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Impact analysis: How is the consumer goods industry responding to Coronavirus?

A data-based report relating to the changes in the FMCG sector as a consequence of COVID-19

PRELIMINARY REMARKS

Reply leverages Data and Analytics to gain insights into the development of the Coronavirus pandemic and how it impacts society, consumers and industries. Using the Quentin Search Data tool developed by TD Reply, which aggregates data from Google Trends and Google Ads, this report provides an Industry Impact Analysis on the fast-moving consumer goods (FMCG) sector.

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This report in no way intends to distract from the fact that the outbreak of the novel Coronavirus is primarily a human tragedy affecting hundreds of thousands of people.

As the situation evolves rapidly, please note that this page reflects the data collected up until 6 April 2020.

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A broad industry overview

Looking at the sectors that have already experienced growth or have suffered losses, the following graph compares how different industrial sectors have reacted to the pandemic.

Data retrieved from Quentin, TD Reply’s Search Data tool, for the mentioned industry sectors across 5 markets (DE, ES, IT, FR, UK) Feb 2019 - Mar 2020

FMCG Industry: In-Depth Impact analysis

Since the lockdown, consumers have been heavily stocking up on basic FMCG and home luxury goods in all monitored markets. It’s noticeable that retailers with strong digital capabilities are experiencing a growth (having delivery slots booked for months in advance), while the retailers with weaker e-commerce offerings are losing consumer interest.

At the same time, it’s important for FMCG brands to hit the right communication tone and not to risk having their campaigns considered inappropriate. Data shows that only brands with purpose-driven advertising and social support seem to be successful.

Now, let’s analyse in depth some of the actors emerging from the COVID-19 crisis that are changing the FMCG Industry.

CONSUMERS

How have consumers responded to the crisis?

BRANDS

Which brands categories are responding better?

SUPPLIERS

What’s the impact on groceries and supermarkets?

THE FMCG INDUSTRY IN THE SPOTLIGHT

The FMCG Industry is one of the few industries that has been able to grow during the crisis. Compared to March 2019, interest in these goods increased by 53% in March 2020 (cross-country, calculated with TD Reply Quentin). It also grew stronger in the countries most affected by the crisis – presumably due to a longer lockdown period. The country where the industry has gained the most interest is Italy, with an increase of 62% (UK: +47%, France: +45%, Spain: +32%, Germany: +20%, USA: +12%).

EUROPEAN CONSUMER INTEREST ACROSS DELIVERY, ONLINE RETAIL AND FMCG

21/02: First cluster of cases reported in Lombardy, Italy

9/03: 9/03: Italy announces the first nationwide measures in Europe to stop the virus

Consumer interest was following 2019’s trajectory until February, when it rose sharply with the first cases of COVID-19 being reported in Europe.

Data retrieved from Quentin, TD Reply’s Search Data tool, for delivery, e-commerce, fashion, FMCG across 5 markets (DE, ES, IT, FR, UK) Feb 2019 - Mar 2020

WHICH FMCG SEGMENTS ARE SEEING A RISE IN CONSUMER INTEREST?

Growth has mainly been reported by the brands that are particularly well positioned online (due to their high e-commerce presence). For many people in the countries under curfew, online ordering has become the only alternative after the closure of many shops. Consumers are also concerned about their health, which means that brands associated with home and personal hygiene are selling particularly well.

CLEANING

+16%

Laundry

-3%

Cleaning supplies

BEAUTY

+3%

Creams

-38%

Razors

SOFT DRINKS

+12%

Water

+10%

Sparkling water

+9%

Energy drinks

+8%

Sodas

-

Coffees & teas

FOOD

+54%

Dairy food

+22%

Ice creams

+5%

Canned food

+1%

Chocolate sweets

HYGIENE

+8%

Soap

+4%

Toothpaste

+1%

Deodorants

ALCOHOLS

-

Beer

-10%

Spirits

Data retrieved from Quentin, TD Reply’s Search Data tool, for FMCG brands across 5 markets (DE, ES, IT, FR, UK). Categories have been built by aggregating the main consumer brands per category (e.g.: Pepsi, Coca-Cola, Fanta, Sprite aggregated in Sodas). Feb 2019 - Mar 2020

RECORD SALES FOR SOME SUPPLIERS ACROSS EUROPE

Taking into account the search queries for online groceries and supermarkets between February and March 2020, there have been changes in the ranking for each country's top brands. The ones benefiting from the growth of the FMCG sector have established online retail stores and engaged in local community activities.

FRANCE

The spread of the Coronavirus in France has led to an increase in sales of basic products such as pasta and soap. Shelves were empty almost everywhere in the country. Distributors excluded the risk of shortages and claimed to have anticipated demand.

From 24 February to 2 March 2020, sales of consumer goods increased by 5% nationwide, according to Nielsen.

GERMANY

German discounters like Lidl seem to be currently experiencing high demand for certain products, as a spokeswoman confirmed on a media request: "In some regions and stores, we are seeing significantly higher sales.”

Articles from the dry goods and hygiene sectors are particularly “in great demand now”.

UK

From 24 February to 21 March, British shoppers made three additional shopping trips per person, which equates to 79M more shopping trips than the same time last year, and spent an extra £1.9Bn on groceries.

Total sales in UK supermarkets rose by 43.1% during the week ending 21 March, just before stores acted to limit numbers and enforce social distancing.

KEEP BUSINESSES MOVING FORWARD

According to the data-driven forecasts, a medium to long-term consequence of the crisis appears to be the growth in the market share of online suppliers. In addition, the crisis is already forcing initially hesitant consumers to become FMCG online natives. This means some brands may immediately rethink their omnichannel strategy.

1

Short-term

CRISIS HAS PRIORITY
  • Putting the needs of others before the brand and the product may show where the brand loyalty lies.
  • Consumer behavior testifies that they usually remember how brands reacted in times of crisis.
  • Consumers may return the favour in due course.
2

Medium-term

E-COMMERCE CAPABILITIES
  • Not seeing oneself as an “e-comm brand” may not be an excuse anymore.
  • Data points out that the crisis will establish FMCG eCommerce as a permanent consumer habit.
  • Brands that are digitally innovative should be better able to reach new consumers.
3

Long-term

LOYAL CUSTOMER BASE
  • Data shows that in past crises brands focused on the strength of the image have grown faster than the average.
  • It seems wise to establish a loyal customer base built on innovative technology.
  • New brand positioning could become appropriate for our world after the crisis.

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