moldova

Bulgaria

Russia

Ireland

Great Britain

Monte-negro

Serbia

Slovenia

Mace-donia

Albania

Norway

Nether-lands

Belgium

Sweden

Unit Value Growth

Denmark

Finland

Poland

France

Germany

SpainPortugal

Greece

ItalyTurkey

Switzer-land

Austria

CzechRepublic

Estonia

Latvia

Lithuania

Belarus

Ukraine

RomaniaHungary

Slovakia Moldova

Bulgaria

Russia

Ireland

Great Britain

Monte-negro

Serbia

Slovenia

Mace-donia

Albania

Norway

Nether-lands

Belgium

Sweden

Volume Growth

MAJOR COUNTRIES

FRANCEHighlights

2018 begun with a decreasing first period (-1.3%) due to a calendar effect (one business day less compared to last year).

Better performance on P2 and P3 permitted to balance, closing Q1 with a +1% value growth on French FMCG market.

However, the high volume losses at the beginning of the year have not been compensated and the first quarter stands negative on

volumes.

Premiumization is still the growing pillar behind FMCG growth.

French FMCG market is still driven by long term trends with a growing demand on non-dairy and dairy fresh food, organic products,

small brands, click & drive services and urban convenience stores.

Context

FRANCEFast Moving Consumer Goods market dynamics

0.3% -0.1% 0.1%

0.2% 0.0%

0.2%0.8% 0.3%

-0.7% -0.1%

0.5% 0.6% 0.5%

2017 MAT YA MAT TY Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Volume change Unit value change Nominal growth

Data has been restated from 2016

UKHighlights

Economic growth has weakened in Q1 and UK and the Eurozone's economy outgrew the UK for the first time

since 2010.

There has been a slowdown in overall UK consumer spend particularly in non-food and out-of-home channels

where sales have declined in recent months in many sectors e.g clothing, homewares.

However, consumer spend has remained resilient in FMCG channels.

With Discounters growing sales by +13% and a market share of 14% (Homescan FMCG, MAT to Q1), this has

maintained Nominal sales growth at +3%.

Unit value growths increased slightly to +2%. Inflation across the economy as a whole peaked at the start of 2018

after 18 months of increase following the depreciation of sterling in late 2016.

FMCG volume growths remain broadly unchanged at +1% with shoppers still `trading up` e.g premium private label.

Context

UKFast Moving Consumer Goods market dynamics

1.5%0.1%

1.4%0.4% 0.2%

1.4%2.3%

-0.3% 0.4%

0.9% 1.0%

-1.9% -1.6%

-0.4% 0.5%

1.8%2.0%

2.8%3.0%

2016 2017 MAT YA MAT TY Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Note: All data from Q2 2017 has been restated.

GERMANYHighlights

The German economy continues to develop positively. The economic growth is estimated to grow by +2.3% in Q1 2018 versus Q1

This positive growth is mainly driven by the consumption of private households which is influenced by a decreasing rate of

unemployment (5.5% for March 2018). Also affecting the growth are a higher demand and rising investments.

Q1 shows a total growth rate of +4.4%. The growth for Q1 is mostly value driven (3.6%), while volume shows a small growth by 0.8%.

Regarding the channels hypermarkets show the highest growth rate with 6.1%, followed by drug stores with 4.0% for Q1.

Due to price increases of dairy products, categories like butter, milk and cheese are growing in value sales. In the near food category

hair care products show the highest growth rate for Q1 with 7.1%.

Context

GERMANYFast Moving Consumer Goods market dynamics

-0.6%-0.5% 0.1% -0.6%

-0.1%-0.3%

0.0% -1.1%

0.9%0.8%

0.4%1.0% 1.7% 1.3%

2.9%3.1%

3.2%3.6%2.0%

0.9%1.4%

4.0%4.4%

2017 MAT YA MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Data has been restated from 2016

SPAINHighlights

Economic recovery still in advance. Spanish government has recently raised four tenths the expected economic growth to 2,7%.

We are facing a reduction in the unemployment rate, from 16,5% at the end of 2017 to 15% by the end of 2018.

Once again, tourism has played an important role to support economic recovery. At the end of first quarter, Spain registered an

increase of 6% of international tourists who spend a 7,7% more than in the same period of last year.

We have to pay attention to raising petrol prices. It will be a challenge for economic recovery and could have impact in family budgets.

In Spain, price evolution turns into the key factor to explain what is happening in FMCG market. Whether in 2017 demand was the

driver, now inflation is supporting Spanish FMCG growing, 3,1% at the end of first quarter.

Performance at January and March was not good in terms of volume and value due to calendar effects with New Year’s Day and

Easter, and also prices raised 2,9% in the first quarter, when inflation at the same period of last year was very tiny, with obvious

consequences in volume evolution.

Context

SPAINFast Moving Consumer Goods market dynamics

2.1% 1.4% 1.9%

2.3%2.4%

1.6%1.3%

1.0% 2.7%

3.9%3.7%

ITALYHighlights

The first three months of 2018 have been positively affected by Easter, that last year was celebrated in April.

Nonetheless, after a high-performing year-ending quarter, in January retailers struggled with falling revenues. Afterwards, growth has

been generally moderate.

Sales volumes have been growing, but the average product price has slowed down, probably as a result of rising inflation.

As seen in the past year, food (and, above all, fresh food) drives growth all over the market. The latest change is that traditional “basic”

ingredients like pasta and rice are loosing ground against ready-to-eat (yet healthy) products.

Context

ITALYFast Moving Consumer Goods market dynamics

2.4%2.1%

1.4%2.1%

3.1% 2.6%

-0.9% -1.0%-0.5% 0.7%

0.6% 1.3%0.7%2.6%

3.1% 3.1% 3.1%

2017 MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

OTHER COUNTRIES

AUSTRIAFast Moving Consumer Goods market dynamics

2.9% 2.3% 2.6% 2.3%

3.2%3.1%

2.4% 1.1%1.8%

0.2% 0.5%

2.6%1.5%

3.4% 3.6%

3.9%3.7%

Note: Data are restated from Q2 2016

BELGIUMFast Moving Consumer Goods market dynamics

-0.8% -1.1%-0.9%

-0.8% -0.3% -0.7%

1.4%2.0% 1.7%

2.9%2.3%

1.7%0.9%

2.1% 2.1%1.3%

1.8%1.4%

CZECH REPUBLICFast Moving Consumer Goods market dynamics

2.9%2.1%

-1.3%-0.3% -1.6%

0.2% 0.9%

4.8%0.6% 4.8%

-1.1%-0.4%

6.0% 5.3%

1.8% 1.7%

4.3% 4.4%

Note: Due to exclusion of some categories, data are restated from Q2 2016

DENMARKFast Moving Consumer Goods market dynamics

-0.9%-0.9%

-0.2%-0.6%

-0.4% -1.3%

1.8%2.1%

-0.3%0.0%

0.7% 1.2%

2.3%2.6%

1.9%0.9%

-0.4% -0.5%-0.7%

1.1%0.9%

2017 MAT TY Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

FINLANDFast Moving Consumer Goods market dynamics

2.1%1.8% 1.7% 2.1%

-0.9% -0.8%

-0.7%-1.1% -0.7%

1.2%1.1%

1.4% 1.4%

2.1%1.9%

GREECEFast Moving Consumer Goods market dynamics

-0.4% 1.2% -0.5%4.5%

-0.3% -1.1% -0.5%

-0.8% 0.6%-0.1%

-15.3%

5.8% 5.9%

4.7%2.0%

-10.7%

5.0%6.4%

Unit value change Volume change Nominal growth

HUNGARYFast Moving Consumer Goods market dynamics

2.2% 2.5% 2.4% 2.1%

3.6%4.4%

0.8%0.7%

4.6% 3.8%6.0%

3.2%2.8%

8.2% 8.3%

IRELANDFast Moving Consumer Goods market dynamics

2.2%0.8%

2.6%1.3%

1.5% 2.2%

2.4%1.6%

-0.6%-0.4%

0.6%0.3%

2.9%2.6%

2.0% 2.2%

NETHERLANDSFast Moving Consumer Goods market dynamics

-0.3%-0.1% -0.3% -0.6%

-0.5% 0.3%-0.8%

2.8%3.3%

0.8% 1.0%

3.5%3.4%

0.6% 0.4%

2017 MAT TY Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

Note: Due to inclusion of some categories, data are restated from Q2 2016

NORWAYFast Moving Consumer Goods market dynamics

-0.2%-0.4%

-0.6% -0.2%

0.6% 0.8%

3.1%2.9%

1.8% 2.0%1.8%

2.6%2.7%

1.4% 1.5%

POLANDFast Moving Consumer Goods market dynamics

2.1% 1.7%3.0%

3.7% 3.9%

2.4% 0.1%

PORTUGALFast Moving Consumer Goods market dynamics

1.2%1.4%

1.6% 1.2%

0.4%0.6%

SLOVAKIAFast Moving Consumer Goods market dynamics

3.2% 2.6%2.4%

4.4%2.9%

-1.9% -1.7%

2.7% 2.6%

SWEDENFast Moving Consumer Goods market dynamics

-0.4%0.7%

2.6%0.2%

-0.4% -0.6%

2017 MAT TY MAT YA Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

SWITZERLANDFast Moving Consumer Goods market dynamics

-0.7%-0.7%

-0.2%-0.4%

1.0%1.4%

0.7%0.1%

-0.3%-0.4%

-0.6%-0.7%

TURKEYFast Moving Consumer Goods market dynamics

5.1%4.9%

4.3% 3.7% 4.5%

6.1%5.7% 5.7%

6.9% 5.7%4.7%

8.6%10.3%

10.5% 10.1%10.8%

14.3%15.0%

Based on Bimonthly reporting cycles

Categories covered in food and drug channels

Bosnia

Bulgaria

Croatia

Estonia

Israel

Latvia

Lithuania

Macedonia

Romania Russia

Serbia Slovenia

Ukraine

EXTENDED EUROPE

BOSNIA-HERZEGOVINA

0.0%-0.8%

1.1%5.4%

8.4% 9.8%

-2.6% -3.5%

-1.5%-0.9%

1.0% 0.9%

-1.4%-2.2%

2016 2017 Dec-Apr 15 Apr-Aug 15 Aug-Dec 15 Dec-Apr 16 Apr-Aug 16 Aug-Dec 16 Dec-Apr 17 Apr-Aug 17 Aug-Dec 17

Fast Moving Consumer Goods market dynamics

BULGARIAFast Moving Consumer Goods market dynamics

0.5% 0.9%

2.6% 3.1%3.9%

1.4%1.8%

1.4%0.8%

4.0% 3.9%

CROATIAFast Moving Consumer Goods market dynamics

1.8% 1.8%

1.7%0.9%

-0.5%-1.2%

1.1% 1.2%

2016 2017 Dec-Apr 15 Apr -Aug 15 Aug-Dec 15 Dec-Apr 16 Apr -Aug 16 Aug-Dec 16 Dec-Apr 17 Apr -Aug 17 Aug-Dec 17

ESTONIAFast Moving Consumer Goods market dynamics

-3.3%-3.2%

-0.1%-1.5% -0.6%

-2.3%-2.7%

6.2% 6.1%0.7%

2.8% 3.4%

4.9%5.7%

7.0% 6.6%

2.9% 2.9% 2.6%

1.1% 1.3%

2.8% 2.6%2.9%

3.3%2.6% 2.7%

2017 MAT TY Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

0.6%2.4%

0.3%-3.0%

-1.6% -1.4%

0.8%1.3%

ISRAELFast Moving Consumer Goods market dynamics

KAZAKHSTANFast Moving Consumer Goods market dynamics

-3.6%0.3%

-3.8%1.2%

-0.5% -1.9%-4.1%

-3.5%-3.1%

13.2% 11.…8.6%

7.3% 7.3%

4.6% 4.0% 3.8%2.8%

LATVIAFast Moving Consumer Goods market dynamics

0.0% 0.5% 0.9%

0.5% 0.3%

0.6% -0.3% 0.5%

4.3%3.6%

1.9%0.6%

1.8% 2.5%

4.6%4.3% 3.3%

4.2% 4.1%

2.8%2.6%

4.0%3.8%

2017 MAT TY Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

LITHUANIAFast Moving Consumer Goods market dynamics

-4.6% -3.3%

-6.0% -5.0%-7.6%

-2.6%-2.1%

6.9% 6.9%

1.2%2.4%

7.2%7.2% 7.5%

4.7%2.2%

-3.5%-2.8% -3.2%

4.6% 4.8%

2017 MAT TY Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

MONTENEGROFast Moving Consumer Goods market dynamics

6.8%7.0%

-34.4%-30.6%

-16.8%-13.9% -11.1%

-6.1%-0.3%

2.9% 3.4%-3.5% 2.5%

2.2%2.3%

3.6% 0.9% 2.5% 1.5% 1.2%0.3% -0.4%

-0.1% 2.3%

9.0% 9.3%

-30.8% -29.7%

-14.3%-12.5%

-0.7%2.7%

11.9% 10.8%

2016 2017 MAT TY Aug-Dec13

Dec-Apr14

Apr-Aug14

Aug-Dec14

Dec-Apr15

Apr-Aug15

Aug-Dec15

Dec-Apr16

Apr-Aug16

Aug-Dec16

Dec-Apr17

Apr-Aug17

Aug-Dec17

15.6%13.1% 10.9%

8.4%5.3%

4.8%2.4% 3.8% 3.6%

-7.1%-4.1%

1.1%1.7%

4.6% 5.5%5.1%

7.4%8.9%

7.9% 8.5% 9.1%

6.4% 6.5% 6.9%

9.4%8.6%

ROMANIAFast Moving Consumer Goods market dynamics

RUSSIAFast Moving Consumer Goods market dynamics

2.0%0.1% -0.3%

-2.1% -2.3%0.2%

7.4% 7.7%7.1%

6.0% 3.4%1.9%

1.4%1.8%

3.7% 3.6%

SERBIAFast Moving Consumer Goods market dynamics

-1.2% -2.0%

4.0%3.6%

4.6%3.7%

3.6%3.4%

4.4%4.2%

2016 2017 Dec-Apr 15 Apr-Aug 15 Aug-Dec15 Dec-Apr 16 Apr-Aug 16 Aug-Dec16 Dec-Apr 17 Apr-Aug 17 Aug-Dec17

SLOVENIAFast Moving Consumer Goods market dynamics

-0.2%0.9% 1.0%

1.6%1.2%

-0.7%-0.4%

-0.1%-0.4%

2016 2017 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

UKRAINEFast Moving Consumer Goods market dynamics

3.8% 0.8%7.2%

0.1% 0.3%3.6%

6.0% 9.2% 10.5%

10.3%27.2%

12.6% 9.7%

8.8% 9.7%

9.9%10.6%

10.4%13.8%

12.4%13.4%

8.9%10.0%

19.8%20.8%

APPENDIX

APPENDIX: GLOSSARY

• Nominal value growth:

• Percentage change in value sales (expenditures) as measured by the total basket of reported product categories

• Unit value growth (≈ ‘price’ change):

• Percentage change in the average retail price per unit in the total basket of reported product categories

• The unit of volume in the basket varies by category (e.g. litres, kilograms, tonnes, etc)

• The change in average price per unit may result from:

• Price changes of individual products

• Change in the mix of purchased products; more or less expensive products, more or less promotions, etc.

• Channel switching; more or less purchases in discount stores, or hypermarkets, or convenience outlets, etc.

• Product or channel mix changes may be induced by price change or may just be the result of market dynamics.

• The unit value growth reflects how consumers experience ‘cost of living’ in their actual grocery shopping behavior.

• Volume growth:

• Percentage change in purchased volume (quantity) of products

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