Consumer goods companies advance falls in purchase volumes and foresee more promotions in the second half

60% of consumer goods companies anticipate that the current drop in purchase volumes will continue throughout the year, according to a survey carried out by the association of manufacturers and distributors Aecoc among 75 companies in the sector -with a market share of 90% among the distribution- presented at the 28th Congress of Commercial Strategy and Marketing.

Specifically, 38.9% of distributors anticipate that this year will close with a drop in purchase volumes of up to 5%, while 27.8% anticipate that demand will stagnate. On the other hand, the remaining 33.3% plans to grow in volume, according to the manager of Aecoc's Commercial Strategy and Marketing, Rosario Pedrosa.

The perspectives of the manufacturers are in the same line, since 56% point to drops in sales volumes of up to 10%, while 14% expect results similar to those of 2022 and 29.7% forecast grow.

Regarding how they expect to close the year, companies in the consumer goods sector expect to close with growth in billing. “61% of the distribution is more optimistic that it will close above expectations, compared to 54% of manufacturers who have the same opinion,” he stressed.

“Price is currently the deciding factor in purchasing decisions and that is affecting volumes. The priority of manufacturers and distributors is to recover demand, which is why, foreseeably, we will see more promotions in the second half of the year,” explained Pedrosa.

Regarding the challenges facing the sector, among the biggest concerns, 80% highlight the trend towards savings in consumption by Spaniards, which is affecting volumes; 61% highlight the change in consumption trends due to the crisis and the loss of purchasing power due to inflation. In addition, 55% warn of the contraction in demand, which will continue in the next semester, while 46% warn of the inflationary situation.

However, 71% have acknowledged that their “greatest concern” is the loss of margins that their companies are experiencing, while recalling that they are trying to transfer this impact as little as possible to the consumer.

In this way, the mass consumption sector advances that throughout the second half of the year there will be “great promotional dynamism”, as recognized by 44% of distributors and 52% of manufacturers.

Aecoc's commercial strategy and marketing manager specified that this promotional activity “is more about the concern of companies to reactivate demand than about costs.”

Looking ahead to the summer campaign, the consumer goods sector has been “optimistic”, since it expects that after 2022, which was “good”, that 2023 will be similar to last year or even better.. “It is a very important campaign for the distribution and it is a moment where the consumer enjoys and that escape route will be used by the consumer, something that will be noticed in the results of both the industry and the distribution”, indicated Rosario Pedrosa.

White label rise

On the other hand, the change in consumer habits due to the impact of inflation is perceived with the rise in private label, which has become strongly reactivated until reaching a market share of 48% in 2023 compared to 15%. % it had in 2000.

“In recent years, with the rise in prices due to inflation, it is rising so far this year, the private label does not give up a share, whenever it has a profit, it does not lose it”, explained the director for Southern Europe of NIQ , Patricia Daimiel.

However, the rise of private label is having a negative impact on innovation. “There is a dramatic contraction of innovation by 43%, it is a shame because innovation adds value. Manufacturers that support it are growing 1.8% more than those that do not. We have greater growth when innovation is worked on,” he reiterated.

On the other hand, Daimiel has presented the NIQ data that shows that the drop in purchase volumes so far this year is 2%. However, consumption picked up in April, with year-on-year growth of more than 4%.

A rebound in consumption that coincides with a notable slowdown in the average increase in the prices of consumer products in the advance of results registered for the month of April, which stood at 9.5%. The figure represents a decrease of 4.7 points compared to the 14.2% rise in prices in March.

The consultancy firm’s data show a cumulative growth of 11.3% in value so far this year.

“In this inflationary scenario, households are trying to contain their spending, repeating habits of 2008, so there is more coexistence between brands, more frequent purchases, more visits, but smaller baskets. There is more promiscuity, they are looking for promotions and betting on the retail brand,” explained Daimiel.