Today, the global FMCG market is worth more than USD 10 billion, making it the largest economy in the world.
Understanding future market trends is essential for FMCG businesses to make critical, near-future decisions when it comes to new-market penetration, market expansion and product development. Only when upcoming market trends are appreciated can revenue-focused strategies be developed.
Here are seven major trends expected to influence FMCG markets in 2019 and beyond:
By 2020, e-commerce revenues are expected to be more than USD 4 trillion. More digitally savvy consumers will spend more time online. Messaging apps will also be increasingly used within the context of sales and marketing.
E-commerce is growing four-times faster than offline sales, with global online sales predicted to double within the next five years. By 2022, FMCG e-commerce is forecast to make up around ten to twelve percent of global FMCG sales, creating a USD 400 billion opportunity.
As e-commerce penetrates FMCG, competition intensifies, and the importance of clicks and bricks means that FMCG businesses will need to adopt an omnichannel approach.
With more consumers leading an on-the-go lifestyle, the demand for convenience is a big trend in 2019. A greater appetite for convenience food and drinks that are ready-to-consume and a desire for restaurant-quality foods at home will drive growth in this sector.
Much of the expectation for quality and convenience is due to the rising culture of delivery apps. Consumers are increasingly demanding flexibility in how, when and where to shop for their FMCG products, with a no-compromise approach to convenience. The trend is for consumers to do smaller, more frequent purchases with a growing demand for fresh convenience foods to fit this lifestyle dynamic.
The existing trend for ‘clean’ foods continues, inspired by greater awareness, interest and understanding of wellbeing. There will be a greater emphasis on health and wellness products, many of which combine research on nutrition and longevity with traditional, ancient therapies.
Sales of snack food in Asia-Pacific soared in 2017 and 2018. Snackers are looking for ‘clean’ food snacks and are more mindful of what they are eating.
GDP increases and disposable income hikes will undoubtedly impact FMCG markets in 2019. Emerging economies, in countries such as Vietnam and Indonesia, and countries with a growing middle-class, such as Thailand, are resulting in more consumers, with more cash to spend. Findings from the Organization for Economic Cooperation and Development (OECD) suggest this will lead to a billion new consumers by 2020 spending between USD 10-100 per day.
Countries such as Thailand, Vietnam and the Philippines are experiencing a rapid explosion of consumers with more disposable income than ever before. By 2030, estimates are that over two-thirds of the world’s middle-classes will live in Asia.
In Vietnam, one of the fastest-growing FMCG markets, household wages have increased by close to 40 percent since 2012, with GDP rising fast. FMCG in emerging markets is growing two to four times more than in developed markets.
Millennial consumers are seeking out new brands that they perceive as innovative product lines and have their own distinct FMCG demands. They prefer to research products by sharing information with their peers online and are much more influenced by peers than a mass-brand channel approach.
Not only do these under-35s have their own distinct identity, they have the funds too. Along with the popularity of e-commerce amongst millennials, there will be increased scope for smaller brands and digital challenger brands in 2019 that resonate with millennial consumers online.
Sustainability is set to take a more central role within FMCG in 2019 and beyond. Consumers are becoming more aware and interested in how sustainability relates to products across the whole supply chain, from the sourcing of ingredients to the packaging.
Consumers are influenced by green, environmental factors as well as the concept of responsibility and accountability. Air pollution, along with the health of the land and agricultural regeneration will also be in the spotlight.
The world is growing up, and whilst the millennials are exerting their influence, the population landscape is being dominated by post-retirement FMCG shoppers. This is particularly evident in Asia, where e.g. Japan tops the tables with predictions that the over-60s will account for 37.3 percent of the population by 2030. Other rapidly aging populations include Vietnam, Thailand and Sri Lanka.
The UN forecasts that on a global scale, the next couple of decades will see the number of over-65s double to around the billion mark. For FMCG, this rising tide of silver consumers could be a golden opportunity.
Along with shifting demographics, small towns and mid-density cities will emerge, creating new FMCG markets. Population densities will create more rural cities with an increasing urbanization of these inhabitants, many of which have the same access to technology and the same consumer behaviors as their urban counterparts. These new frontiers on the FMCG horizon will witness new trade centers and improved infrastructure.
Undoubtedly, 2019 will be a year of huge change in the broad as well as the macro FMCG markets. Those businesses who understand these new and divergent pathways have a far better opportunity to navigate them successfully.