With the emergence of the global pandemic during the last year, it has been an extremely challenging time for many businesses but how has the FMCG sector fared against the rest?
Candidates
In my experience, the FMCG sector is stable during uncertain times: people still need to eat and drink, they get ill and need to clean their homes. Despite the huge global economic shockwave brought about by COVID-19, FMCG has shown its resilience - in the face of stretched supply chains from panic-buying and the impacts of staff shortages, it has been one of the industries to weather the storm without too many damaging consequences. So it’s a solid market to consider when weighing up your options. By solid I also don’t mean boring. In fact the FMCG sector is an exciting sector to work in, and during uncertain times it generates some very interesting work!
Clients
Living with Covid throughout 2020 was a process of adaptation for us all. Earlier on in the year when we faced our first lockdown, in terms of recruitment, potential candidates just weren’t looking for external opportunities - their caution was understandable. But we’ve all adapted as the year has gone on and as we've moved into 2021 the job market has picked up and the ease of sourcing talent has improved hugely.
We have had to adapt to new ways of working, with increased home-working and video-conferencing being at the heart of carrying on with 'business as usual'. As businesses start along the road of a return to normal we are beginning to see some dichotomy in the approaches taken - some being resistant to maintaining current working from home practices and others embracing this new way. What's certain is that continued flexibility in this area as we move forward into a post-pandemic world will give companies the edge over competitors when sourcing talent.
In general terms for the health of the industry, some figures suggest that FMCG growth is set to reach 10% by the end of Q1 2021 and there have been positive outcomes for pretty much all but Health & Beauty within the sector. Predictably, with the emergence of the pandemic, two of the fastest growing FMCG brands in the world in 2019 and 2020 were proven killers of the COVID-19 virus: Dettol and Harpic, both manufactured by our client, Reckitt Benckiser (RB). Indeed, three of the big players in the FMCG space saw sales growth of over 10% last year: RB, Kellogg’s and Kraft Heinz.
Whilst the growth of the market will likely be sustained in the short-term, the trend in heightened use of home hygiene products is sure to naturally wane over time and the rate of growth will inevitably slow. Crucially, in all of this, the share of consumer spending whilst at home will certainly be redistributed into other areas outside of FMCG as we transition out of lockdown: whilst Health & Beauty is likely to recover soon, the cinema, theatre and cultural trips and international travel we've all been craving are going to pull a significant portion of consumers' budgets away from Food and Drink, for example, causing shifts in both category-level and overall growth.
The extent to which this will happen, though, depends on so many unknown factors: vaccine rollout success and uptake - current and continued in subsequent years, the impact of the current recession and the latest government budget, post-pandemic working-from-home practices, the road-map out of lockdown (with its possible delays and any future restrictions that may need to be implemented if new variants take hold)... etc. We can still rely on a generally stable area of the market but we must acknowledge factors such as these that make it much harder to predict the future trajectory. The good news is that, as we move from 2020 through into the first part of 2021, the growth in e-commerce continues to skyrocket, with its share in the FMCG market showing an unprecedented increase.
One thing to stay on the pulse with is what is happening in FMCG in the Chinese market. It may not be a foolproof predictor of trends in the West but we can certainly use what we have seen there to indicate likely consumer behaviour and attitudes on a broader scale. Since the beginning of last year, we have seen that where China has gone we have followed - for example with the huge expansion in online sales and e-commerce (though in this respect they are years ahead) and the more recent recovery / growth in sales through local shops and businesses. Whilst for the first part of last year China saw a decline in FMCG growth, things seem to be more buoyant now. As the country returned practically back to normal life last autumn, moving into the last quarter of 2020 saw a recovery for many physical stores beyond the local level, too.
It's one to keep an eye on, hopefully a talisman that will signal hope... though there's no doubt that the shift over to e-commerce and FMCG category expansion within this, both in China as well as here, has been a game-changer and businesses are going to have to adapt and move with the times in this respect.
Further Reading
Want to understand in more depth the historical and current trends in consumer behaviour around Consumer Packaged Goods (CPG) in relation to the pandemic?
McKinsey have a report giving detailed insights on this from July 2020:
And, more recently, an article from January 2021 providing further insights on consumer behaviour, supply chains and more, in the light of the global recovery from the COVID-19 pandemic:
Bain have written an article about how companies can defend against Covid that's worth a read: