Quarter by Numbers Europe Q2 2018 - Nielsen · The Austrian economy is continuing its solid...

1

Copyright © 2017 The Nielsen Company

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

QUARTER BY

NUMBERS Q2 2018

EUROPE

2


CONTENTS –EUROPE WEST

SECTION 1

THE BIG PICTURE: EUROPE WEST Message from Olivier Lamare ………………………………………………………………………..….

EUROPE AT A GLANCE Key economic drivers……………………………………………………………………………………..

Looking through West Europe FMCG Lens………………………………………………………......

COUNTRY SNAPSHOT Austria……….………………………….…………………………………………………………………..

Belgium………………………………………………………………………………………….......……..

Denmark………………………………………………………………………………………..................

Finland………………………………………………………………………………………………….......

France………………………………………………………………………………………………………

Germany……………………………………………………………………………………………………

Ireland…………………………………………………………………………….…………….......….......

Italy……………………………………………………………………………………....……………........

Netherlands………………………………………………………………………………....……………..

Norway………………………………………………………………………………………..………........

Portugal…………………………………………………………………....………………….……….......

Spain……………………………………………………………………………………………..…………

Sweden……………………………………………………………………………………………….........

Switzerland………...………………………………………………………………………………………

United Kingdom…………………………………………………………………………….……………...

IN THE INDUSTRY The Quest for Convenience………………………………………………………………………………

1

T 4

E 5

7

T 8

11

14

17

20

23

26

29

32

35

38

41

44

47

50

Y 111

3


CONTENTS – EUROPE CENTRAL & EAST

SECTION 2

THE BIG PICTURE: EUROPE CENTRAL & EAST Message from Roberto Pedretti and Daniel Chorbadjian…………………………...........................

EUROPE AT A GLANCE Key economic drivers……………..…………………………………………………….…………..........

Looking through Central & East Europe FMCG Lens…………………………………………….......

COUNTRY SNAPSHOT Belarus……….………………………….………………………………………………………………….

Bulgaria……….………………………………………….…………………….......................................

Croatia……….………………………………………….…………………….......................................

Czech Republic……………………………………………………………………………………………

Estonia…………………………………………………………………………………………....………..

Greece………………………………………………………………………………………………….......

Hungary…………………………………………………………………………………………………….

Kazakhstan…………………………………………………………………………………………...……

Latvia……………………………………………………………………………………....……………….

Lithuania……………………………………………………………………………………………………

Poland………………………………………………………………………………………………………

Romania…………………………………………………………………....………………………………

Russia………………………………………………………………………………………………………

Serbia………………………………………………………………………………………………………

Slovakia…………………………………………………………………………………………………….

Slovenia……………………………………………………………………………………………………

Turkey………………………………………………………………………………………………………

Ukraine……………………………………………………………………………………………………..

IN THE INDUSTRY The Quest for Convenience……………………………………………………………………………..

1

T 53

E 54

56

T 57

60

63

66

69

72

75

78

81

84

87

90

93

96

99

102

105

108

Y

111

4


THE BIG PICTURE:

EUROPE WEST

Olivier Lamare

Retail Services

Developed Markets

Over the last few quarters, European consumer confidence has been on the rise and

reached some of the highest levels for the region; latest quarter confirms the trend with

some markets still gaining confidence index points like Ireland, the UK and the

Netherlands (+5) or Denmark (+4), Norway and Belgium (+3).

Europeans diverge on the national issues of greatest concern, but health remains high

on the list, specifically in Portugal and Finland this quarter. The economy is also a key

priority with countries like Italy and Spain showing notable peaks.

Among Eurozone's largest economies, GDP growth continued to slow in France,

Germany, Italy and Spain in Q2. This is starting to become a normalized pattern

of slowing growth after several years of healthy rates. That said, the growth is still

there, and combined with positive sentiment amongst consumers, provides a

favourable context for day-to day purchases. FMCG growth remains more

unpredictable than ever due to local market conditions, changeable weather patterns

and seasonal impacts. After the upside growth in Q1 due to an early Easter in 2018,

Q2 has been impacted by the reverse effect, and shaped by changing weather

conditions.

FMCG sales growth slowed for the second successive quarter, increasing by 2.4%

in value, down from 4.4% in Q4 and 3.9% in Q1. Volumes dropped by 0.1%, for the

first time since early 2017 in Europe, with Belgium (-2.2%), Switzerland (-1.2%),

Netherlands (-0.7%), Spain (-0.8%) recording declines.. The main exceptions were

Ireland and Sweden where volumes grew by 3.4% and 1.5%, respectively.

Without a doubt, growth is getting harder and harder to achieve in the region - and the

slowdown observed this quarter reinforces the need for finding new ways to achieve

sustainable growth. We observed that winners can be found across all sectors and

markets with examples of companies, segments and channels performing

strongly. Growth is out there but industry players will increasingly need to find ways to

identify and unlock this growth, through stronger innovations and better shopper

experience as key drivers.

Answering consumers’ needs in terms of convenience is another way. Our latest

Thought Leadership whitepaper, The Quest for Convenience, highlighted 80% of

(Western) Europeans are urbanized people, lacking time and seeking ease, utility and

simplicity. When we talk about convenience, we refer to any solution enabling

consumers to gain time, such as a product (ready meal, snacks etc.), or a retail

concept (home delivery, nearby proximity store etc.), often with a higher frequency of

shopping trips.

Looking ahead, FMCG performance should improve in Q3, led by beverage

categories, surfing on the wave of hot weather in Europe this summer and the Football

World Cup, as well as high levels of promotions in the region over this important

consumption period.

https://www.nielsen.com/us/en/insights/reports/2018/the-quest-for-convenience.html






5


EUROPE WEST

MARKETS AT A GLANCE

ECONOMIC PULSE OF CONSUMERS

AROUND EUROPE

The Conference Board® Global Consumer Confidence Survey is conducted in

collaboration with Nielsen measures perceptions of local job prospects,

personal finances and immediate spending intentions. Consumer confidence

levels above and below a baseline of 100 indicate degrees of optimism and

pessimism, respectively

Mostly positive gains in consumer confidence is balanced by some

steep declines

CONSUMER CONFIDENCE INDEX


GDP and Inflation reflect % change per annum to Q2 2018 or (-) indicates not available at time of publication

Source: Economist Intelligence Unit (EIU)/OECD/local government sources

The Conference Board® Global Consumer Confidence Survey is conducted in collaboration with Nielsen.

GDP

(annual %

growth)

Inflation Q2 2018Q2 2018 vs

Q1 2018

7.0 0.4 Ireland 108 5

1.3 2.3 UK 101 5

2.8 1.6 Netherlands 106 5

0.8 1.0 Denmark 118 4

1.5 2.4 Norway 92 3

1.3 2.2 Belgium 91 3

2.8 1.1 Finland 83 1

3.0 2.2 Austria 101 1

2.7 1.8 Spain 92 1

3.3 1.9 Sweden 99 0

Q2 2018Q2 2018 vs

Q1 2018

GDP

(annual %

growth)

Inflation

Portugal 85 -5 2.3 1.0

Switzerland 99 -5 2.5 1.0

Italy 62 -4 1.1 1.0

Germany 107 -1 2.0 1.9

France 78 -1 1.7 2.1

6


4037

49

36

26

52 52

33

42

4944 44

5651 51 53

3945

32

4750

40

49

3336

4236

4035

46

27

3639

36

2934

50

31

48

22

3336

30

43

2831

20

27

0

10

20

30

40

50

60

EU AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

Putting into savings Holidays / vacations New clothes

2018

21 21 2018

20

26

1614

28

14

2220

28

2020

13

9 9 10

18

31

22

10

22

16

28

7

20

12

18

0

5

10

15

20

25

30

35


Health The economy

Health and the economy continue to be key concerns while consumers are

mixed on whether it is a good time to spend, save or invest.

WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS?

WHO’S SPENDING, SAVING AND INVESTING?

Type of concern

After living expenses, how is spare money spent

Bars reflect Q2 2018. Table shows comparison to Q1 2018

EUROPE WEST

MARKETS AT A GLANCE


CONSUMER SENTIMENTS IN

EUROPE



Putting into savings 0 5 -1 8 -2 5 -3 -4 0 -3 -4 -4 3 -1 3 1

Hol idays / vacations 2 -4 -4 -3 -1 -1 -3 0 0 -1 -3 -3 3 0 0 2

New clothes 2 5 5 0 -1 2 2 4 -2 -3 3 0 0 0 3 -2


The economy 2 1 1 0 -1 1 4 1 -2 -2 2 9 0 -4 0 0

Health 1 -2 -5 -1 2 3 3 -2 0 -1 0 -2 1 3 -2 0

7


PORTUGAL (+1%)

0.9% 2.0%1.8% 1.8% 1.1% 4.0%

1.9%

1.5%

0.0% 0.3%

1.0%2.6%

1.6%

1.6%

1.6%

-0.8%

-2.2%-1.2%

-0.7% -0.3%

-0.8%

0.0%

-0.5%0.0%

2.6%

-0.7% -0.7%

0.6% 1.0%1.5%

0.1%-0.2%

0.6%

1.2%0.9%

3.1%

2.0%

1.0%

0.0%

2.9%

0.3%

1.9%2.2%

2.7%

3.1%

AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

Unit value change Volume change Nominal growth

IRELAND (+3%)UK (+0.8%)

FRANCE (-0.1%)

LOOKING THROUGH EUROPE WEST FMCG LENS

FAST MOVING CONSUMER GOODS MARKET DYNAMICS – Q2 2018

Weighted average – WEST EUROPE – 15 countries

WHERE ARE THE FMCG GROWTH OPPORTUNITIES?

Average volume growth Q1 2018 & Q2 2018

Avg. volume growth decreasing versus last period

Avg. volume growth increasing versus last period

ITALY (+0.8%)

BELGIUM (-1.4%)

NETHERLANDS (-0.7%)

SPAIN (0%)

Colour coding indicates growth or declining trend

compared to same 6 month period year ago

Average volume growth of Q1’18 & Q2’18 vs Q1’17 & Q2’17.

AT BE CH DE DK ES FI FR GB IE IT NL NO PT SE

SWITZERLAND (-0.9%)

AUSTRIA (+0.4%)

FINLAND (-0.4%)

DENMARK (-0.8%)

NORWAY (+0.7%)

SWEDEN (+1%)

GERMANY (+0.9%)

8


AUSTRIA SNAPSHOT

The Austrian economy is continuing its solid performance, with 3% GDP growth in

the second quarter versus the previous year. While this is slower than the growth

rates in the first quarter (3.4%), last quarter’s figures marked a multi-year high.

Consumer confidence also remained quite strong, growing one index point to 101.

While consumer optimism on job prospects and personal finances increased

marginally by one point each (63 points and 59 points respectively), consumer

sentiment that “it’s a good time to buy” decreased by one point (to 46 points).

With nominal value growth of just 0.1%, Austria’s FMCG market stagnated in the

second quarter due to a slight decrease (-0.8%) in volume sales. This development

was mainly driven by a strong Easter period during the first quarter, leading to lower

growth rates in the second quarter. While the first half of 2018 was positive for

FMCG, it was less dynamic than a year ago.

Mid-sized Hypermarkets (1000m2-2499m2) and Discounters remain the driving

forces of this positive long-term development, with both channels successfully

capitalizing on the early summer season and Football World Cup, while smaller

stores (below 399m2) stagnated. The Dairy segment remains the strongest growth

driver (5.6%), mainly due to the drastic price increase of butter last year. Alcoholic

beverages grew by 4.6%, thanks to strong Beer sales (due to good weather in

March and April) and Gin (part of an overall trend for this popular liquor). The Top 5

manufacturers grew by 4.4% and outperformed all other manufacturers and

including private label.

In the quarters to come, we expect a positive development of the market due to high

consumer confidence levels and retailers reinforcing promotions to fight discounters’

low-price strategies. Drivers will continue to be Beverages (Football World Cup, very

hot weather), Ice Cream, and Barbecue products.

COUNTRY HIGHLIGHTS

CONSUMER CONFIDENCE INDEX ECONOMY WATCH

Source Economist Intelligence Unit (EIU)

The Conference Board® Global Consumer Confidence

Survey is conducted in collaboration with Nielsen.

2.5

2.9

3.53.7

3.4

3.0

2.2 2.2 2.2 2.3

1.92.2

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018

GDP growth (% change pa)

Inflation, consumer prices (% change pa)

8185 87 87 86 8788

94 94102 100 101

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU AT

Pedro Lima

Managing Director

Austria, Belgium,

Netherlands,

Switzerland

9


2.7%

3.1%

3.2%

2.7%

2.8%

-0.7%

-2.3%

3.6%

1.6%

Total FMCG Hypermarkets > 1000 m² Hypermarkets 1000 - 2499 m²

Hypermarkets > 2500 m² Supermarkets 400 - 999 m² Large Food 250 - 399 m²

Small Food Up To 250 m² Discounters Drug Stores

TOTAL AUSTRIA – CHANNEL PERFORMANCE

Austrian FMCG market stagnates, in part due to a strong Easter season in Q1.

Mid-sized Hypermarkets and Discounters drive growth.

FMCG MARKET DYNAMICS

(weighted average)

VALUE CONTRIBUTION AND GROWTH – MAT Q2-2018

23%

15%

8%

40%

4%2%

24%

8%

0.6%

1.7%0.6%

0.2% 0.5% 1.1% 1.4%

2.6%

1.5% 0.9%

3.0% 1.0%

0.6%

3.2%3.1%

5.2%

2.4%1.1%

1.8%

-0.8%

3.6%

2.7%

1.2%

3.4% 3.6%

6.3%

3.9% 3.7%3.3%

0.1%

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

Austria

Unit Value Growth Volume Growth Nominal Value Growth

10


Great weather drives an increase in Beer sales, with Gin sales also up.

TOTAL AUSTRIA – SUPER CATEGORIES PERFORMANCE

TOTAL AUSTRIA – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

Top 5 manufacturers outperform all other manufacturers as well as private

label.

SUPER CATEGORIES VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0%

Fresh Food Perishable 32.9%

Culinary Shelf-Stable & Other 17.0%

Dairy 11.5%

Alcoholic Beverages 8.3%

Non-Alcoholic Beverages 7.2%

Confectionery 6.9%

Homecare/Pet Care 6.9%

Personal Care 6.1%

Hot Beverages 2.4%

Baby Care 0.7%

2.7%

1.7%

3.5%

5.6%

4.6%

3.4%

2.4%

0.4%

0.3%

4.1%

-0.4%

MANUFACTURERS VALUE CONTRIBUTION NOMINAL VALUE GROWTH

Total FMCG 100.0%

Top 1-5 7.9%

Top 6-10 4.5%

Top 11-30 9.9%

Top 31-100 11.9%

100+ 44.9%

Private Label 20.9%

2.7%

4.4%

-1.3%

4.1%

2.7%

2.2%

3.5%

11


BELGIUM SNAPSHOT

Belgium’s GDP is growing (up 1.3% versus previous year), but the growth has

indeed slowed versus the previous quarter. Nevertheless, consumer confidence

has increased — up three points to 91. Optimism grew regarding job prospects

(up two points to 47) and buying intentions (up three points to 39), but consumer

sentiment with regard to personal finances receded slightly, dropping one index

point to 48.

Total nominal value growth in FMCG contracted in the second quarter, with a dip

in volume sales (-2.2%) outweighing price increases (2.0%). As in previous

quarters, Large Supermarkets and Hard Discounters are driving the growth in

the market, due to wide assortment at competitive prices in large supermarkets

and the focus on fresh in discounters. Superettes, though small in share, also

experienced a strong 7.5% growth due to their emphasis on proximity and

shopper convenience.

Looking at super categories, we are still seeing great nominal value growth in

Bakery and Toast. This continuous growth is part of the growing convenience

trend: one-stop shopping rather than going to the local bakery. Despite positive

trends in other markets, we saw a decline in Alcoholic Beverage sales (-1.3%).

This is notable due to the warm weather we had across Europe, which usually

drives higher sales for Alcoholic Beverages. In Belgium, the Alcohol category is

still heavily impacted by the excise tax raised on Alcoholic Beverages in

November 2015, which has encouraged consumers to purchase alcohol across

the border.

Differing from previous quarters, we are seeing more growth from the smaller

manufacturers, which focus on smaller niche products. There is tremendous

potential for brands that play local, using locally sourced ingredients or playing

to national pride. In a competitive market like Belgium’s, these types of

strategies help to differentiate brands and drive growth.

COUNTRY HIGHLIGHTS



1.81.6 1.6

1.9

1.51.3

3.0

2.0 1.9 2.0

1.5

2.2

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



81

8587 87

86 8789

84

95

85

88

91

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU BE

Pedro Lima



Pedro Lima

Managing Director

Austria, Belgium,

Netherlands,

Switzerland

12


0.8%

-0.9%

4.0%

-8.2%

2.2%

7.5%

Total FMCG Hypermarkets Large Supermarkets

Small Supermarkets Discounters Superettes

TOTAL BELGIUM – CHANNEL PERFORMANCE

FMCG market contracts, due to timing of Easter and drop in volume sales.

Superettes, with emphasis on proximity and convenience, show strong

nominal growth.

FMCG MARKET DYNAMICS - BELGIUM

(weighted average)


11%

50%

18%

17%

3%

1.4%2.0%

2.3%

1.8%

0.6%

-0.3%

0.7%

2.1% 2.2%

2.0%

-0.1%

-1.2%

-0.3% -0.8%-0.7%

2.9%

-0.5% -0.3% -0.7%

-2.2%

1.3%

0.8%

2.0%

0.9%

-0.1%

2.7%

0.2%

1.8%1.5%

-0.2%


Belgium


13


TOTAL BELGIUM – SUPER CATEGORIES PERFORMANCE

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%


Dairy 13.5%

Fresh Products 12.1%

Grocery 11.8%

Non Alcoholic Beverages 11.6%

Health & Beauty 8.3%

Housekeeping 5.8%

Frozen 5.0%

Confectionery 4.7%

Sweet Snacks 3.7%

Hot Beverages 2.9%

Salted Snacks 2.4%

Pet Product 2.0%

Bakery & Toast 1.8%

0.8%

-1.3%

4.3%

3.1%

-0.9%

1.6%

-2.6%

-0.6%

-0.8%

0.7%

1.0%

2.5%

3.3%

0.4%

5.6%


Total FMCG 100.0%

Top 1-5 15.6%

Top 6-10 8.2%

Top 11-30 13.8%

31-100 10.1%

100+ 15.0%

Private Label 37.4%

0.8%

0.3%

-1.0%

-0.4%

-0.1%

1.9%

1.8%

TOTAL BELGIUM – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

Playing local (smaller manufacturers) and playing with price (private label) has

driven growth.

Increasing prices drives sales in Dairy. Beverages increased due to higher demand

caused by better weather and big sports events.

14


DENMARK SNAPSHOT

Although there are some emerging growth risks, Denmark’s economy continues to

be strong with steady GDP growth, low levels of unemployment, low interest rates

and rising real estate prices. Danish consumers are still the most positive in Europe

with the Consumer Confidence Index rating reaching 118 points following a four

point gain in Q2.

FMCG market growth was steady, with a 0.9% gain year-on-year this quarter.

Market growth is being driven by increasing consumer demand for premium and

organic products as well as offerings that meet convenience needs. Many Danes

are keen to try new products and solutions from both retailers and manufacturers

and this openness to change presents both opportunities and threats for FMCG

companies. Although the industry has only taken the first steps in digitalisation, this

is already changing customer journeys and shopper expectations. There are big

growth gains to be made for brand owners and retailers if they can successfully

personalise their offerings. Consumers are increasingly expecting a tailored and

relevant experience when they communicate or browse for information.

One of the biggest challenges for FMCG companies is to identify the current needs

of the shopper: are they looking for something healthy to eat on-the-go, preparing for

the meal later tonight, or do they have a big stock-up shopping mission in mind?

What are they looking for in terms of information and inspiration — are they after fast

information on where to find a fresh salad for lunch or recipes that meet their family’s

need for convenience as well as a gluten free diet? And where can they find the best

promotions combined with the least time consuming (painful) and most convenient

shopping experience? The future winners will be those companies who find the most

automated, relevant and effective ways to deliver value to shoppers. Disruption in

the FMCG industry is clearly underway.

.

COUNTRY HIGHLIGHTS





4.3

2.5

1.11.3

-0.6

0.80.9 0.9

1.5 1.30.7 1.0

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

107115 115 116 114 118

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU DK

Cecilie Westh

Managing Director

Nordics

15


1.1%

1.0%

2.7%

Total FMCG Grocery Trade Convenience

TOTAL DENMARK– CHANNEL PERFORMANCE

Growth in the FMCG industry continues to face challenges from changing

shopping habits (e.g. more eating out and takeaways) as well as from

e-commerce growth.

The demand for proximity or convenience stores increased in Q2 due to the

warmer weather.


(weighted average)


93%

7%

0.5%

2.3%

-0.4%

-…

0.7%

1.2% 2.4%

2.7%2.0% 1.1%

-0.6%-1.2%

0.0%

-0.5%-1.5%

-0.1%

-1.6%-0.6%

-1.5%

-0.3%-0.1%

1.1%

-0.4% -0.5%-0.7%

1.1%0.8%

2.2%

0.5%0.9%


Denmark


16


Stronger sales in Dairy was been driven by premium products and price

increases, while value gains in Beverages were boosted by the warmer weather.

TOTAL DENMARK – SUPER CATEGORIES PERFORMANCE

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Packed Food 27.9%

Beverages 21.9%

Dairy Products 15.6%

Fresh Food 12.3%

Confectionery 6.5%

Frozen Food 6.1%

Household Products 5.9%


1.1%

-0.2%

2.3%

6.4%

0.7%

-1.3%

0.7%

-3.2%

-3.4%

TOTAL DENMARK – MANUFACTURER PERFORMANCE - FMCG

DETAILS NOT AVAILABLE

17


FINLAND SNAPSHOT

Midway through 2018, Finland’s economy continues to be in healthy shape with

positive indicators including steady GDP growth, slowly rising consumer confidence

and declining unemployment.

After several years of little change, grocery prices have recently increased and since

Q4 2017 have driven growth in the FMCG market. In Q2, unit value contributed

1.9% of the total 2% FMCG growth. Hypermarkets continue to be the growth

leaders in the market.

We are seeing some interesting trends emerging. According to the latest Nielsen

Shopper Trends report, price consciousness among Finns has almost doubled

compared to the years preceding the economic crisis. Today, two out of three

consumers say they know the prices of most or all of the grocery items that they

regularly buy. However, what Finns are willing to pay more for is convenience and

time-saving options. Despite this, purchasing groceries online accounts for less than

1 % of FMCG market value. Extra charges seem to be the primary barrier for online

shopping according to the Nielsen Shopper Trends report.

As for super categories, Beverages are driving the nominal value growth. Much of

this can be attributed to Alcoholic Beverages where long drinks are showing high

double-digit growth, both in value and volume. This is a consequence of the new

Alcohol Act introduced at the beginning of the year that permits grocery stores to sell

higher alcohol by volume products (now 5.5%, previously 4.7%). Wines and spirits

are sold exclusively by Alko Ltd, a state-owned alcohol company, but grocery

retailers are lobbying for wines to be sold in supermarkets too and, if successful, this

would certainly shake up the industry.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) GDP estimate or Q2 2018



3.03.2

2.42.6

2.92.8

1.10.9

0.7 0.60.8

1.1

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

68 70

81 80 82 83

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU FI

Cecilie Westh

Managing Director

Nordics

18


1.5%

2.1%

1.5%

3.9%

-0.9%

-2.2%

3.5%

Total FMCG Hypermarket Supermarket Hard Discounter Superettes Other Shop Types Variety Stores

TOTAL FINLAND – CHANNEL PERFORMANCE

Rising food prices continue to drive FMCG growth.

Supermarket formats returned to growth in Q2 after a flat first

quarter, while Hard Discounters continued to lead market growth.


(weighted average)


38%

28%

11%

10%

8% 6%

0.0%

1.7%

-0.8%-0.2%

-0.7% -1.1%-0.7%

1.0%

1.8%

1.9%1.5%

-0.2%

1.8%1.7% 2.1%

3.2%2.6%

0.6%

-1.0%

0.0%1.5% 1.5%

1.1%1.4% 1.4%

2.1%1.9%

1.6%

0.8%

2.0%


Finland


19


Beverages were the fastest growing super category, boosted by new

alcohol regulations.

TOTAL FINLAND – SUPER CATEGORIES PERFORMANCE

TOTAL FINLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

While Top 10 manufacturers returned to growth in Q2, smaller

manufacturers were the fastest growing.


Total FMCG 100.0%

Fresh Foods 35.8%

Dairy 15.5%

Shelf Stable Foods 14.0%

Beverage (Excl.Wines&Spirits >5.5% Alc.) 10.6%

Others 9.9%


Hygiene 4.8%

Frozen Foods 4.0%

1.5%

2.7%

-0.1%

-0.8%

5.3%

0.8%

-0.4%

-0.8%

4.4%


Total FMCG 100.0%

Top 1-5 15.6%

Top 6-10 7.3%

Top 11-30 14.5%

Top 31-100 12.3%

100+ 26.3%

Private Label 23.8%

1.5%

0.8%

0.5%

2.0%

3.8%

0.4%

2.3%

20


FRANCE SNAPSHOT After a strong finish for fast moving consumer goods in 2017 along with a record

high consumer confidence, spring has been a bit challenging in France. French

households faced inflation and several national strikes (education, transport,

energy), appear to have dulled confidence and market momentum.

There are some concerning trends in France, - high levels of unemployment remain

despite economic recovery and consumers tend to be pessimistic about their own

economic conditions and are reluctant about making purchases such as cars,

electronics and consumer goods (FMCG). Growth has therefore weakened

significantly in 2018 starting in Q1 and slowing even further in Q2 where we noticed

a drop in volume in spite of promotional focus from retailers.

France saw adverse spring weather in early June compared to 2017 which strongly

impacted Beverage categories driving 50% of the FMCG’s losses during that period.

The growing force behind total FMCG growth remains fresh market categories (both

Dairy and Non-dairy) while Personal Care is still decreasing in spite of episodic

boosts due to successful retail events.

Value growth is still evident overall but mainly supported by two channels, e-

commerce (mostly click & drive) which continues its momentum, and also SMPL

(Discounters) performing well thanks to investments in stores and a strong

communication push. The last quarters have seen an accelerating trend for small

and medium FMCG companies, pursuing the trend of “premiumisation” and

“localisation” that started five years ago. Looking forward to the third quarter, we

expect some positive results given the encouraging trends seen this summer. The

combination of hot weather and the impact of the Football World Cup led to a 2.5%

growth, with strong dynamism of some categories like soft-drinks (+11%) and ice-

creams (+26%).

.

COUNTRY HIGHLIGHTS



1.4

2.3

2.7 2.8

2.2

1.71.5

1.0 1.0

1.2

1.5

2.1

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

66

7571

79 79 78

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU FR

Laurent Zeller

Managing Director

France



21


1.6%

0.0%

1.4%

1.4%

8.3%

5.3%

Total FMCG Hypermarkets Supermarkets

Convenience Drive (E-Commerce) Smpl / Discounters

TOTAL FRANCE – CHANNEL PERFORMANCE

FMCG sales growth dropped to 1% during the first half of the year, with

declining volume in Q2.


(weighted average)


41%

34%

8%

5%

11%

E-Commerce / Drive continues to gain momentum while SMPL confirms their

reinvention with investments in stores and strong communication outreach.

0.8%

1.3%

0.8%0.8%

-0.4% -1.9%

0.9%

1.4%0.9%

1.5%

0.3%

0.3%

-0.2% -0.2%

-0.2%

5.1%

0.2%1.5%

0.2%

-0.5%

1.1%1.6%

0.6% 0.5%

-0.7%

3.3%

1.1%

2.9%

1.1% 1.0%


FranceUnit Value Growth Volume Growth Nominal Value Growth

22


Fresh product categories remain the growth engines while weather-

sensitive categories such as drinks and ice-cream suffered at the start of

the season.

TOTAL FRANCE – SUPER CATEGORIES PERFORMANCE

TOTAL FRANCE – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Sweet Grocery 17.8%

Fresh Non-Dairy 17.1%

Dairy 16.2%

Savoury Grocery 12.2%

Alcoholic Drinks 9.7%

Soft Drinks 7.0%

Homecare 6.0%

Personal Care 5.8%

Paper Products 3.6%

Savoury Frozen Food 3.4%

Sweet Frozen Food 1.2%

1.6%

1.9%

3.5%

3.4%

1.4%

1.8%

-1.5%

1.6%

-2.9%

0.3%

0.2%

-4.0%


Total FMCG 100.0%

Top 1-5 11.8%

Top 6-10 7.3%

Top 11-30 16.4%

31-100 16.6%

100+ 15.5%

Private Label 32.3%

1.6%

-0.1%

-1.0%

1.7%

2.4%

6.3%

0.2%

Small players are in good shape (push from retailers and consumers asking

for local products) while main brands and private label maintain their sales.

23


GERMANY SNAPSHOT

COUNTRY HIGHLIGHTS


2.12.3

2.72.9

2.3

2.01.9

1.61.7 1.6

1.3

1.9

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

101 103 102 103108 107

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU DE

Source Economist Intelligence Unit (EIU) OECD GDP for Q2 2018

Ingo Schier

Managing Director

Germany



With GDP growth of 1.95%, Germany’s economy regained momentum in Q2

following the slowdown in the previous quarter. Analysts predict further

acceleration is likely in the coming months as stronger global demand for

German exports, rising investments and increased consumer spending should

boost the economy. Meanwhile, Germany’s Consumer Confidence Index rating

remains high at 107 points, with consumers increasingly optimistic about their

job prospects and personal finances, and positive about the country’s economic

outlook.

The FMCG market was up just 1.2% year-on-year in Q2, with volume sales

contracting -0.7% due to higher prices, while unit value grew 1.8%. The major

reason for the relatively low year-on-year growth figure was that the Easter

business period fell into Q1 this year as opposed to Q2 in 2017. The unusually

high temperatures from April onward increased summer sales of categories such

as Soft Drinks (up 5.2% this quarter) and Ice Cream, (18.1%). Beer (8.4%), Self-

service Sausages (18.4%) and Butter Baguettes (30.6%). The FIFA World Cup

also boosted consumption momentum.

Drug stores have shown above-average growth for a long time, but is now

slowing due to the impact of a “discount spiral” in this channel. To break out of

this spiral, companies in this space should look to introduce exclusive brands

and also ramp up their use of social media and influencers to gain traction with

younger target groups for products such as cosmetic boxes.

Major branded goods manufacturers face an emerging challenge from smaller

manufacturers and brands. These players are increasingly penetrating the

market, by occupying niches and taking up shelf space. As a result, smaller

players are growing fast and taking market share from than Top 1-10

manufacturers.

24


2.9%

3.8%

-2.1%

3.2%

2.6%

Total FMCG Hypermarkets Supermarkets Discounters Drug Stores

TOTAL GERMANY – CHANNEL PERFORMANCE

Market growth was mainly driven by price increases, while the volume

sales decline was due to Easter being in Q1 this year.

Hypermarkets are leading channel growth, followed by discounters which

have rebounded recently.


(weighted average)


41%

8%

42%

10%

1.2%

2.0% 0.4% 0.9%

1.7%

2.1%2.0%

1.8%2.0%

1.8%

-0.1%

0.9%

0.6% 0.5%

-2.5%

0.8%

0.0%

2.2% 2.5%

-0.7%

1.1%

2.9%

0.9%1.4%

-0.8%

2.8%

1.9%

4.0%4.5%

1.2%


Germany


25


TOTAL GERMANY – SUPER CATEGORIES PERFORMANCE

TOTAL GERMANY – MANUFACTURER PERFORMANCE - FMCG

Private Label could increase shares in all channels except certain Discounter

stores where brand listings are in focus.

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Food Ambient 17.4%

Dairy 12.0%



Confectionery 10.1%

Fresh Food Selfservice 9.2%

Household Care 6.8%

Personal Care 6.8%

Tobacco 6.0%

Frozen Food 5.5%

Pet Food 1.6%

Baby 1.6%

Health Care 1.1%

2.9%

4.5%

9.1%

1.6%

1.5%

2.1%

2.5%

0.5%

1.3%

0.8%

2.3%

1.4%

-0.8%

3.1%


Total FMCG 100.0%

Top 1-5 8.1%

Top 6-10 5.2%

Top 11-30 9.6%

Top 31-100 14.2%

100+ 22.3%

Private Label 40.6%

2.9%

0.5%

1.7%

3.8%

2.3%

3.2%

3.4%

Categories such as Soft Drinks and Ice Cream enjoyed strong Q2 sales due

to the particularly sunny and hot summer.

26


IRELAND SNAPSHOT

Ireland’s impressive economic performance continued in Q2, with GDP up 7% year-

on-year. Inflation remains low and the labour market is in healthy shape with the

5.1% unemployment rate being at its lowest level in more than a decade. Consumer

sentiment is increasingly positive as reflected by the Consumer Confidence Index

gaining five points this quarter to reach 108.

The strong economy and positive consumer sentiment is boosting Ireland’s FMCG

market, which grew 2.6% over the latest 12 months, and gained 3.5% in Q2, the

fourth consecutive quarter of accelerating year-on-year growth. Almost all of the

growth this quarter was due to increased volume sales, which were boosted by

unseasonably warm weather.

Brands are benefiting the most in the current FMCG landscape and are enjoying

faster growth than Private Label across all channels, including discounters. This is a

considerable change from the same period last year and has been driven by many

shoppers having more disposable income and switching from discounters back to

grocery multiples.

It’s no surprise given this backdrop, that performance over the first half of the year

has accelerated. Ireland’s retail sector is buoyant and after a strong first half, the

outlook remains positive for the remainder of the year. It is likely, however, that we

will begin to see some pull back in spend over Q3 and Q4 given the uncertainty

around Brexit and the potential impact for Ireland. While the overall economic

overview remains positive, we may very well see a year of two very different halves.

COUNTRY HIGHLIGHTS





3.9

6.7

13.0

5.4

10.0

7.0

0.4 0.0 0.1 0.5 0.5 0.4

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

100 102 103 103 103108

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU IE

Nadine Hatten

Managing Director

Ireland

27


2.6%

3.0%

2.3%

2.3%

Total FMCG Multiples Convenience Discounters

TOTAL IRELAND – CHANNEL PERFORMANCE

The strong economy and hot weather in May and June led to accelerating

FMCG growth in Q2.

All channels grew but the multiples were the biggest winners at the expense of

discounters.


(weighted average)


47%

34%

19%

*Multiples = Multiples & Dunnes

-0.5%

0.5% 1.2%

0.6%

-2.1%

-0.6% -0.4%

0.6% 0.3% 0.1%

2.0%

2.1%

0.3%

1.5%

2.2%

4.9%

2.4%1.6% 2.6%

3.4%1.5%

2.6%

1.5%2.1%

0.1%

4.3%

2.0%2.2%

2.9%3.5%


Ireland


28


Easing financial pressure on households led to stronger sales in indulgent

categories, such as Confectionery and Alcohol.

TOTAL IRELAND – SUPER CATEGORIES PERFORMANCE

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Confectionery 22.1%

Alcohol 18.2%

Chilled 16.6%

Tobacco/Sundries 13.0%

Ambient 10.2%

Household 5.4%

Bakery 5.1%


Frozen Food 3.2%

Pet Food 1.6%

2.6%

5.0%

3.9%

1.8%

3.7%

-0.7%

0.4%

0.4%

0.1%

1.7%

2.8%

29


ITALY SNAPSHOT With GDP growth of 1.1% in Q2, Italy is the only member of the G7 with a

slowing economy. Also of concern, the country’s unemployment rate rose to

10.9% in June and the Consumer Confidence Index rating dropped four points to

62 and remains well below the European average. Consumer sentiment was

likely affected by the protracted process to form a new coalition government

following the general election in March.

Despite slower FMCG growth this quarter (0.3%) and a slight dip in

consumption, the market remains in relatively good shape. The Q2 year-on-year

result was mainly down due to Easter being in Q1 this year as opposed to Q2 in

2017. Volume growth declined -0.7% but was offset by price-driven increases

boosting unit value, which was up 1%. Food categories, both fresh and frozen,

continued to drive overall FMCG growth.

In terms of channel performance, discounters and drug stores were the best

performing. They are typically offering lower prices than other channels, thus

tapping into consumers increasing demand for price convenience. E-commerce

is gaining traction in the FMCG market and now accounts for 1.7% of total

sales. Home delivery, especially for food, is becoming more popular, particularly

in Northern Italy. The retail supermarket chain ALDI has expanded into northern

regions, recently opening 30 stores, bringing stiffer competition to discounters

and hypermarkets in that part of the country.

Consumer keep their positive focus towards healthy eating and sustainable

grocery shopping. Meanwhile, the major trends that have been driving growth in

the last few years (organic food, healthy dieting, etc.) have slightly slowed down,

even though they are still positive.

COUNTRY HIGHLIGHTS


1.3

1.61.7

1.6

1.4

1.1

1.41.5

1.3

1.1

0.8

1.0

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

58 5865

68 6662

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU IT

Source Economist Intelligence Unit (EIU) OECD for Q2 2018



Roberto Pedretti

Managing Director,

Central & Southern

Europe

30


2.9%

2.1%

3.5%

-1.7%

4.6%

7.8%

Total FMCG Hypermarkets Supermarkets Convenience Discounters Drug Stores

TOTAL ITALY – CHANNEL PERFORMANCE

Overall FMCG growth slowed due to an earlier Easter this year while

price increases boosted value sales.

Drug stores and discounters were the best-performing retail channels as

Italians became more price conscious due to political uncertainty and the

slowing economy.


(weighted average)


27%

38%

12%

18%

5%

1.1%

-1.0% -0.5%

0.7% 0.9%0.6%

1.3%0.7%

1.0%

1.8%

1.4%2.1%

-0.5%

3.1%

2.6% 1.7%2.4%

-0.7%

2.9%

0.3%

1.6%

0.2%

4.0%

3.1% 3.1% 3.1%

0.3%

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

Italy


31


Fresh and Frozen food categories drove FMCG growth even when in a

“savings mood”, Italian shoppers are always keen on a healthy diet and

sustainable grocery shopping.

TOTAL ITALY – SUPER CATEGORIES PERFORMANCE

TOTAL ITALY – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Packaged Food 30.2%

All Fresh 29.0%

Beverages 14.2%

Personal Care 9.9%

Home Care 7.7%

Frozen 5.4%

Pets 2.0%

Light Bazaar 1.3%

Heavy Bazaar 0.2%

Textile 0.1%

2.9%

1.8%

5.7%

3.0%

0.9%

0.1%

3.6%

2.5%

-2.1%

4.7%

-1.3%


Total FMCG 100.0%

Top 1-5 10.0%

Top 6-10 5.7%

Top 11-30 12.0%

Top 31-100 13.7%

100+ 32.0%

Private Label 26.6%

2.9%

1.5%

-1.5%

0.2%

1.8%

4.6%

4.2%

Smaller brands and private labels are enjoying growth as Italian consumers

still demand quality even while becoming more price conscious.

32


8185 87 87 86 87

100 102 101 101 101106

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU NL

ECONOMY WATCH

NETHERLANDS SNAPSHOT

COUNTRY HIGHLIGHTS CONSUMER CONFIDENCE INDEX

2.6

3.3

2.9 3.0 3.12.8

1.3

1.0

1.5 1.41.2

1.6

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



Source Economist Intelligence Unit (EIU) OECD Q2 2018 The Conference Board® Global Consumer Confidence


Economic indicators continue to be bright in the Netherlands, with GDP up 2.8%

for the quarter. Growth has slowed, however, when looking at the previous four

quarters even if it is by a small margin.

Consumer confidence is up five index points to 106, well above the European

average of 87. More than half (55%) of Dutch consumers feel it’s a good time to

buy the products they want (up 7% from Q1), and this is reflected in overall

consumer spending for Q2 reported by Statistics Netherlands (up over 2% vs.

one year prior). Despite a strong job market, consumers' optimism about job

prospects over the next 12 months dropped two points to 55%

The FMCG market saw a nominal value growth of 1.9% in Q2, which was due to

the steady increase in prices (2.6%) while volume sales dropped slightly

(-0.7%). The trends in channel performance remain relatively unchanged from

the first quarter, with Food up 3.0% (driven by price and premium products in

Supermarkets) and Drug & Perfumery up 1.6%. Dairy and Margarine/Butter/Fat

continue to show large gains due to the price hikes for Butter, with Beverages

(2.1%) and Shelf Stable Food (2.8%) also showing good growth.

The top 5 manufacturers showed the weakest growth (1.5%) in our ranking, with

private label (up 4.8%) showing the strongest nominal value growth — driven by

Fresh.

Looking to what’s next, we continue to see great opportunity for growth through

premiumisation in frozen food and fresh – for multinational manufacturers, local

brands, as well as private label which remains an opportunity.

Pedro Lima

Managing Director

Austria, Belgium,

Netherlands,

Switzerland

33


2.8%

3.0%

1.6%

0.5%

Total FMCG Food Drug-Perfumery Petrol

TOTAL NETHERLANDS – CHANNEL PERFORMANCE

Nominal growth drops slightly from Q1 due to a decrease in volume sales, in part

due to the timing of the Easter holiday this year.

The trends in channel performance remain relatively unchanged from the first

quarter, with Food up 3.0% (driven by price and premium products in Supermarkets)


(weighted average)


85%

11%4%

1.4%

3.3%1.0%

1.1% 1.0%2.3%

3.3%3.5% 3.5%

2.6%

-1.5%

-0.6%

-0.6%

0.5%

-1.5%

1.3%

-0.5%

0.3%

-0.8%

-0.7%0.0%

2.8%

0.4%

1.6%

-0.5%

3.6%

2.8%

3.8%

2.6%

1.9%


NetherlandsUnit Value Growth Volume Growth Nominal Value Growth

*Total FMCG includes e-commerce from January 2016

34


TOTAL NETHERLANDS – SUPER CATEGORIES PERFORMANCE

TOTAL NETHERLANDS – MANUFACTURER PERFORMANCE - FMCG

The top 5 manufacturers showed the weakest growth (1.5%) in our ranking,

with private label (up 4.8%) showing the strongest nominal value growth —

driven by fresh.

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Beverages 23.9%

Other Shelf Stable Food 18.1%

Personal Care 13.6%

Confectionery 11.4%

Dairy 11.3%

Tobacco 11.2%

Frozen 5.0%

Home Care 3.5%

Margarine/Butter/Fat 2.0%

2.8%

2.1%

2.8%

1.5%

2.8%

8.1%

0.1%

3.0%

1.9%

6.7%


Total FMCG 100.0%

Top 1-5 15.8%

Top 6-10 6.8%

Top 11-30 14.0%

Top 31-100 16.8%

100+ 27.0%

Private Label 19.7%

2.8%

1.5%

2.7%

1.9%

2.9%

2.5%

4.8%

Butter-related products continue to dominate due to price hikes, but

Beverages (2.1%) and Shelf Stable Food (2.8%) also show good growth.

35


0.8

2.1

3.6

1.6

2.1

1.5

2.6

2.1

1.51.3

2.0

2.4

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



NORWAY SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) OECD Q2 2018



81

85

87 8786

8787

82

90

86

89

92

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU NO

Cecilie Westh

Managing Director

Nordics

Norway’s GDP for Q2 of 1.5% growth will continue a low but consistent economic

backdrop for the country. The Consumer Confidence Index reflected this environment

and increased 3 points to hit 92 points signaling a fairly buoyant consumer mindset.

The value in the grocery market after the second quarter reached 2.0% growth to

reach 1.7 Billion NOK. This is a somewhat weaker development than in the first

quarter, which is due to the fact that Easter this year fell in Q1 while Easter 2017 fell in

Q2. The figures for organic growth show an increase for the total market of 1.1%

compared with last year.

Category performance was mixed with several categories growing while several other

categories experienced a significant decline in value. Frozen food and Beverages in

particular performed well for the quarter and may be attributed to the warm weather

and summer holidays.

Developments in the market are influenced by several factors such as:

• Development in brick and mortar stores: So far this year, the total store numbers

have increased by 10 stores and discount stores have gained 37 new stores.

• Soft discounters now account for 68.2% of turnover in the total market, and they

have strengthened their position at the expense of convenience stores (6.3%) and

supermarkets (25.5%). Both of these retail stores have a decline in the number of

stores, which explains their decline in shares.

• Traditional stores are under increasing pressure from e-commerce, cross border

trade and Dollar stores who offer many of the same products at compelling price

points or offering a wider range.

According to our recent report, “Norske dagligvarekjeder 2018”, we see a low

percentage of Norwegians who have tried shopping for groceries online in the

last 52 weeks, but there is an increase in the number of purchases done online. These

factors contribute to a market that is constantly evolving where all players would be

served well by closely monitoring consumer preferences and reduce risk by preparing

for multiple scenarios in the changing landscape.

36


2.3%

0.0%

1.7%

2.3%

5.0%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes

TOTAL NORWAY – CHANNEL PERFORMANCE

Norway’s consistent economic environment is reflected in the stable

FMCG performance.

Superettes and small supermarkets traded well stemming from growing

demand for convenience and time saving.


(weighted average)


6%

29%

55%

11%

1.3%

1.9%3.1% 2.8%

3.5%

-0.7%

0.8%

1.8% 2.0%1.6%

0.9%

0.4%

-0.6% -0.1%-1.5%

2.3%

0.8%

0.6%

0.9%

0.6%

2.2% 2.3%2.6%

2.8%

2.0%

1.6% 1.6%

2.5%2.8%

2.2%


NorwayUnit Value Growth Volume Growth Nominal Value Growth

37


Frozen food and Beverages have performed well over the summer months.

TOTAL NORWAY – SUPER CATEGORIES PERFORMANCE

TOTAL NORWAY – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

Private label has seen strong growth with increasing retailer focus.


Total FMCG 100.0%

Fresh Food 29.1%

Beverages 15.9%

Packed Food 14.4%

Chilled Wares And Oils 13.0%

Tobacco 7.3%

Frozen Food 6.0%

Chocolate And Confectionery 4.9%

Wash And Housekeeping

Products4.1%

Health And Beauty 3.8%

Other Nonfood Products 1.1%

Pet Food / Pet Articles 0.6%

2.3%

2.5%

4.0%

2.7%

2.1%

1.9%

5.2%

3.6%

-5.2%

-2.5%

-2.5%

0.1%


Total FMCG 100.0%

Top 1-5 24.1%

Top 6-10 10.0%

Top 11-30 19.4%

Top 31-100 15.3%

100+ 3.7%

Private Label 27.5%

2.3%

1.6%

0.9%

2.6%

0.8%

-2.3%

4.6%

38


PORTUGAL SNAPSHOT

COUNTRY HIGHLIGHTS


2.9 3.0

2.4 2.4

2.12.3

1.5 1.6

1.3

1.8

0.91.0

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

7482 85 84

9085

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU PT

Source Economist Intelligence Unit (EIU) OECD Q2 018



Roberto Pedretti

Managing Director,

Central & Southern

Europe

Having entertained various scenarios of economic crisis and austerity measures,

Portugal shows big signs of recovery. The national GDP continues to grow and the

unemployment rate is decreasing with the development and growth of tourism in

Portugal a contributing factor to the country’s economic recovery.

In this context, the FMCG market has also been going through a slow but positive

upswing. In the second quarter of 2018, FMCG grew 1% in volume consumption

and 1.6% in price. In total, the growth in value is 2.7%. Behind these national

figures, there are also changes in the behavior of the Portuguese consumer.

The Consumer Confidence Index shows that consumers in Portugal maintain their

optimism close to the European average (85 points and 87 points respectively),

contrary to the cultural and historical pessimism we have seen until recently.

Portuguese consumers report improvements in their professional and personal

situations, considering that this is a good time to buy what they want or need.

Consumption in Portugal (both inside and outside of the home) reflects this trend.

With more money available, Portuguese consumers are willing to pay higher prices

for products that meet their needs. They seek (and pay more) for innovative, quality,

and healthy products.

In a country where the work/life balance is the primary concern, convenience is a

main trend in both products and store formats. Consumers are looking for products

that make their life easier (such as take away or refrigerated products) and smaller

and nearby stores. In this dynamic and valuable market, the focus of brands and

retailers should be the quality and innovation of products and services, affording

consumers plenty of options to spend on products and services that offer health,

well-being, time saving, simplicity and convenience

39


4.0%

2.5%

4.6%

4.5%

Total FMCG Hypermarkets Supermarkets Superettes+Traditionals

TOTAL PORTUGAL – CHANNEL PERFORMANCE

FMCG growth continues to boosted by price variables as consumers traded up

to higher price tiers.

Due to the growing trend of convenience, smaller formats see strong growth.


(weighted average)


26%

66%

8%

1.5%3.0%

0.4% 0.6%1.2%

2.4%2.8%

3.8%

3.0% 1.6%

2.1%

1.1%

2.7%

3.4%0.3%

3.7% 0.2%2.9%

1.1%

1.0%

3.6%4.0%

3.1%

4.0%

1.6%

6.1%

3.0%

6.7%

4.1%

2.7%


Portugal


40


TOTAL PORTUGAL – SUPER CATEGORIES PERFORMANCE

TOTAL PORTUGAL – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Grocer Products 38.6%


Personal Care 11.1%

Alcohol Drinks 10.7%

Household Care 8.0%

Frozen Products 6.8%

Non Alcohol Drinks 6.8%

4.0%

4.9%

3.2%

2.3%

4.5%

2.4%

4.3%

5.1%


Total FMCG 100.0%

Top 1-5 16.7%

Top 6-10 7.9%

Top 11-30 15.2%

Top 31-100 13.0%

100+ 15.4%

Private Label 31.8%

4.0%

2.4%

-1.3%

6.0%

5.2%

6.3%

3.8%

The recent sugar tax continues to drive Non Alcoholic Drinks growth in value,

along with mineral water’s dynamism.

Private Label continued to grow in Q2 following retailer investment and

innovation.

41


SPAIN SNAPSHOT Spain’s economy slowed in Q2, with GDP gaining 2.7% year-on-year, slightly down from

the 3% plus growth achieved in each of the previous five quarters.

Domestic consumption continued to be the major driver of economic growth while

exports have weakened. The rate of unemployment has continued to decline, but

private consumption is soft. The Consumer Confidence Index remained stable at 92

points, above the European average, with Spanish consumers generally positive about

the economic outlook and their future job prospects.

Spain’s FMCG market gained 3.1% in total value this quarter, largely driven by price

increases that saw unit value gain 4%. The price hikes were most noticeable for

important categories such as Frozen Fish, Soft Drinks and Wine. Several factors

contributed to the unit value gain, including a general increase in raw material costs,

less promotional pressure and consumers leaning toward more premium segments.

Meanwhile, volume sales contracted, possibly due to less favourable weather

conditions compared to the same period last year. This particularly impacted demand

for Beverages and Frozen categories.

The convenience trend is certainly apparent in Spain’s FMCG market. Ready-to-eat

meals are increasingly popular with busy consumers and strong sales in that space is

boosting growth for some companies. Also digitalisation is changing the shopper

journey and expectations. This is providing big opportunities for brand owners and

retailers to personalise their products and experiences to meet evolving consumer

demand.

Looking ahead, Spain’s new prime minister, Pedro Sánchez, presented his

government’s economic plan to congress on 17 July. The plan proposes a tax rise for

corporations and a slower deficit reduction pace so that public spending can be

boosted. The economy is expected to lose some steam this year on the heels of weaker

domestic demand. Gathering economic headwinds also point to a softening of tourist

numbers after the boom of recent years.

COUNTRY HIGHLIGHTS


3.0 3.1 3.1 3.1 3.02.72.8

1.9 1.9

1.6

0.9

1.8

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



81

8587 87

868786

91 91

93

91 92

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU ES

Source Economist Intelligence Unit (EIU) OECD GDP Q2 2018



ECONOMY WATCH

Roberto Pedretti

Managing Director,

Central & Southern

Europe

42


4.0%

-0.3%

4.9%

3.2%

Total FMCG Hypermarkets Supermarkets Drug Stores

TOTAL SPAIN – CHANNEL PERFORMANCE

FMCG growth momentum continued, but was mainly driven by price inflation.

Supermarkets are driving growth, especially larger formats.


(weighted average)


15%

80%

5%

1.3%

3.0%

0.7% 0.2% 0.6%1.1%

1.9% 1.9% 2.3%

4.0%

2.1%

1.0%

3.0% 3.4%

1.8%

2.6%

2.4% 3.5%

0.9%

-0.8%

3.4%

4.0% 3.8% 3.6%

2.4%

3.7%

4.3%

5.3%

3.2% 3.1%


Spain


43


The bad weather this quarter lead to soft sales in Frozen and Beverage

categories, especially for ice-cream, soft drinks, and beer products

TOTAL SPAIN – SUPER CATEGORIES PERFORMANCE

TOTAL SPAIN – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Packaged food 25.5%

Drinks 15.2%


Household 8.4%

Cooked meats 8.2%

Canned food 6.4%

Frozen 5.5%

Dairy 5.3%

Milk & shakes 4.9%

Cheese 4.5%

Ready meal 4.1%

4.0%

5.2%

3.2%

2.5%

2.2%

5.2%

4.1%

4.0%

2.1%

1.4%

5.1%

10.6%


Total FMCG 100.0%

Top 1-5 10.6%

Top 6-10 5.3%

Top 11-30 11.7%

Top 31-100 9.9%

100+ 21.2%

Private Label 41.4%

4.0%

-1.5%

-0.6%

1.1%

2.0%

7.7%

5.4%

Private Label performed well but smaller manufacturers are the major

drivers of growth.

44


SWEDEN SNAPSHOT

Sweden’s economy continued to expand at a healthy rate, with GDP up 3.3% in Q2.

Low interest and commercial lending rates helped drive strong private consumption,

which in turn is benefiting the retail market.

Consumers remain positive with the Consumer Confidence Index rating stable at 99

points, which is considerably higher than the European average. While terrorism has

been the major concern over the few last years, this quarter crime became the top

concern, followed by health and then terrorism. This is likely due to crime being a

political topic that has gained extensive media coverage in the lead up to this year’s

general election.

FMCG market growth remained robust in Q2, with total value up 3.1%. Price

increases contributed to value growth of 1.6%, while the Easter season and an early

start to the summer boosted volume growth, which gained 1.5%.

Hypermarkets and discounter formats led channel growth, although this was mainly

due to price inflation. All categories except Household Products grew, with the

strongest growth recorded in Dairy while the warm summer boosted sales in

Beverages and Frozen Food (especially ice-cream products). Price is top of mind

for Swedish consumers and private label — both traditional and organic — has

gained 5.2% growth in the year to Q2 2018 and continues to bolster the FMCG

market. Today’s Swedish shopper is more conscious than ever about product health

attributes as well as price changes and this is providing challenges to

manufacturers. Local assortment as well as e-tailers are challenging retailers.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q2 2018 OECD



2.0

2.6 2.7

2.9

3.3 3.3

1.5

1.8

2.2

1.8 1.71.9

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

95 9498 97 99 99

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU SE

Cecilie Westh

Managing Director

Nordics

45


3.2%

4.8%

2.4%

1.4%

1.1%

5.8%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes Discounters

TOTAL SWEDEN – CHANNEL PERFORMANCE

Volume and value equally contributed to overall FMCG growth of 3.1%.

Hypermarkets and discounters lead channel growth in Q2, mainly due to

price inflation.


(weighted average)


37%

31%

20%

6%

6%

0.6%

2.9%

-0.6% 0.1%

0.7% 1.8%

3.0%3.3%

2.6%1.6%

1.0%

0.3%

3.6%

1.1%

-1.2%

1.6%

-0.4%

0.7%

0.6%1.5%

1.6%

3.2% 3.1%

1.1%

-0.4%

3.4%

2.6%

4.0%

3.2% 3.1%



46


Higher prices drove growth in Dairy while the warm and early summer

boosted sales for Frozen Food and Beverages categories.

TOTAL SWEDEN – SUPER CATEGORIES PERFORMANCE

TOTAL SWEDEN – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

Smaller manufacturers and retailers focusing on private label are leading

growth.


Total FMCG 100.0%

Packaged Food 24.5%

Fresh Food 20.7%


Beverages 10.2%

Frozen Food 9.0%


Health And Beauty 5.0%

Confectionery 3.8%

3.2%

2.2%

2.7%

5.9%

4.9%

5.8%

-2.0%

0.5%

2.1%


Total FMCG 100.0%

Top 1-5 14.9%

Top 6-10 6.9%

Top 11-30 15.6%

Top 31-100 20.5%

100+ 16.9%

Private Label 25.3%

3.2%

2.1%

2.8%

1.8%

3.6%

2.2%

5.2%

47


SWITZERLAND SNAPSHOT

Switzerland is experiencing an increasingly broad-based economic upswing. GDP

was up 2.5% year-on-year in Q2, the highest growth rate in a few years. Meanwhile,

the unemployment rate has dropped to its lowest level since September 2008,

before the global financial crisis. Swiss consumer sentiment remains positive and at

99 points on the Consumer Confidence Index, is well above the European average.

Although Switzerland enjoys a comfortable economic situation currently, certain

global economic risks still persist. Therefore, the majority of Swiss consumers

believe that the economy may have peaked.

Reflecting the positive macroeconomic conditions, the Swiss FMCG market

continues its moderate growth and has gained 0.5% total value over the latest 12

months. The market grew 0.6% Q2, with unit value increasing 1.3%, largely due to

price rises in food categories, while volume contracted -1.2%. Premiumisation,

good weather conditions and the FIFA World Cup 2018 contributed to growth. Non

food categories remain under pressure due to a rise in cross-border shopping as

well as growing discounter formats keeping price pressures high. Department stores

are losing market share to discounters as a result.

Swiss consumers are increasingly demanding sustainably sourced, natural and

regional products. These trends first emerged in food categories and are now

emerging in beauty categories too. Meanwhile, convenience and digitalisation are

other major trends shaping the FMCG landscape. Convenient shopping and

convenient products are now essential considerations for today’s consumer.

Although e-commerce in Swiss FMCG is still very small at 2% of the market, it is a

key growth area with emerging opportunities for manufacturers and retailers. Small

companies in particular are benefiting from these trends and it is their innovations

that are shaping the FMCG environment.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) GDP Q2 2018 estimate



0.50.7

1.2

2.0

2.42.5

0.5 0.4 0.5

0.80.7

1.0

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

10298 97 99

10499

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU CH

Pedro Lima

Managing Director

Austria, Belgium,

Netherlands,

Switzerland

48


0.5%

-0.1%

0.3%

2.1%

0.6%

-3.5%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Supermarkets Department Store

TOTAL SWITZERLAND – CHANNEL PERFORMANCE

Food categories are the driving force behind nominal value growth. Premiumisation,

good weather conditions in the summer and the World Cup 2018 have impacted the

development positively.

Supermarkets are superseding hypermarkets as small formats such as convenience

stores and discounters grow quickly at the expense of department stores.


(weighted average)


25%

33%

24%

13%

4%

1.0%1.0% 1.3%

1.0%0.5%

0.5%

-0.1%

0.5%

1.1% 1.8%

-0.4%-0.5%

-0.7%

0.3%

-2.8%

1.9%

-0.5%

0.8%

-0.6%-1.2%

0.5% 0.5% 0.6%

1.4%

-2.3%

2.4%

-0.6%

1.3%

0.5% 0.6%


SwitzerlandUnit Value Growth Volume Growth Nominal Value Growth

49


Most Food categories are showing robust growth while Non Food categories

struggle due to cross border shopping and price competition.

TOTAL SWITZERLAND – SUPER CATEGORIES PERFORMANCE

TOTAL SWITZERLAND – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

Small manufacturers (100+) are shaping the industry and driving FMCG

growth by nimbly adapting to consumer trends and market challenges.


Total FMCG 100.0%

Culinary Shelf-Stable & Other 18.7%

Butchery 16.4%

Dairy 13.4%

Fruits And Vegetables 12.5%


Confectionery 7.3%

Bakery 6.6%

Homecare/Pet Care 5.4%

Cosmetics 5.1%


Sanitary 2.2%

0.5%

2.0%

-0.7%

1.5%

0.2%

1.9%

0.5%

0.0%

-0.2%

-1.7%

0.2%

-1.3%


Total FMCG 100.0%

Top 1-5 5.3%

Top 6-10 3.2%

Top 11-30 7.0%

Top 31-100 8.1%

100+ 76.4%

0.5%

-0.3%

0.3%

0.3%

0.1%

0.7%

50


UNITED KINGDOM SNAPSHOT

COUNTRY HIGHLIGHTS


1.8 1.81.7

1.31.2

1.3

2.2

2.6 2.7 2.8

2.42.3

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

102 99 99 96 96101

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU GB

Source Economist Intelligence Unit (EIU) OECD GDP Q2 2018

The UK economy remains strong despite a GDP slow down at the start of the year

and, after 12 months of consumer price inflation, FMCG growth has now fallen

back from the levels in Q1. The uncertainty surrounding Brexit, and the continued

rise of energy and fuel costs, have not yet impacted retail spend. When it comes

to UK shopping habits, consumers remain confident but cautious; they’re willing to

economize but not compromise, with many safeguarding grocery spend altogether

as they look to make savings on other discretionary spend such as out of home

consumption, clothing or entertainment.

Although this year got off to a slow start, FMCG volume growth in Q2 remains

positive and accelerated towards the end of the quarter as we entered what turned

out to be an unusually hot summer. In line with the slow start to the

quarter, sales value growth fell back slightly to 1.9% in Q2, from 3% in the

previous quarter, driven in part by the early timing of the Easter holiday and the

peak in inflation. However, this is still an improvement over the same time last

year and as we ended the quarter, volume growth was on the rise with hot

weather hitting the UK at the end of May.

While there is still pressure on the consumer wallet, we continue to see shoppers

spend freely on indulgences, celebrations and events. Shoppers are maintaining

their grocery spend and opting instead to make savings on the overall household

expenditure. The momentum we’ve seen in the first half of the year looks set

to continue for the second half, and we anticipate that FMCG growth to improve

and sit close to 3%, with volume growth remaining positive for the remainder of the

year. This is in marked contrast to the fall in volumes at the end of 2017.



Paul Walker

Managing Director

United Kingdom & Ireland

51


The UK saw a slight decline in value and volume during Q2.


(weighted average)

TOTAL UK– CHANNEL PERFORMANCE


0.4%

2.0%

-1.6%

-0.4%

0.5%

3.2%

2.9%

1.8% 2.0%

1.3%

1.1%

0.5%2.4%

1.8%

-0.3%

0.4%

-0.9%

0.9% 1.0%

0.6%1.5%

2.5%

0.8%

1.4%

0.1%

3.7%

2.1%

2.8%3.0%

1.9%


UK


52


TOTAL UK – SUPER CATEGORIES PERFORMANCE

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Fresh Food 35.5%

Impulse 11.3%

Beer, Wine & Spirits 11.3%

Non Food 8.7%

Tobacco 8.2%

Ambient Grocery 8.1%

Health Beauty Toiletries & Baby 7.8%

Household & Pet 5.4%

Frozen 3.8%

2.5%

3.5%

3.5%

4.5%

-1.7%

-0.9%

3.4%

0.2%

1.7%

5.4%

Beer, Wine and Spirits, and Soft drinks are the UK’s fastest growing categories due

in part to warm weather.

TOTAL UK – MANUFACTURER PERFORMANCE - FMCG


53


THE BIG PICTURE: EUROPE EAST/CENTRAL

Daniel Chorbadjian

Managing Director

Eastern Europe

Roberto Pedretti

Managing Director,

Central & Southern

Europe

Over the last few years the word "convenience" has been seen more regularly in many of

the European market commentaries. Often it has been used to explain why certain

channels or categories are growing and reflects a consumer need that has been around

for some time but it is apparent that it is gaining momentum and evolving.

Recently we held a webinar on the topic “The Quest for Convenience” that explored why

consumers are looking for convenience in everything they do and how a blend of format,

services and technology innovation will present challenges and opportunities in the

FMCG space moving forward. In a session attended by European, Middle East and

African attendees we conducted a live poll asking the audience:

Thinking about your own lives, which of the following challenges are becoming

more concerning for you? The options that were most supported were:

• Reduce working hours/ work life balance 56%

• Ways and time to focus on healthy lifestyle 53%

• Overall busyness - "too much to do" 48%

• Meal preparation 43%

• Traffic congestion 42%

Although these responses from nearly 500 attendees would be skewed (most attendees

work for big FMCG companies and are not your average consumer) it clearly paints a

picture of people feeling the pressure of their busy lifestyles. When we asked them

"What solutions do you think consumers will increasingly leverage to deliver

convenience in their lives over the next 2-3 years?", the top responses were:

• Home delivery - Products and services 78%

• Grab and Go / Prepared products for instant consumption 62%

• E-commerce and logistics 46%

• Proximity retailing - Close to work/home 44%

• Personalised communications and offers 43%

The sentiment from our poll supports the notion that we will have to continue to change

the way we interact with consumers to meet their needs. We will have to "fit in" with their

increasingly busy lives and know more than ever about what they want and how they

want it. Convenience will be a big part of this. In Eastern and central Europe we continue

to see positive signs of confidence and growth but as we have noted previously, market

and consumer optimism in Eastern and Central Europe is often accompanied by a

healthy dose of caution.

Growth will not come consistently across channels or categories but will be aligned with

changing consumer lifestyles and needs. The challenge is that the same consumer who

on one occasion is willing to pay more for a product that saves them time will next time

look for a value solution and then go to a specialty store for a different purchase to meet

specific needs. It is critical therefore to stay tuned to consumers’ changing sentiment and

preferences and adapt as needed. Convenience is one consideration that should be

influencing strategies and offerings from FMCG players. Health and wellness is another,

value offerings, seasonal products, local and organic, sustainable and ageing are other

themes that continue to surface across our markets and companies should be starting to

look at how they can use these as platforms for future business strategies, if they aren’t

already.


54


GDP

(annual %

growth)

Inflation Q2 2018Q2 2018 vs

Q1 2018

3.9 4.5 BELARUS 67 7

3.7 3.3 ESTONIA 88 7

2.0 0.7 GREECE 67 6

3.8 1.9 SLOVENIA 87 6

4.3 2.6 BULGARIA 85 4

3.6 11.6 UKRAINE 62 4

3.5 2.8 SLOVAKIA 93 3

4.1 6.2 KAZAKHSTAN 84 3

1.7 2.4 RUSSIA 70 2

4.5 2.7 HUNGARY 80 2

5.0 1.8 POLAND 105 2

2.9 1.9 CROATIA 79 2

3.7 2.6 LITHUANIALITHUANIA 78 1

4.4 1.7 SERBIA 75 1

4.2 5.4 ROMANIAROMANIA 92 1

2.9 2.3 CZECH REP.CZECH REP. 108 0

GDP and Inflation reflect % change per annum to Q2 2018 /latest available data

Source: Economist Intelligence Unit (EIU)/local government sources


EUROPE CENTRAL & EAST

MARKETS AT A GLANCE

ECONOMIC PULSE OF CONSUMERS

AROUND EUROPE

The Conference Board® Global Consumer Confidence Survey is conducted in

collaboration with Nielsen measures perceptions of local job prospects,

personal finances and immediate spending intentions. Consumer confidence

levels above and below a baseline of 100 indicate degrees of optimism and

pessimism, respectively

A mixture of regional tensions and improving economic conditions have

been the main reasons for Consumer Confidence Index movement



Q2 2018Q2 2018 vs

Q1 2018

GDP

(annual %

growth)

Inflation

LATVIA 80 -6 4.2 2.4

TURKEY 88 -1 5.3 12.8

55


2024 23 26 28

22 2127

21

31 31 2835

26 2731

35

3

1820

12

27

6

2529

15 1712 9

20

10

2015 17

8 11

60

21

0

10

20

30

40

50

60

70

EU BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

Health The economy

Putting money into savings is a leading response, highlighting a cautious mindset

across Europe, followed by spending on holidays and clothes.

WHAT ARE THE TOP 2 CONCERNS IN THE NEXT SIX MONTHS?

WHO’S SPENDING, SAVING AND INVESTING?

Type of concern

After living expenses, how is spare money spent


EUROPE CENTRAL & EAST

MARKETS AT A GLANCE


CONSUMER SENTIMENTS IN

EUROPE


4030

28

43

35 34 34 33

20

35

21

58

35

2632

39 45

54

28

39 37

23

37 41

28 26 2721

38 3841

35

26 2931 34

50

3339 36

3234

23

2737

19

37

20

28

47

39

25

40

19

29

54

35

0

10

20

30

40

50

60

70


Putting into savings Holidays / vacations New clothes


Putting into savings 0 -1 1 5 -1 5 0 4 -3 -5 0 4 -4 -1 3 1 0 6 1

Hol idays / vacations 2 5 6 7 8 3 2 5 3 2 5 3 5 1 2 2 2 10 12

New clothes 2 6 8 8 4 2 5 4 3 -3 2 0 2 1 3 3 4 6 4


Health 1 -4 -4 -1 -6 0 -1 -1 1 2 -2 3 8 -1 3 -1 -2 -3 -4

The economy 2 1 4 1 3 2 0 -2 -4 -3 6 -3 -3 -2 1 -2 4 23 0

56


3.4% 4.4%

3.8%3.8% 0.2%

1.5%4.3%

5.4%

1.6%2.2%

1.7%

4.4%2.9% 1.8%

2.8%3.7%

13.7%

10.1%3.8%

8.3%

-2.9%

-1.1%

1.5%

-1.0%

3.5%

-5.6%

1.5%2.6%

1.7%

5.3% 0.7%

5.0%

-1.8%-4.1%

2.9% 10.2%

7.2%

12.7%

0.9%2.8%

1.6%0.5%

7.8%

-0.2%

3.1%4.8%

3.4%

9.7%

3.6%

6.8%

1.0%-0.4%

16.6%

20.4%

BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

Unit value change Volume change Nominal growth

LOOKING THROUGH EUROPE CENTRAL & EAST

FMCG LENS

FAST MOVING CONSUMER GOODS MARKET DYNAMICS – Q2 2018

EUROPE EAST & CENTRAL – 18 countries

WHERE ARE THE FMCG GROWTH OPPORTUNITIES?

Average volume growth Q1 2018 & Q2 2018

Colour coding indicates growth or declining trend compared to same 6 month period year ago.

Average volume growth of Q1’18 & Q2’18 vs Q1’17 & Q2’17.

Avg. volume growth decreasing versus last period

Avg. volume growth increasing versus last period

RUSSIA (+3.7%)

CZECH REP. (-1%)

ESTONIA (-1.4%)LATVIA (+2.2%)LITHUANIA (-0.3%)

UKRAINE (+10.6%)

ROMANIA (+4.4%)

BULGARIA (+4.6%)

TURKEY (+2.8%)

GREECE (+3.3%)

POLAND (+3.3%)

SLOVAKIA (-2.9%)

HUNGARY (+3.9%)

BELARUS (+7.1%) KAZAKHSTAN (-2.9%)

*BL = Belarus

BG BL CZ EE GR HR HU KZ LT LV PL RO RS RU SI SK TR UA

SERBIA (+0.1%)CROATIA (0%)SLOVENIA (-0.2%)

57


BELARUS SNAPSHOT

COUNTRY HIGHLIGHTS


0.41.7

2.9

4.3

5.1

3.9

7.6

6.3

5.44.9 4.9

4.5

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



81 8187 87 86 87

55 55

63 60 6067

Q3 2016 Q4 2016 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU BL

Source: GDP and Inflation; & National Statistics Committee of Belarus

Vaios Dimoragas

Managing Director

Ukraine and Belarus



The GDP of Belarus in the second quarter of 2018 grew by 4.5% while the

government is confident that GDP will remain stable and level off at 3.5% by the

end of the year. Belarus is currently favoured by external conditions - the prices

for oil and the demand for Belarusian machinery products is gradually

increasing. In addition, in May, we saw incomes growing and prices falling with

the Eurasian Development Bank improving the forecast for inflation down to

5.1%. Experts believe that higher growth rates will be supported by continued

consumer activity amid rising incomes and expanding lending. External demand

is supported by a steady growth in the economies of the main trading partners

and rather favourable external conditions.

The improved macro-economic conditions were reflected in consumer

confidence with Belarus reaching the highest Consumer Confidence Index since

2016. In addition, according to Nielsen RMS data the consumption recovery

pace has accelerated in the first half of 2018 driven by new launches and a

wide variety of promotional offers along with the solid performance of private

labels. Total FMCG growth was healthy in Q2 and undoubtedly the good

weather was favourable to the strong growth of Beverage, Beers and Snacks.

Favourable results were shared however with all super categories and all retail

channels recording positive numbers.

In this context, capturing the momentum is important; however focusing merely

on winning market share could shadow the opportunity of category expansion.

Retailers and manufacturers should balance their efforts between short term

tactics (such as promotions) and longer term strategies (such as improving and

sustaining their brand equity and growing category penetration). They should

allocate resources effectively between the two and monitor their progress on

both pillars, to make the best out of friendlier business conditions. Consumers’

lifestyles and prospects are changing in Belarus and there are opportunities to

anticipate as to how this will flow into consumption choices.

58


10.7%

9.5%

15.2%

2.7%

20.9%

5.7%

Total FMCG Hyper/Supermarket (Food Categories) Groceries Modern Trade (Food Categories)

Groceries Traditional Trade (Food Cat) Kiosks + Other Markets (Food Categories) Drug Categories

TOTAL BELARUS – CHANNEL PERFORMANCE

Outstanding growth of Private Label is coming from Beer, Milk, Carbonated Soft

Drinks, Coffee and Mineral Water. The price index of Private label tends to be

lower than average category price.


(weighted average)

VALUE CONTRIBUTION AND GROWTH – YTD Q2-2018

54%

29%

5%3%

8%

The FMCG market continued its recovery with positive sales volume during the last

12 months as the improving economy led to the increased consumer demand.

3.7%2.6%

4.4%

7.0%

6.1%

8.3%

10.7%

8.6%

12.7%

YTD TY Q1 18 Q2 18

Belarus

Unit Value Growth Volume Growth

59


TOTAL BELARUS – SUPER CATEGORIES PERFORMANCE

TOTAL BELARUS – MANUFACTURER PERFORMANCE - FMCG

Coffee and chocolate increase their sales in Kiosks and Other Markets while

other categories shrink in this Traditional channel. Drug market growth is

driven by Laundry Detergents, Baby diapers and Shampoos

YTD Q2-2018 YTD Q2-2018

YTD Q2-2018 YTD Q2-2018


Total FMCG 100.0%

Beer 23.1%

Beverages 20.5%

Dairy 16.7%

Chocolate 11.4%

Coffee 9.2%

Personal Care 5.8%

Snacks 5.1%

Candies 4.6%

Home Care 2.1%

Grocery 1.5%

10.7%

7.9%

20.3%

9.8%

8.2%

8.1%

7.1%

13.1%

7.6%

2.0%

9.1%


Total FMCG 100.0%

Top 1-5 28.4%

Top 6-10 12.9%

Top 11-30 27.4%

Top 31-100 19.1%

100+ 6.2%

Private Label 6.1%

10.7%

13.0%

11.0%

5.5%

11.8%

1.5%

35.4%

Beverages grew both in volume and value supported by new launches and

private label. Snacks growth driven by the new launches and price decrease of

top products especially in chips.

60


COUNTRY HIGHLIGHTS

3.63.9 3.8

3.0

3.5

4.3

1.7

2.3

1.6

2.7

2.0

2.6

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



BULGARIA SNAPSHOT Bulgaria’s economy continued its impressive momentum in Q2 with GDP

accelerating to 4.3% year-on-year, its best quarterly gain this decade. Growth was

driven by higher industrial output, stronger consumer spending, and an increase in

European Union investment projects. Meanwhile, the unemployment rate dropped to

5.5% - its lowest level in more than eight years. However, higher food prices, along

with fuel and hotel price increases, are gradually pushing inflation toward the 3%

mark.

The Consumer Confidence Index bounced back from last quarter’s dip to reach 85,

and now sits just two points below the European average. Although Bulgarian

shoppers are benefiting from an increase in their disposable income, they are being

moderately cautious with their retail spend due to the higher food prices.

The FMCG market maintained its robust growth trajectory in Q2, gaining 3.4% in unit

value and 3.8% in volume. The longer term trend is also impressive, with value sales

up 8.4% for the year to Q2. All super categories grew by more than 6% over the

latest 12 months, with growth leaders being Chilled Products (especially packed

meat products) and Salty Snacks. Both of these categories enjoyed double-digit

growth, with sales boosted by the summer barbeque season and the month-long

FIFA World Cup.

All FMCG channels gained at least 7% this quarter, with drug stores and extra

large/large supermarkets leading the way. Despite long-term pressure from

organised trade formats, traditional trade grocery stores maintained great growth

momentum, up 7.4% in value this quarter due to strong Dairy and Snacks sales.

Looking ahead, the economic outlook remains positive, with GDP growth of at least

3% expected, although rising inflation is a slight concern. On the retail front, we

expect leading players will focus on store enhancement rather than expansion to

meet evolving consumer needs. Every year one of the key demands for Bulgarian

shoppers (according to the Nielsen Shopper Trends survey) is “everything I need in

one shop”. Retailers who tailor their offering to meet this growing consumer demand,

will set themselves up well for future growth.


Source EIU & National Statistical Institute (NSI)

Svyatoslava Svyst

Managing Director

Bulgaria / RV Leader

Eastern Europe



81

8587 87

8687

75

85

8889

81

85

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU BG

61


8.4%

8.4%

8.9%

9.0%

7.4%

10.7%

Total FMCG Supermarkets/Hypermarkets Extra Large Food Stores

Large Food Stores Traditional Trade Drug Stores

TOTAL BULGARIA – CHANNEL PERFORMANCE

Bulgaria’s strong economy helped the FMCG market maintain solid growth

this quarter, although food price increases are a concern.

Traditional Trade has enjoyed above average growth due to strong sales in

Salty Snacks and Dairy categories.


(weighted average)


41%

13%

19%

24%

4%

1.6%

3.4%

1.8% 1.6% 0.7%

1.9%3.1% 3.3%

3.4%3.4%

2.3%

5.0%

0.4%

2.0% 3.3%

4.0%

4.7%6.2% 5.5%

3.8%

3.9%

8.4%

2.2%

3.6%4.1%

5.9%

7.8%

9.5%8.9%

7.2%


BulgariaUnit Value Growth Volume Growth Nominal Value Growth

62


Alcoholic drinks, Chilled Products, Salty Snacks and Non-Alcoholic Beverages

grew in Q2, boosted by the warm summer and the FIFA World Cup.

TOTAL BULGARIA – SUPER CATEGORIES PERFORMANCE

TOTAL BULGARIA – MANUFACTURER PERFORMANCE - FMCG

A historical over-reliance on promotions has weakened long-term growth for

Private Label manufacturers.


Total FMCG 100.0%

Top 1-5 17.1%

Top 6-10 10.9%

Top 11-30 20.5%

Top 31-100 23.1%

100+ 25.5%

Private Label 3.0%

8.4%

10.0%

4.9%

9.6%

12.7%

4.9%

3.9%

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Chilled Products 25.5%


Confectionery 14.9%


Personal Care 7.2%

Household 7.0%

Salty Snacks 5.2%

Hot Beverages 4.3%

Shelf Stable Food 3.0%

Baby Categories 1.3%

Petfood 1.2%

8.4%

10.0%

7.7%

6.9%

8.0%

6.3%

7.2%

12.6%

8.2%

6.3%

6.6%

19.2%

MAT Q2-2018 MAT Q2-2018

63


CROATIA SNAPSHOT

COUNTRY HIGHLIGHTS CONSUMER CONFIDENCE INDEX ECONOMY WATCH

Source: DZS – Croatian Bureau of Statistics.

8185 87 87 86 87

69 7074 73

77 79

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU HR

2.63.0

3.3

2.0

2.5

2.9

-0.4

0.1

-0.5

0.8 0.5

1.9

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018





Economic growth is continuing at an encouraging pace with GDP up 2.9% in Q2

2018. Healthy household expenditure contributed to GDP while a bounce back in exports

of goods and services from the previous quarter was a highlight in numbers released by

Croatia’s statistical office.

The unemployment rate is declining, job prospects are considered to be improving which

is positively influencing consumers’ confidence driving Croatia to its highest ever result of

79 in Q2 2018. Warm weather in the pre-summer season and exciting expectations for the

June World Football Championship has undeniably contributed to this positive attitude.

This positive sentiment however, has not translated to the FMCG industry with a 0.5%

nominal growth for Q2 although this result is skewed by the timing of Easter trading

compared to the previous year. Compared to previous years, consumers are shifting their

monthly budgets from groceries to Non Food sectors, especially electronics, household

appliances and apparel. Decreasing housing credit interests (although 2pp higher than in

Eurozone), are positively affecting the housing costs but consumers are not shifting their

spare money into retail spending.

Favourable weather conditions have boosted sales of Beverages and Ice cream while

basic categories such as Meat, Milk, and Coffee are still suffering from volume

deterioration due to relentless inflation. Such ambience is ideal for Private Label

development which retailers have obviously benefited from, developing all levels of their

private label portfolio, from the economy to premium segment.

Croatian consumers prefer to spend spare cash on new clothes and household items

rather than spending more on groceries. The question in such an environment is: where

are the opportunities for FMCG producers and retailers? A very simple answer emerges:

Stay focused on consumers’ needs and evolve as they do. From the channel perspective,

discounters have found the best response to consumers’ needs, growing at double-digits

of 12.4% vs. last year by developing their value-for-money exclusive brands,

implementing specific theme-based promotions and complementing assortment with

apparel, with women and children’s fashion in the spotlight driving foot traffic and

undoubtedly sales in other areas of the store.

Miroslav Tasic

Group Managing

Director Adriatic

Region

64


1.8%

1.9%

0.8%

-0.5%

-1.7%

12.4%

Total FMCG Hypermarkets Supermarkets

Traditional trade** Kiosks/Tobacconists Discounters

TOTAL CROATIA – CHANNEL PERFORMANCE

Zero-sum game volume wise for the first half of the year. Inflation driving the

value growth.

Discounters outpacing rest of the market with shoppers turning to discounter’s

exclusive brands but also broadened assortment of branded products


(weighted average)

VALUE CONTRIBUTION AND GROWTH – MAT Q2 2018

19%

33%

35%

1%12%

**Drugstore channel is included in Large groceries (part of Traditional Trade)

. .

FMCG excludes Tobacco/Cigarettes

* Universe update – limited backdata available

1.9%2.4%

2.5%

3.1%

1.5%

0.0%

1.5%

-0.2% -0.3%

1.9%

0.1%

0.3%

1.1%

-1.0%

1.8%2.1%

4.4%

3.2%

1.8%

1.1%

0.5%

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

Croatia


65


Favourable weather conditions contributed to strong growth of Non-Alcoholic

drinks, Beer and Ice-cream while growth in Snacks is driven by consumers’

demand and promotions during the World cup.

TOTAL CROATIA – SUPER CATEGORIES PERFORMANCE

TOTAL CROATIA – MANUFACTURER PERFORMANCE - FMCG

Private Labels, especially with Discounters’ exclusive brands are the

biggest generator of FMCG growth as well as Beer producers.


Total FMCG 100.0%

Beverages 26.8%

Meat and Meat Products 16.6%


Confectionery 10.6%

Personal Care 9.7%

Packed Food 8.5%

Household Care 4.4%

Frozen Food 4.4%

Salted Snacks 2.9%

Baby Food 0.8%

1.8%

5.4%

-0.5%

4.0%

-1.9%

-3.1%

0.8%

-2.5%

7.6%

4.0%

-3.5%


Total FMCG 100.0%

Top 1-5 20.4%

Top 6-10 12.4%

Top 11-30 21.9%

Top 31-100 15.2%

100+ 11.5%

Private Label 18.7%

1.8%

-0.3%

6.6%

-1.0%

0.2%

-1.7%

8.1%

MAT Q2 2018 MAT Q2 2018

FMCG: excluding Tobacco

.

MAT Q2 2018 MAT Q2 2018

66


8185 87 87 86 87

103 101 101 104108 108

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU CZ

CZECH REPUBLIC SNAPSHOT The Czech Republic’s Q2 GDP estimate of 2.9% growth shows a small slowdown

in a string of impressive quarterly reports that has done nothing to dampen

economic outlook or consumer confidence.

Czech consumers are still the second most optimistic in Europe after the Danish

with unemployment reaching record low levels (June 2.9%) leading to very high job

prospects and a readiness to spend. In Q2 over 50% of Czech consumers said that

this was a good time to make purchases. The low unemployment creates pressure

on wage growth however and retailers and manufacturers are reflecting this in price

expansion as inflation climbed to a 2.3% increase. The growing price of food is the

second biggest concern and as a result, 34% of Czech shoppers are now

considering switching to cheaper grocery brands.

Q2 2018 was especially influenced by very hot weather. We have seen record

turnover of Beer with year-on-year growth at 7.3% and this seems set to continue

past Q2 with record July sales of 70.5 million liters just in Off Trade. These high

temperatures also supported the growth of Frozen food up 20% vs. Q2´17 and Non

Alcoholic Beverages up 8% vs. Q2´17.

Overall however, FMCG growth slowed to 0.9% (from 4.6% in Q1) driven by a

strong volume decline of -2.9%. This volume drop is more significant for Food

categories (-3.5%) than Drug categories (-0.6%). Hypermarkets and Traditional

Trade has seen volumes declining in the last 12 months, while Supermarkets,

Discounters and Drug stores still manage to increase both volume and turnover.

Given that consumers are sensitive to the growing price of food and other products

it will be prudent to monitor consumer responses for companies who intend to use

this positive period to increase prices.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) & Czech statistical office

2.9

4.9 5.1 5.0

4.2

2.9

2.4 2.22.5 2.6

1.92.3

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



Karel Tyra Managing Director,

Czech Republic



67


2.1%

4.6%

-0.4%

1.1%

3.4%

4.7%

6.0% 5.5%

3.7%3.8%

1.0%

-0.8%

2.1%

2.8%

-1.3% -0.3%-1.6%

0.0%

0.8%

-2.9%

3.0%3.9%

1.7%

3.9%

2.1%

4.3% 4.4%

5.5%4.6%

0.9%


Czech Rep.


3.9%

0.6%

7.6%

9.3%

-0.3%

6.8%

Total FMCG Hypermarkets Supermarkets Discounters Traditional Trade Drugstores

TOTAL CZECH REPUBLIC – CHANNEL PERFORMANCE


(weighted average)


Volume decline has been driven by Food categories where price increases

are more significant than Drug categories.

Convenient types of stores (Supermarkets, Discounters) are attracting more

consumers and are growing at the cost of Hypermarkets.

39%

17%

22%

13%

8%

NB: 2016 and 2017 updates due to product enhancements, universe update, implementation of new chains and new categories with full history

68


Big manufacturers are still behind the market growth and small, flexible

players are also gaining market share.

Very hot temperatures in Q2 drove growth of both Alcoholic and Non-

Alcoholic beverages as well as Frozen food.

TOTAL CZECH REPUBLIC – SUPER CATEGORIES PERFORMANCE

TOTAL CZECH REPUBLIC – MANUFACTURER PERFORMANCE - FMCG


Total FMCG 100.0%

Dairy 19.0%

Beverages Alcohol 16.8%

Sweets & Treats 14.4%


Culinary - Shelf Stable 9.8%

Beverages Non Alco 8.6%

Beverages Hot 4.1%

Home Care excl. Laundry 3.1%

Home Care - Laundry 2.3%

Pet Care 2.3%

Infant Care 2.0%

Culinary - Frozen 1.9%

Frozen 1.9%

Baking - Shelf Stable 1.5%

Culinary - Refridgerated 0.2%

3.9%

5.0%

7.8%

3.5%

2.7%

0.2%

5.8%

1.7%

1.3%

0.0%

3.0%

0.6%

0.7%

3.6%

0.4%

3.8%


Total FMCG 100.0%

Top 1-5 15.9%

Top 6-10 8.0%

Top 11-30 17.9%

Top 31-100 20.4%

100+ 18.4%

Private Label 19.3%

3.9%

2.7%

2.6%

3.2%

4.3%

4.1%

5.7%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

69


ESTONIA SNAPSHOT The Estonian economy continues to perform well and the outlook for the second

half of 2018 and next year is positive. In Q2 2018, the unemployment rate was

5.1%, the lowest in a decade. The labour force participation rate (the share of

working-age population who are employed or looking for a job) was 71.9%,

which is only 0.1 percentage points lower than a year ago, when the rate was at

its highest level in 20 years. The Consumer Confidence Index increased

noticeably to 88 points as consumers evaluate their job prospects and personal

financial situation better than previous quarters. Inflation increased slightly in

Q2 to 3.3% as the consumer price index was affected the most by motor fuel

and housing, followed by Alcoholic beverages and Tobacco.

The FMCG market had a moderate 2.8% value growth in Q2 compared to a

year ago, but volumes decreased by 1.1%. Alcoholic Drinks were the only

category group that decreased annually due to the impact of increased excise

taxes. This has led to increased alcohol trade on the Latvian border and

reduced tourist’ spend. Busier lifestyles and increased incomes have boosted

growth in categories related to convenience and indulgence such as Baby

Food, Non Alcoholic Beverages, Chilled and Frozen Food and Snacks.

Consumer demand for convenience has increased sales in the

Convenience/Petrol channel by 8.8%. New store openings have contributed to

6.2% growth in Large Supermarkets. Looking ahead, expectations of

consumers’ increased spending power should be a focus and meeting demand

outside of essential categories creates an opportunity to trade consumers up to

additional and/or more premium products for both manufacturers and retailers.

COUNTRY HIGHLIGHTS


Source: OECD & Statistics Estonia

3.9

5.3

4.5

5.3

3.6 3.7

3.0 3.1

3.7 3.8

3.13.3

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

72

83 81 81 8188

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU EE

Ilona Lepp

Managing Director

Baltics


Survey is conducted in collaboration with Nielsen

70


2.9%

-0.8%

6.2%

3.0%

0.2%

8.8%

2.0%


Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations

Drug Stores+Pharmacies

TOTAL ESTONIA – CHANNEL PERFORMANCE

A favourable labour market and increased incomes support consumption.

Volume decreased mainly due to declining domestic Alcohol sales.

Busy lifestyles and demand for convenience fuels the growth of Petrol

Stations/Convenience channel. New store openings drive the performance

of Large Supermarkets.


(weighted average)


23%

33%

30%

11% 1%2%

* Backdata not available due to Universe Update

5.7%4.9%

5.7%7.0%

6.6%4.6% 3.8%

-2.8%-2.3% -2.8%

-3.7%-4.0%

-1.9%-1.1%

2.9% 2.6% 2.9%3.3%

2.6% 2.7% 2.8%

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

Estonia


71


Alcoholic Drinks decline as high excise taxes have caused significant alcohol

trade on Latvian border and reduced purchases by tourists visiting Estonia.

TOTAL ESTONIA – SUPER CATEGORIES PERFORMANCE

TOTAL ESTONIA – MANUFACTURER PERFORMANCE - FMCG

Small and local players continue to grow even faster than bigger ones,

demonstrating their ability to be agile and responsive to market changes.


Total FMCG 100.0%

Chilled and Frozen products 38.9%



Personal Care 7.2%


Confectionery 6.3%

Household products 3.9%

Hot Beverages 3.3%

Snacks 3.2%

Pet Care 2.2%

Baby Food 0.8%

2.9%

6.1%

-1.8%

1.0%

0.0%

6.8%

0.8%

1.7%

0.7%

5.2%

2.7%

6.9%


Total FMCG 100.0%

Top 1-5 23.2%

Top 6-10 12.0%

Top 11-30 21.9%

Top 31-100 17.0%

100+ 18.1%

Private Label 7.7%

2.9%

3.4%

3.4%

2.3%

3.8%

2.2%

1.5%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

72


0.3

1.5 1.5

2.0

2.3

2.0

1.5

1.3

0.8 0.8

0.3

0.7

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



GREECE SNAPSHOT


Source Economist Intelligence Unit (EIU). Q2 2018 estimate

8185 87 87 86 87

53 5260 60 61

67

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU GR

Vicky Grigoriadou

Managing Director

Greece



Greece’s economy performed well in the first half of 2018, with solid GDP

growth results for both quarters. Following the successful conclusion of the

European Stability Mechanism programme (ESM) for Greece, the country’s

economic recovery is expected to accelerate gradually over the remainder of

this year and into the next, driven by a stronger labour market and improving

sentiment. The long-term outlook, however, partially hinges on the country’s

ability to maintain fiscal discipline and minimise debt risks following its bailout

exit.

Inflation remains low, although it rose slightly in Q2, reaching 0.7%, mainly due

to higher prices for energy and processed food. Greece’s Consumer

Confidence Index rating jumped significantly this quarter, up six points to 67

points after three consecutive quarters of minimal movement. Although

consumer sentiment still remains considerably lower than the European

average of 87 points, the upward trend is an encouraging sign for the country

as a whole, and in particular the FMCG market.

With a gradually improving economy and increasingly optimistic consumers,

Greece’s FMCG market has rebounded in recent quarters, recording 4.5%

growth over the latest 12 months. What is particularly encouraging is that this

momentum has been demand driven and entirely due to increased

consumption. FMCG growth in Q2 was 1.6% year-on-year, but the dip from the

growth figures of the previous three quarters simply indicates that Greece’s

FMCG market is returning to normal following the massive impact of the

reactivation of the ex-Marinopoulos stores. Greece’s FMCG market can expect

continued, yet more restrained growth through until the end of the year.

73


4.5%

27.2%

3.0%

2.1%

0.9%

Total FMCG Hypermarkets Large Supermarkets Small Supermarkets Superettes

TOTAL GREECE – CHANNEL PERFORMANCE

An improving economy and higher consumer sentiment has driven FMCG

growth of 4.5% for the year, however growth decelerated in Q2.

The reactivation of ex-Marinopoulous stores has boosted Hypermarket

growth.


(weighted average)


11%

38%37%

15%

0.2%

-0.4%

2.5%

-0.3%

-1.1%-1.0%

-0.8%

0.6%

-0.5%

0.2%

-4.6%

4.8%

-8.7%

-2.6%

-4.2%

2.9%

5.8%

5.9%

5.1%

1.5%

-4.5%

4.5%

-6.2%

-2.9%

-5.4%

1.9%

5.0%

6.4%

4.6%

1.6%


Greece


74


All super categories are growing, helped by the reactivation of the ex-

Marinopoulos stores and the return of shoppers from alternative grocery

channels.

TOTAL GREECE – SUPER CATEGORIES PERFORMANCE

TOTAL GREECE – MANUFACTURER PERFORMANCE - FMCG

Smaller local manufacturers are leading growth by nimbly entering new

categories, adding line extensions to their portfolios and increasing their

distribution reach.


Total FMCG 100.0%

Top 1-5 21.5%

Top 6-10 9.8%

Top 11-30 21.4%

31+ 32.5%

Private Label 14.8%

4.5%

2.0%

3.3%

4.4%

9.2%

-0.6%

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Dairy & Refrigerator Cat. 23.6%

Grocery 23.0%

Non Alcoholic Drinks 12.3%


Confectionery 9.0%

Household 6.3%


Detergents 4.3%

Paper Products 3.4%

4.5%

4.3%

4.1%

8.1%

2.9%

5.4%

5.8%

3.7%

1.5%

1.8%

MAT Q2-2018 MAT Q2-2018

75


HUNGARY SNAPSHOT

Hungary’s economy has slowed slightly, but remains in good shape with GDP

growth of 4.5% year-on-year in Q2 and strong private consumption. Reflecting

the favourable macroeconomic circumstances, Hungarian consumers are

becoming increasingly positive and the Consumer Confidence Index rating is

now closing in on the European average.

The FMCG market continues its acceleration trajectory, with MAT growth rising

from 7% in Q1 to 7.4% in Q2, while year-on-year growth this quarter was 7.8%

and evenly spread between value and volume gains.

Influenced by the growing trend of convenience, we are seeing Hungarian

shoppers spend less time in large formats such as hypermarkets, instead many

are preferring to shop at closer proximity mid-sized retailers. This trend

contributed to slower growth for hypermarkets in Q2. The latter and the mostly

traditional trade-like small organised channel struggle with the drug sector

mainly.

Inflation rose slightly, ending the quarter at 2.7%, reflecting its low rate last year

and the stable economic growth, but it remains at a healthy level. Wages are

growing at double-digit levels, which is no doubt a key factor for rising

consumer confidence. Due to low unemployment and an intensifying labour

shortage, wage rises look set to continue. With moderate inflation and good

macroeconomic conditions, the FMCG market should continue to enjoy stable

growth in the coming quarters. However, as the Hungarian economy has likely

reached its mid-term potential, consumer spending will reach a limit too.

Therefore it is crucial for FMCG players to be agile and flexible to a changing

environment by being sensitive to further inflation increases and adapting their

pricing strategies as necessary.

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q2 estimate

3.9 3.8

4.3

4.9 4.74.5

2.6

2.12.4 2.3

2.0

2.7

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

6470

76 7478 80

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU HU

Kateryna

Edelshtein

Hungary Market

Leader Buy & Watch



76


7.4%

2.8%

4.5%

17.9%

3.2%

11.2%

5.4%

Total FMCG Hypermarkets Large Organized Discounters

Small Organized Drug Stores Independent Stores

TOTAL HUNGARY – CHANNEL PERFORMANCE

FMCG growth continued to be strong in Q2, with wage increases

helping to maintain consumer spending.

Discounters performed well, while growth slowed for Hypermarkets as

consumers seek more convenience based outlets and products.

FMCG MARKET DYNAMICS OFFLINE

(weighted average)


25%

15%

24%

17%

8%

12%

1.9%

4.6%

0.7%1.5%

2.1% 2.7%

5.0% 4.5%3.8% 4.3%

2.5%

2.7%

2.1%

3.4%1.5%

3.8%

0.3%

3.6%4.4%

3.5%

4.4%

7.4%

2.8%

4.8%

3.6%

6.5%

5.3%

8.2% 8.3%7.8%


Hungary


77


Biggest and mid-size (Top 11-30) companies grew faster, than Q1 due

to successful innovation, effective marketing and revised strategies

TOTAL HUNGARY – SUPER CATEGORIES PERFORMANCE

Branded and Private Label products are growing, but the latter is faster

in both Food and Drug categories.

Total FMCG includes Private label but Private label is not included in manufacturer tiers


Total FMCG 100.0%


Processed Meat 12.8%



Personal Care 9.0%

Dry Grocery 8.1%

Cleaning / Household 6.2%

Confectionery 5.4%

Frozen Foods 3.6%

Hot Beverages 3.6%

Snacks 3.1%

Household Paper 2.9%

Petfood 2.8%

Biscuits/Wafers 2.7%

Breakfast 1.9%

Baby Care 1.3%

7.4%

7.5%

7.5%

11.3%

9.4%

7.5%

2.2%

6.6%

5.9%

7.8%

3.8%

12.0%

5.3%

8.7%

4.4%

7.1%

5.7%


Total FMCG 100.0%

Top 1-5 20.4%

Top 6-10 11.7%

Top 11-30 21.8%

Top 31-100 22.3%

100+ 23.9%

7.4%

6.5%

6.6%

7.9%

6.9%

4.4%

TOTAL HUNGARY – MANUFACTURER PERFORMANCE - FMCG

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

78


3.1

5.3

4.2

3.1

4.1 4.1

7.8 7.67.0

7.4

6.66.2

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



KAZAKHSTAN SNAPSHOT

COUNTRY HIGHLIGHTS


Source Local government source. Minister of National Economy

81

85

87 87 87

78

79

8381

84

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q2 2018

EU KZ

Ilona Lepp

Managing Director

Baltics



Kazakhstan continued its positive economic momentum with a 4.1% growth in

GDP for 2018 Q2, a continuation of the 4.1% growth from the previous quarter.

This healthy economic environment contributes to a growing consumer

confidence that hit 84 points for the quarter.

The FMCG market declined in Q2 versus the same quarter a year ago by -0.2%.

Increased unit prices didn’t manage to offset the significant volume loss of

-5.6%. This is a result of a series of factors starting from the depreciation of

Kazakh tenge by 4.7% in April 10, a drop of real income as well as consumers’

willingness to save.

Despite poor Q2 results, FMCG market is still hitting positive growth of 4.8% for

the latest year driven by biggest value contributors – large stores (13.5%) and

medium stores (16.0%). Changing consumer’s preferences in channels as well

as heating promotional pressure continues to impact Pharmacies (-8.2%),

Perfumeries (-7.7%) and Kiosks & Pavilions (-6.4%). Only Personal Care and

Alcohol categories experience negative performance for the year to Q2 2018,

meanwhile the smallest value contributors: Home care, Pet food, Baby food and

Care are thriving. Tobacco and Beverages – two super categories with the lion

share of the market, manage to maintain only moderate growth below 2%.

Smaller manufacturers having more flexibility to adapt are gaining more power

with the strongest growth in the market.

Despite short term concerns on the monetary front, economic prospects seem

quite positive for Kazakhstan. Slowing inflation reveals opportunities to ease

consumers’ concerns over prices. As consumers are looking for ways to save,

now is the best time to offer value for money propositions and ensure

effectiveness in trade spending via targeted promotions.

79


12.6%

6.0%16.8%

13.7%

10.5%7.4%

5.8%6.1%

5.5% 5.4%

-0.2% -1.2%

3.9%

-1.3% -2.2%-2.2%

0.1% 0.2%

-0.3%-5.6%

12.4%

4.8%

20.6%

12.4%

8.3%

5.3% 5.9% 6.3%5.2%

-0.2%


Kazakhstan


TOTAL KAZAKHSTAN – CHANNEL PERFORMANCE

Gradually easing inflationary pressures have not counter balanced volume

losses, which are driven by consumers’ saving mode.

Expansion, wider assortment needs and promotional pressure are pushing

shoppers’ preferences towards Supermarkets (Large) and Open markets (Other)


(weighted average)


34%

21%

35%

3%

7%

Need to update GR number

4.8%

13.5%

16.1%

-6.6%

-8.7%

6.1%

Total Kazakhstan Urban Large Stores Medium Stores Small Stores Drug Stores Other*

* Other includes: Kiosk s/Pavilions, Open markets, Petrol Stations, Tobacconist

80



Total FMCG 100.0%

Beverages 25.9%

Tobacco 21.7%

Dairy 14.1%

Personal Care 10.3%

Food 9.1%

Confectionery 7.8%

Alcohol 6.7%

Home Care 2.6%

Baby Food 1.3%

Pet Food 0.3%

Baby Care 0.1%

4.8%

3.6%

5.3%

10.6%

0.7%

3.7%

4.6%

1.9%

7.8%

7.0%

26.9%

15.5%

Smallest value contributors are thriving indicating a focus on family care

preferences - Home care, Baby food and Care and Pet food.

TOTAL KAZAKHSTAN – SUPER CATEGORIES PERFORMANCE

TOTAL KAZAKHSTAN – MANUFACTURER PERFORMANCE - FMCG

While Top 5 manufacturers have modest growth, smaller players (Top 31-100)

are finding ways to consumers’ hearts and are gaining momentum.

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Top 1-5 41.3%

Top 6-10 15.2%

Top 11-30 4.2%

Top 31-100 0.4%

100+ 38.9%

4.8%

2.3%

7.7%

1.1%

6.1%

6.9%

81


LATVIA SNAPSHOT Latvia’s economy recorded solid growth of 4.2% in Q2, a slight deceleration from

the previous two quarters. The collapse of the country’s non-resident banking

market, labour shortages and a slow down in Euro area growth were contributing

factors. However, the heating labour market is driving wage increases and

stimulating household consumption.

The FMCG market gained 4.8% year-on-year this quarter, with balanced volume

and value growth. Consumer spending continued to rise steeply amid rapid wage

growth. Among categories, Shelf Stable Foods and Hot Beverages recorded

negative growth, possibly due to warmer than usual weather, and this impacted

the growth of Top 5 manufacturers. Mid-size and small manufacturers are

capturing the moment in finding ways to consumers’ hearts.

In terms of channel performance, all formats are growing but Convenience/Petrol

Stations and Pharmacies are leading the way, with 15.2% and 16.6% growth

respectively over the latest 12 months. These numbers reflect that consumers

increasingly seek convenient products and quicker and easier shopping

experiences and they are willing to pay more to satisfy this demand. There are

big opportunities for FMCG companies to better meet shopper demand for healthy

and convenient food on-the-go and other needs emerging from the health,

wellness and convenience trends

COUNTRY HIGHLIGHTS


4.2

4.9

6.2

4.75.2

4.2

3.2 3.1 2.92.6

2.02.4

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

69

78 7873

8680

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU LV

Ilona Lepp

Managing Director

Baltics

Source: OECD The Conference Board® Global Consumer Confidence


82


4.1%

3.4%

3.7%

4.1%

15.2%

16.6%

Total FMCG Hypermarket/Large Supermarkets+Drugstores

Small Supermarkets/Discounters Superettes/Groceries

Conveniences/Petrol Stations Pharmacies

TOTAL LATVIA – CHANNEL PERFORMANCE

Favourable macroeconomic conditions and rapid wage increases are

boosting domestic consumption and FMCG growth.

The convenience and healthy living trends continue to increase consumer

demand in Convenience/Petrol Stations and Pharmacy formats.


(weighted average)


42%

35%

20%

3%1%

3.1%

4.3% 4.6% 4.3%3.4%

1.6%2.2%

1.0%

-0.3%

0.6%

-0.2%

0.4%

2.0%

2.6%4.1% 4.0%

5.1%

4.0%3.8%

3.5%

4.8%

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

LatviaUnit Value Growth Volume Growth Nominal Value Growth


83


Unusually warm weather spurred strong growth of Non Alcoholic

Drinks, Chilled and Frozen products and Snacks.

TOTAL LATVIA – SUPER CATEGORIES PERFORMANCE

TOTAL LATVIA – MANUFACTURER PERFORMANCE - FMCG

Mid-size and smaller manufacturers as well as Private Label are growing

fastest as consumers seek value offerings in the face of rising prices.


Total FMCG 100.0%




Personal Care 7.8%


Confectionery 6.3%


Hot Beverages 4.1%

Snacks 3.4%

Pet Care 2.2%

Baby Food 0.9%

4.1%

6.2%

4.6%

-1.1%

3.4%

6.5%

2.9%

0.5%

-1.3%

6.6%

6.6%

7.8%


Total FMCG 100.0%

Top 1-5 18.2%

Top 6-10 9.4%

Top 11-30 19.4%

Top 31-100 21.5%

100+ 21.8%

Private Label 9.7%

4.1%

0.0%

5.2%

5.4%

6.7%

3.6%

3.6%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

84


LITHUANIA SNAPSHOT

Lithuania’s economy maintained its solid start to the year, with GDP growth in Q2

up 3.7% year-on-year. Gradually easing inflationary pressure (2.6% in Q2 versus

3.4% in Q1), and wage increases driven by the labour shortage have stimulated

household consumption. These conditions also helped to keep consumer

sentiment stable. The Consumer Confidence Index ended the quarter on 78

points, with health replacing increasing food prices as the top concern for

Lithuanians.

The FMCG market had moderate total value growth of 3.1% in Q2. For the first

time we saw positive volume growth (1.5%). Non Alcoholic Beverages, Chilled

and Frozen, Snacks, Pet Care and Baby Food continued to perform well. Growth

in these categories is being spurred by Lithuanian consumers increasing demand

for convenience and having more disposable income. Top 10 manufacturers are

benefiting the most from these changes in the market, while private label growth

has slowed.

The convenience trend continues to boost sales for Convenience/Petrol Station

formats, with this channel growing 18% over the latest 12 months. Meanwhile,

increasing demand for health and beauty products triggered 9.1% growth in the

Pharmacies channel. New openings and a focus on large Supermarkets also

influenced shopper footfall in this channel.

Macroeconomic indicators remain largely positive, although there is cooling

demand for Lithuanian exports from the country’s key trading partners. With the

encouraging economic conditions and rising incomes, the FMCG market’s

sustainable growth prospects look promising. Companies that innovate their

products and shopping experiences to leverage the convenience and health

trends will be well-positioned to boost their sales.

COUNTRY HIGHLIGHTS


4.0 4.1

3.63.8

3.53.7

2.8

3.5

4.44.2

3.4

2.6

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



81

8587 87

8687

74 73

7779

7778

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU LT

Ilona Lepp

Managing Director

Baltics



Source: OECD

85


3.8%

0.3%

9.0%

2.1%

4.6%

18.0%

0.7%

9.1%


Small Supermarkets/Discounters Superettes/Groceries Conveniences/Petrol Stations

Drug Stores Pharmacies

TOTAL LITHUANIA – CHANNEL PERFORMANCE

Favourable economic conditions and increasing consumer purchasing

power saw FMCG growth accelerate this quarter.

Convenience and health trends are driving strong growth in the

Convenience/Petrol and Pharmacy channels.


(weighted average)


22%

24%38%

10%

1%3%

2%

5.5%4.4%

7.2%7.2% 7.5%

4.7%

1.6%

-1.8%

-7.6%

-4.7% -2.7%-2.6% -2.2%

1.5%3.8%

-3.2%

2.5%

4.6%4.8%

2.6% 3.1%

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

Lithuania



86



Total FMCG 100.0%




Personal Care 10.0%


Confectionery 5.7%

Hot Beverages 4.2%


Snacks 3.2%

Pet Care 1.8%

Baby Food 0.7%

3.8%

7.0%

2.8%

-1.2%

1.3%

8.9%

0.7%

-0.4%

3.8%

7.1%

8.6%

4.6%

Non Alcoholic Beverages, Chilled and Frozen Products, Snacks, Pet Care

and Baby Food were the category growth leaders.

TOTAL LITHUANIA – SUPER CATEGORIES PERFORMANCE

TOTAL LITHUANIA – MANUFACTURER PERFORMANCE - FMCG

Top 10 manufacturers benefited the most from the positive FMCG

environment, while Private Label growth slowed.


Total FMCG 100.0%

Top 1-5 18.3%

Top 6-10 9.1%

Top 11-30 21.5%

Top 31-100 22.5%

100+ 19.3%

Private Label 9.4%

3.8%

5.4%

6.6%

3.5%

4.1%

1.0%

3.9%

MAT Q2-2018 MAT Q2-2018

.

MAT Q2-2018 MAT Q2-2018

87


4.64.2

5.5

4.4

5.0 5.0

1.9 1.8 2.02.3

1.51.8

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



81 8187 87 86 8791 88

104 104 103 105

Q3 2016 Q4 2016 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU PL

POLAND SNAPSHOT


Source Economist Intelligence Unit (EIU) & Central statistics office

Szymon

Mordasiewicz

Managing Director,

Poland



CCI not available for Q1 and Q2 2017

Poland’s robust economic performance continued in Q2, with GDP up 5% year -

on-year, above projections made by the country’s major banks. Indications are

that rising household consumption was the main growth driver, with increased

output from industry and manufacturing also contributing.

A number of factors are boosting private consumption. Polish salaries continue to

improve, with average wages up 7% year-on-year in May. Meanwhile, the

unemployment rate remains very low and social transfers are over 500. The

current record low interest rates are also likely to be contributing to the positive

outlook, encouraging consumers to spend rather than save.

The FMCG market gained 3.4% in Q2, which was down from the 5.9% year-on-

year growth recorded in the previous two quarters, but the lower growth figure

this was largely due to Easter being in Q1 this year. Overall growth remains

robust and sustainable with even unit value and volume growth. The hotter than

usual summer helped boost sales in both Alcoholic and Non Alcoholic categories,

with Beer up 6% year-to-date, Mineral Water up 14%, and Carbonated Soft

Drinks up 7%. Ice-Cream has done exceptionally well, with sales growing 30% in

the first six months.

Although quarterly GDP growth is expected to slow slightly in the second half of

the year, the major bank’s expect Poland to achieve annual GDP growth of

around 4.9%. And in positive news for the FMCG market, private consumption is

expected to continue to be the growth driver.

In the coming months, FMCG players should seek ways to personalise the

shopper experience. We expect smaller format stores as well as proximity

discounters and supermarkets to focus on this approach to maintain growth.

However, to do so effectively, it will require investment from both retailers and

manufacturers to ensure store offerings and the right technologies are in place to

meet the evolving needs of consumers.

88


4.9%

0.2%

3.5%

8.1%

5.3%

4.1%

Total FMCG Hypermarkets Supermarkets Discounters Drugstores Small Format

TOTAL POLAND – CHANNEL PERFORMANCE

The market grew 3.4% in Q2 with balanced volume sales and unit value

growth (both 1.7%), indicating sustainable growth.

Hypermarkets were the only channel to perform poorly in Q2 as

consumers moved to Discounters and Drug stores for Food and Drug

purchases.


(weighted average)


10%

15%

32%7%

36%

2.2%2.3%

1.2%2.0% 1.9% 2.0%

3.0%

2.1% 0.9% 1.7%

1.3%2.6%

1.4%

2.9%

-1.2%

3.6% 1.6%3.8%

5.0%

1.7%

3.5%

4.9%

2.5%

4.9%

0.7%

5.6%

4.6%

5.9%5.9%

3.4%


Poland


89


All manufacturers are growing, but Private Label is expanding below the

market average as consumer preference favours major brands.

The hotter than usual summer boosted sales of Alcoholic Beverages, Non

Alcoholic Beverages and Frozen Products.

TOTAL POLAND – SUPER CATEGORIES PERFORMANCE

TOTAL POLAND – MANUFACTURER PERFORMANCE - FMCG


Total FMCG 100.0%


Culinary 16.5%


Dairy 13.8%

Confectionery 11.5%

Cosmetics Categories 8.5%

Paper Sanitary Hygiene & Other 4.6%

Home Categories 4.4%

Frozen Products 3.2%

4.9%

2.9%

2.4%

6.3%

8.4%

7.5%

3.6%

4.3%

3.4%

10.1%


Total FMCG 100.0%

Top 1-5 16.2%

Top 6-10 11.0%

Top 11-30 19.9%

Top 31-100 16.7%

100+ 17.0%

Private Label 19.2%

4.9%

4.1%

5.0%

5.0%

6.6%

6.0%

3.2%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

90


ROMANIA SNAPSHOT Romania’s economy accelerated slightly in Q2, with year-on-year GDP

growth of 4.2%. Inflation continued to rise and reached 5.4% by the end of

June on the back of higher international oil and energy prices, increased

taxes on cigarettes and rising salaries.

Despite regular raises in the minimum wage level, the spending power of

consumers has been constrained by the high inflation and growing interest

rates. Although the Consumer Confidence Index remained relatively high at

92 points by the end of Q2, it will likely drop in Q3 due to the current political

and social turmoil. There are concerning divisions among people and

institutions in Romania in regard to government policies and allegations of

corruption.

Meanwhile, the FMCG market recorded growth of 9.7% year-on-year in Q2,

with volume increasing 5.3% and the remainder coming from price inflation.

Among channels, Hypermarkets registered slow growth as the convenience

trend drove footfall to proximity formats, including Traditional Trade.

Supermarkets continued their double-digit growth momentum on the back of

store expansion, while Petrol & Convenience made value gains, despite a

flat universe and premium prices. Fresh Food was the highest growth

category in Q2, while Personal and Household Care categories gained value

above the inflationary rates.

The National Bank of Romania maintain their forecast of a gradual economic

slow down for the rest of the year, with GDP growth expected to flatten.

Slower consumption is likely as the real income of the population is

diminishing. However, there are still opportunities for the FMCG companies,

especially those that adapt their offerings in response to rapidly evolving

consumer trends, such as the increasing appetite for convenience.

COUNTRY HIGHLIGHTS


Source EIU/ & INS

5.76.1

8.8

6.7

4.0 4.2

0.2 0.7 1.5

3.1

4.75.4

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 8785

101 9890 91 92

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU RO

Luca De Nard

Managing Director

Romania



91


8.6%

5.7%

17.6%

7.2%

7.5%

2.2%

12.3%

Total FMCG Hypermarkets Super/Minimarkets

Discounters Traditional Trade Pharma/Cosmetics

Petrol Stations/Convenience

TOTAL ROMANIA – CHANNEL PERFORMANCE

Consumption continues to be the FMCG growth trigger, with rising

inflation contributing.

Proximity channels are growing through expansion (Supermarkets)

and demand for premium convenience (Petrol & Convenience).


(weighted average)


28%

18%

11%

41%

1%1%

1.5%

5.4%

0.1%

-0.1%

1.1%2.4%

4.5% 5.6%5.0% 4.4%

6.8%

3.2%

10.9%

8.7%5.7%

4.0%2.4%

3.8%3.5% 5.3%

8.3% 8.6%

11.0%

8.6%

6.8% 6.4%6.9%

9.4%8.6%

9.7%


Romania


92


Growth is visible across most categories, driven by retail development

and price increases.

TOTAL ROMANIA – SUPER CATEGORIES PERFORMANCE

TOTAL ROMANIA – MANUFACTURER PERFORMANCE - FMCG

Smaller manufacturers outside the Top 10 are succeeding as they are

better able to adapt to evolving consumer demands.


Total FMCG 100.0%

Dry Grocery 29.1%

Fresh Food 23.0%

Beverages - Alcoholic 14.3%

Beverages - Non Alcoholic 13.3%

Personal Hygiene/Cosmetics 8.5%

Household Care 7.7%

Frozen Food 3.1%

Non Food 1.0%

8.6%

7.3%

11.6%

7.7%

10.0%

8.7%

7.6%

6.9%

-5.9%


Total FMCG 100.0%

Top 1-5 16.5%

Top 6-10 9.5%

Top 11-30 18.9%

Top 31-100 21.0%

100+ 21.8%

Private Label 12.3%

8.6%

8.9%

7.0%

11.6%

10.2%

6.6%

6.4%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

93


Russia's GDP grew at a robust level of 2.4 in Q2 - as per Rosstat, Russia's

state statistic service. The economy was supported by construction &

manufacturing related to FIFA World Cup 2018 as well as by retail, services and

export-oriented sectors which increased turnover because of the football event.

Retail turnover grew 3% in June compared to 2.4% in May which is seen as a

strong result for this industry. With inflation staying below 2.5%, consumers

became more confident in Q2 up two points to hit an index of 70.

The second half of 2018 and entry into 2019 is expected to be a tougher time

for consumers and business in Russia. First, the increase of VAT from 18% to

20% which will come into effect in 2019 will speed up inflation. Russian

consumers’ real income growth in the past months was attributed to increased

salaries in the budget sector that took place because of presidential elections;

but this effect will not be long lasting. With flat real income and increased

inflation, the growth of consumer spending cannot be expected to continue.

.

Secondly, a new round of US sanctions are expected to take place in

November. The scope of sanctions include broad import-export bans,

prohibitions on US bank loans to the Russian government and suspension of

flights by Russian national carriers. Apart from bringing uncertainty and

challenges for business, it is likely to impact ruble exchange rates, hence

lowering consumers’ spending capabilities.

The FMCG market saw signs of revival in the first half of 2018 - unlike 2017,

consumption was driven by volume growth, not price growth. Since Russia’s

Central Bank is targeting inflation at 4% annually, we believe the FMCG sector

will continue to operate in a low-inflationary environment, and adjusting pricing

strategies in this relatively new context will become important. Consumer

sentiment may not rise significantly either given the above mentioned economic

developments, so consumers are likely to continue to be cautious with spending

and saving strategies, including buying on promotion and seeking value.

RUSSIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Q2 18

0.6

2.42.1

1.01.3

1.7

4.7

4.3

3.3

2.5 2.4 2.4

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

6370 70 69 68 70

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU RU

Alexander Kotsuba,

Managing Director

Nielsen Russia



94


4.1%

7.8%

-5.2%

Total FMCG Modern Trade Traditional Trade

TOTAL RUSSIA – CHANNEL PERFORMANCE

Solid FMCG market growth in Q2 came from real consumption growth, with

Beer, Ice-cream and Energy drinks enjoying higher than usual sales in June.

Modern trade continues robust development with key retailers refreshing their

approach to the shopper experience.


(weighted average)


75%

25%

6.2%

1.5%

7.9%

7.2%

5.9%

3.3%

1.5%

1.0% 1.3% 1.8%

-1.8%

2.6%

-1.0%

-2.8%

-3.2%

0.0%

0.6%

2.9%

2.5%

5.0%4.3% 4.1%

6.9%

4.4%

2.7%3.3%

2.0%

3.9% 3.8%

6.8%


Russia


95


Private label ceased its growth in Russia, the trend is mainly driven by the food

sector where brands outpace PL with promotional offerings.

Beer category showed positive dynamics - hotter spring\summer 2018, real

income stabilization and the World Cup contributed to the rise of consumption.

TOTAL RUSSIA – SUPER CATEGORIES PERFORMANCE

TOTAL RUSSIA – MANUFACTURER PERFORMANCE - FMCG


Total FMCG 100.0%

Top 1-5 19.9%

Top 6-10 11.9%

Top 11-30 17.5%

Top 31-100 17.0%

100+ 29.6%

Private Label 4.1%

4.1%

6.4%

1.5%

3.0%

5.2%

4.4%

-0.1%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Other Food 14.9%

Tobacco 14.4%

Dairy 12.6%


Beer 8.5%

Personal Care & Make-Up 7.1%

Vodka 6.9%

Sauces & Grocery 6.0%

Premium Alcohol 4.9%

Home Care 3.1%

Pet 2.9%

Baby Food & Infant Formula 2.3%

Ice Cream 1.9%

Frozen Food & Fish 1.6%

Baby Care 1.2%

4.1%

4.9%

7.5%

2.0%

4.5%

3.7%

2.5%

-2.3%

-0.9%

13.7%

0.0%

11.6%

5.6%

10.3%

6.5%

-1.7%

96


Serbia’s economy continues to track positively with healthy GDP growth of 4.4%

year-on-year in Q2, followed a similar gain in the previous quarter. Although GDP

growth in 2018 is considerably better than last year, it is still low compared to many

neighbouring markets. Inflation remains low although the Republic Bureau of

Statistics of Serbia expects consumer prices will gradually increase on the back of

growing domestic demand, the favourable labour market and higher wages.

A slight rise in household disposable income has helped boost domestic

consumption and is also contributing to a more positive consumer sentiment.

Serbia’s Consumer Confidence Index rating reached 75 points this quarter.

However, three-quarters of Serbian people still believe that the country is in a

recession and a similar proportion are pessimistic about their job prospects.

The FMCG market grew 0.6% in volume for the year to Q2 2018 but price increases

continue to be a strong driver, with overall value growth being 3.6%. Tobacco

continues to be the lead FMCG category, accounting for almost 30% of FMCG

market share although other categories are growing faster. Frozen and Pet Food in

particular are leading the way, achieving strong value growth of 13% and 11%,

respectively, over the latest 12 months.

In terms of retail channels, although Hyper/Super markets contribute the most value,

Traditional Trade formats continue to be of key importance to Serbia’s FMCG

markets, with large/medium grocery formats the growth leaders. Due to Serbia’s

particularly high market concentration, Top 5 manufacturers account for almost 34%

of the FMCG market, and their share is growing.

Store proximity and promotional activities are still driving the consumption choices of

Serbian shoppers. However, there is a gap between the consumption of private label

in Serbia and the rest of the region. This can indicate a positive business climate for

Discounter chains, like Lidl who are entering the market at the end of the year.

SERBIA SNAPSHOT


Source Local government source

1.11.4

2.1

2.5

4.5 4.4

3.1

3.7

3.0 2.9

1.6 1.7

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



8185 87 87 86 87

69 69 69 6974 75

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU RS

Miroslav Tasic

Group Managing

Director Adriatic

Region



97


TOTAL SERBIA – CHANNEL PERFORMANCE

Positive economic conditions and increasing disposable income is

contributing to a sustained period of value growth.

Traditional Trade continues to be important to Serbia’s FMCG market and

large/medium grocery formats are enjoying strong growth.


(weighted average)


29%

28%

22%

14%

4%3%

0%3.6%

1.6%

10.9%

-1.4%

-1.7%

12.2%

11.3%

7.1%

Total FMCG Hyper/ Super Large/Medium Groceries Small Groceries

Kiosks/ Pavillions Drug Stores Petrol Stations Pharmacies

3.1%

3.0%

4.6%3.7%

3.6%

3.4%

3.9%

3.3%

2.9%

0.7% 0.6%

-0.1%

0.6%

-1.2%-2.0%

-2.0%

-0.5%

0.7%

3.8% 3.6%

4.4%4.2%

2.4%

1.3%

1.9%

2.9%

3.6%

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

Serbia


98


Frozen and Beverages grew over the FIFA World cup period.

TOTAL SERBIA – SUPER CATEGORIES PERFORMANCE

TOTAL SERBIA – MANUFACTURER PERFORMANCE - FMCG

Smaller companies are finding faster growth due to their agility.

MAT Q2-2018 MAT Q1-2018

MAT Q2-2018

MAT Q1-2018


Total FMCG 100.0%

Tobacco 29.5%

Food Fresh Refrig. 14.8%

Beverages Non-Alcoholic 13.9%

Confectionery And Snacks 11.7%

Beverages Alcoholic 8.4%

Personal Care 7.1%

Food Shelf Stable 6.7%


Frozen 2.7%

Pet Food 0.3%

3.6%

2.2%

4.2%

6.2%

2.2%

6.4%

5.5%

-0.2%

-0.5%

13.0%

11.2%


Total FMCG 100.0%

Top 1-5 33.8%

Top 6-10 10.8%

Top 11-30 22.0%

Top 31-100 17.2%

100+ 12.2%

Private Label 4.0%

3.6%

3.1%

7.1%

0.6%

4.6%

8.6%

-2.6%

99


ECONOMY WATCH

81

85

87 8786

87

82

85

8786

90

93

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU SK

3.13.4

3.5 3.5 3.6 3.5

1.0 1.0

1.6

2.0

2.4

2.8

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



SLOVAKIA SNAPSHOT

COUNTRY HIGHLIGHTS


Source Economist Intelligence Unit (EIU) Slovak Statistics

Karel Tyra Managing Director,

Slovakia

There is no doubt that both the Slovak economy and the retail environment have

enjoyed stable growth with the GDP forecast to come in at 3.5% for Q2 2018.

However there are commentators who ask if this momentum will continue.

Already record-high labour shortages are keeping nominal wage growth high

throughout 2018 and putting pressure on organisations who are dealing with a

shrinking supply of skilled workers. The unemployment rate fell to historical lows in

May 2018 (5.4%) and is on course to hit a rate around 5% for the full year. The first

half of 2018 saw inflation increase which has impacted FMCG with recorded

consumption (volume) decline, accelerating in the second quarter by over 4%.

Prices of services and food are the main contributors to overall growth in consumer

prices.

Faster paced lifestyles and changing consumer attitudes are changing shopping

habits and consumers are looking for a more convenient shopping trip. As a result,

organised groceries below 400 square meters that are more aligned to

convenience are performing well - many of them setting store renovations as a

strategic priority. An optimistic labour market and rising wages are also

underpinning consumer confidence which improved in the second quarter by three

points to reach its all-time high of 93. Slovak consumers were more positive in all

three drivers of the Consumer Confidence Index: higher enthusiasm about jobs

and personal finances, along with improved spending intentions, drove the overall

confidence growth.

Health has occupied the top position on the list of biggest concerns for several

quarters (35% in Q2 2018), which makes Slovaks one of the most concerned

about their health among European markets (European average 20%). Health is

followed by other top concerns about increasing food prices which crossed 20% in

the last four quarters, reaching similar levels as far back as 2013. Consumer

preference for health is evident across many products and growth in categories like

Dairy and Health and Beauty provide a call to action for retailers and

manufacturers to take advantage of this consumer need.



100


3.1%

2.5%

3.5%

-1.7%

12.3%

Total FMCG Hyper/Supermarkets Organized Groceries

Non Organized Groceries SK Organized Drug

TOTAL SLOVAKIA – CHANNEL PERFORMANCE

Inflationary pressures have contributed to volume declines particularly in the

Food basket while Drug remains in growth despite similar price increases.

Drug chains perform well thanks to Drug categories taking consumers from

Food & Mixed stores.

FMCG MARKET DYNAMICS*

(weighted average)


60%27%

6%7%

0.9% 3.6%

-1.6% -0.3%

2.4% 3.2%4.7%

3.3%

2.9%

3.7%3.8%

-0.5%

4.4% 2.8%

2.0%6.2%

-0.5%

4.2%

-1.8%

-4.1%

4.7%

3.1% 2.7% 2.6%

4.3%

9.4%

4.2%

7.5%

1.2%

-0.4%


Slovakia


101


Slovakia’s bigger players are driving strongest growth dominating key summer

categories.

Hot temperatures in Q2 helped Frozen categories to be among the fastest growing.

TOTAL SLOVAKIA – SUPER CATEGORIES PERFORMANCE

TOTAL SLOVAKIA – MANUFACTURER PERFORMANCE - FMCG


Total FMCG 100.0%

Dairy 18.5%

Sweets & Treats 17.1%

Beverages Alcohol 16.7%


Culinary - Shelf Stable 9.7%

Beverages Non Alco 9.1%

Beverages Hot 4.7%

Frozen 3.2%

Home Care excl. Laundry 2.4%

Home Care - Laundry 2.2%

Baking - Shelf Stable 2.0%

Infant Care 1.9%

Pet Care 1.5%

3.1%

5.8%

1.8%

3.3%

4.9%

0.6%

2.8%

1.2%

4.5%

4.3%

1.9%

-4.3%

3.3%

4.8%


Total FMCG 100.0%

Top 1-5 14.2%

Top 6-10 10.1%

Top 11-30 17.0%

Top 31-100 18.8%

100+ 18.0%

Private Label 21.8%

3.1%

4.3%

5.2%

2.4%

4.1%

2.4%

1.8%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

102


8185 87 87 86 87

62

74

84 83 8187

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU SI

SLOVENIA SNAPSHOT

Slovenia had encouraging GDP growth of 3.8% year-on-year in Q2 2018 and the

economy is expected to continue expanding at a positive pace. Both imports and

exports have grown, while domestic expenditure increased by 5.3%, which is the

biggest quarterly gain in a decade. Domestic expenditure increases were observed for

housing, appliances and equipment. Household spending increased by 3.4%, while the

cost of living essentials rose 1.5% over the past year. Meanwhile, the employment rate

continues to grow and is 3% higher than the same period last year.

Consumer sentiment is increasingly positive, with the Consumer Confidence Index up

six points in Q2 at 87 points in line with the European average. The favourable

economic environment means households have more disposable income, some of

which is being put into savings, but also increasingly into holidays and entertainment.

However, improved economic conditions do not seem to have benefited FMCG volume

growth, which contracted -1.8% year-on-year in Q2. Value growth continues to drive

FMCG. Among lead categories, the FIFA World Cup boosted sales of Salted Snacks

and Beverages, and favourable weather conditions contributed to growth in Meat and

Meat Products as well as Dairy Products, especially Ice cream.

Among channels, although private label recorded strong growth numbers in Q2, this

was mainly due to discounter expansion rather than consumers spending more on

cheaper grocery brands. Most Slovenians believe it is a time for “us” with a focus on

personal gratification with more spending on out-of-home entertainment and new

clothes as well as technology .

Health remains the number one concern for Slovenian consumers (and significantly

above the European average) and household health spending is increasing. Work-life

balance is also a very important concern. These two consumer priorities provide

excellent opportunities for retailers and manufacturers who can understand these

evolving needs to provide tailored products and experiences.

COUNTRY HIGHLIGHTS


Source Local government

4.95.4

5.1

6.2

5.0

3.8

1.81.4 1.2 1.3 1.3

1.9

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018





Miroslav Tasic

Group Managing

Director Adriatic

Region

103


3.0%

1.3%

1.0%

-4.3%

4.4%

-5.7%

10.2%

5.4%

Total FMCG Hypermarkets Supermarkets Large groceries Medium and Small groceries Kiosks Discounters Drugstores

TOTAL SLOVENIA – CHANNEL PERFORMANCE

Value growth is being driven by promotions, loyalty activities, and a wider

assortment of branded and premium products.

Discounters and Drug stores are leading growth through promotions and

loyalty activities.


(weighted average)


15%

41%11%

3%0%

26%

4%

0.3%2.7%

-1.1%

0.0% 0.9%

0.5% 2.1%2.3% 2.5%

2.8%0.2%

0.3%

0.4%

0.5%

-1.4%

2.0%

-0.2%

2.9%

1.2%

-1.8%

0.5%

3.0%

-0.7%

0.5%

-0.5%

2.5%1.9%

5.2%

3.8%

1.0%


SloveniaUnit Value Growth Volume Growth Nominal Value Growth

104


The warm weather and the FIFA World Cup boosted growth for Salted

Snacks and Beverages.

TOTAL SLOVENIA – SUPER CATEGORIES PERFORMANCE

TOTAL SLOVENIA – MANUFACTURER PERFORMANCE - FMCG

Private label growth is being driven by the expansion of discounters.

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Beverages 24.1%


Meat And Meat Products 15.1%

Packed Food 13.0%

Confectionery 10.9%

Personal Care 9.9%

Household Care 5.4%

Frozen Food 3.1%

Salted Snacks 1.5%

Baby Food 0.5%

3.0%

3.1%

3.6%

5.1%

2.5%

2.0%

0.7%

-0.1%

4.2%

11.6%

0.7%


Total FMCG 100.0%

Top 1-5 17.0%

Top 6-10 8.3%

Top 11-30 15.7%

Top 31-100 15.8%

100+ 10.5%

Private Label 32.6%

3.0%

1.2%

1.4%

1.0%

2.6%

-0.1%

6.6%

105


5.3 5.3

11.5

7.3 7.3

5.2

10.2

11.510.6

12.3

10.2

12.8

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



TURKEY SNAPSHOT Turkey’s economy continued to grow strongly in Q2, with a GDP growth of 5.2%, a

solid result considering the emerging geopolitical tensions and associated

economic risks. Domestic demand remains high and there was robust growth in

industrial output, construction, trade and services.

Price rises throughout the quarter pushed inflation to 12.8% by the end of June.

Imported goods became more expensive due to the weakening exchange rate,

while increasing global oil prices also had an effect. The price rises contributed to

much of FMCG market growth at 16.6% in Q2, although the volume gain of 2.9%

indicates some solid and sustainable growth too. Body Care, Hair Care, Oral Care,

Ice Cream and Dairy have been the fastest growing categories over the latest 12

months. Personal care categories grew strongly in Q2 on the back of price

increases, but also made solid volume gains. This was due to greater household

penetration as Perfumery chains and Hard Discounters continued their rapid store

expansion strategies, and growth was also boosted by intense promotional

activities in these formats. As for Dairy, price increases for raw milk was the key

driver of value growth, but Hard Discounters also generated strong volume growth

by applying everyday low pricing strategies. For food categories in general, the

health trend remains a major influencing factor, as reflected by accelerating sales

for healthy snacks and organic products.

Looking ahead, as exchange rate movements will likely lead to further inflation,

manufacturers will need to carefully manage their pricing and promotion strategies

to maximise growth. Innovation must rank high on the agenda too and will be key

for FMCG companies to satisfy the evolving needs of consumers as influenced by

the growing health and convenience trends.

COUNTRY HIGHLIGHTS


Source Local government sources

8185 87 87 86 8790

107113 112

89 88

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU TR

Didem Sekerel

Erdogan

General Manager

Nielsen Turkey, Buy.



106


16.4%

-1.9%

11.6%

11.3%

29.3%

33.0%

10.1%

Total FMCG Hypermarkets Large & Medium Supermarkets

Small Supermarkets Total Hard Discounter Perfumery

Traditional Trade

TOTAL TURKEY – CHANNEL PERFORMANCE

Price rises were the major growth driver, but the FMCG market also made a

solid volume gain of 2.9% in Q2.

Discounters and Perfumeries led channel growth on the back of rapid store

expansion.


(weighted average)


5%

22%

11%

35%

3%

26%

FMCG: excluding Tobacco/Alcohol

6.3%

12.4%

5.7% 4.7%6.1%

8.6%10.3%

12.4% 13.3%13.7%

5.3%

4.0%

4.2%5.8%

5.5%

6.0%5.1% 5.1% 2.8%

2.9%

11.7%

16.4%

9.8%10.5%

11.7%

14.6%15.5%

17.5%

16.1% 16.6%


TurkeyUnit Value Growth Volume Growth Nominal Value Growth

107


Personal care categories performed strongly due to the store expansion of

Perfumeries and Hard Discounters as well as promotions.

TOTAL TURKEY – SUPER CATEGORIES PERFORMANCE

TOTAL TURKEY – MANUFACTURER PERFORMANCE - FMCG

Smaller manufacturers and Private Label grew fastest as consumers

increasingly sought out value offerings.

FMCG: excluding Tobacco/Alcohol

*100+ includes private label brands


Total FMCG 100.0%

Top 1-5 24.3%

Top 6-10 11.3%

Top 11-30 17.8%

Top 31-100 15.0%

100+ 31.7%

16.4%

13.8%

13.0%

14.8%

14.1%

22.1%

MAT Q2-2018 MAT Q2-2018


Total FMCG 100.0%

Confectionery 21.4%

Non Alcoholic Drinks 21.1%

Dairy 13.1%

Grocery 12.2%

Housekeeping 7.9%

Paper Products 6.1%

Fats And Oils 5.5%

Body Care 3.8%

Ice Cream 3.3%

Hair Care 2.8%

Oral Care 1.4%

Grooming 0.8%

Other 0.6%

16.4%

16.5%

15.1%

21.1%

13.8%

15.7%

13.5%

10.9%

21.4%

21.9%

21.4%

19.2%

14.2%

20.0%

MAT Q2-2018 MAT Q2-2018

108


2.8 2.6 2.4 2.3 3.1 3.6

13.9 13.8

16.2

13.9 13.8

11.6

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018



UKRAINE SNAPSHOT

COUNTRY HIGHLIGHTS



8185 87 87 86 87

5257 58 61

5862

Q4 2016 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

EU UA

Vaios Dimoragas

Managing Director

Ukraine and Belarus



Ukraine’s economic recovery appears to have continued in the second quarter

after a good start in Q1. Domestic demand remained a driver in Q2 due to the

easing of inflationary pressures, coupled with improving labour market dynamics

and strong remittance inflows that have boosted private consumption. This is

evident in the double-digit volume growth of FMCG for the third quarter in a row.

Nevertheless, downside risks are significant and stem from mounting political

tensions domestically, ahead of next year’s elections and slow reform momentum

that is a prerequisite for the continuation of IMF support. Inflation rates have also

been lower over the last months as the central bank’s initiatives take effect. But

there is risk of a falling Hryvnia in case the next IMF tranche is not paid out and

this would fuel inflation again.

Although Ukraine’s consumer confidence is steadily on the rise from a low of 41 in

2015 to 62 in Q2 2018, this growing trend is encouraging but consumers clearly

remain very cautious due to the proven volatility of the economy.

Despite the still fragile state of the economy and consumers’ mindset, we see the

global trend of convenience also applies to Ukrainian shoppers. They are

becoming smarter and more demanding as their lifestyles become increasingly

busy where they are more time poor and stressed. Convenience in all aspects of

life is crucial: shoppers want to spend less time and expect a positive experience

from each shopping journey both online or offline. This creates a challenge but

also an opportunity for retailers and manufacturers. A challenge because it is far

more complex than just opening more conveniently placed stores but also an

opportunity to address consumers’ needs effectively, by increasing loyalty to

brands and becoming more embedded in their changing lifestyles.

109


20.7%

22.6%

35.9%

26.3%

10.9%

Total FMCG Hypermarkets/Supermarkets MT Minimarkets MT Perfumeries MT Traditional Trade

TOTAL UKRAINE – CHANNEL PERFORMANCE


(weighted average)


53%

13%

6%

29%

FMCG market shows consistent recovery with double-digit volume growth

indicating a sustainable performance.

Modern trade continues to win market share, especially Minimarkets

showcasing the increasing trend for convenience amongst consumers.

Need to align headings

9.7%

10.8% 9.6% 9.0% 9.9% 10.0%10.4%

10.7%10.3%

10.1%

2.2%

9.9%

2.9%

0.3% 1.6%

5.3% 8.5%

10.7% 11.1%10.2%

11.9%

20.7%

12.5%

9.3%

11.6%

15.3%

18.9%

21.8% 21.4%20.4%


UkraineUnit Value Growth Volume Growth Nominal Value Growth

110


Due to a strong summer season, the top three categories contributing most to

FMCG growth were Beverages (alcoholic and non-alcoholic) and Snacks.

TOTAL UKRAINE – SUPER CATEGORIES PERFORMANCE

TOTAL UKRAINE – MANUFACTURER PERFORMANCE - FMCG

Higher than average growth of Top 11-30 manufacturers indicates higher

competitiveness and fragmentation of the market.


Total FMCG 100.0%

Beverages - Alcoholic 21.6%

Beverages - Non Alcoholic Rtd &

Not Rtd20.7%

Confectionery & Snacks 18.1%


Personal Cleaning & Hygiene 9.2%

Household 5.3%

Seasoning & Sauce 4.0%

Baby Care 2.2%

Meals/Meal Mixes Shelf Stable 2.2%

Pet Food 1.9%

Baby Food & Drinks 1.7%

Desserts/Cakes/Sweet Products 0.6%

20.7%

17.7%

18.3%

27.1%

22.4%

18.5%

22.3%

16.7%

17.4%

24.2%

23.6%

25.9%

20.0%


Total FMCG 100.0%

Top 1-5 23.7%

Top 6-10 13.3%

Top 11-30 23.0%

Top 31-100 20.4%

100+ 13.9%

Private Label 5.7%

20.7%

19.9%

18.3%

23.2%

20.3%

21.8%

18.7%

MAT Q2-2018 MAT Q2-2018

MAT Q2-2018 MAT Q2-2018

111


WHAT IS DRIVING CONSUMER LIFESTYLE CHANGES?

IN THE INDUSTRY: QUEST FOR CONVENIENCE WEST EUROPE

AGING POPULATION

56%

LOOK FOR STORES IN

CONVENIENT

LOCATIONS

35%

WANT TO SPEND LESS

TIME GROCERY

SHOPPING “IT IS A

CHORE”

37%

PREFER STORES

WHERE IT’S EASY TO

GET IN AND OUT

QUICKLY

23%

WISH THERE WHERE

MORE PRODUCTS TO

MAKE EASY THEIR

LIFESTYLES

INCREASED

URBANIZATION

RISING POPULATION

DENSITY

MORE FEMALES IN

WORKPLACE

WIDER TECH

ACCESS

WHAT ARE CONSUMERS SEEKING?

EASE, UTILITY & SIMPLICITY

DISCOVER HOW COMPANIES CAN CATER TO CONVENIENCE

Download THE QUEST FOR CONVENIENCE report. Reach out to your local client service team for local specifics.

+0.4M WORKING

WOMEN (70% FEMALE

LABOUR FORCE)

+17M URBANIZED

PEOPLE (80% OF TOTAL

POPULATION)

90% INTERNET

PENETRATION (VS. 85% IN 2015)

20% YOUNG

-0.4M

36% WORKFORCE

-11.1M 44% OLDER

+20.9M

BY

2025

*

* POPULATION - YOUNG: 0-19 YEARS | WORKFORCE: 20-49 YEARS | OLDER: 50+ YEARS

LONGER

COMMUTING

40%

40%

40%

LONDON +2% VS. 2015

CONGESTION

LEVEL (2016)

MARSEILLE +2% VS. 2015

ROME +2% VS. 2015

+4% INDIVIDUALS

PER KM2

(VS. 2015)

CONVENIENCE

WILL BE A NECESSITY

http://www.nielsen.com/us/en/insights/reports/2018/the-quest-for-convenience.html

112


AGING POPULATION

60%

LOOK FOR STORES IN

CONVENIENT

LOCATIONS

43%

WANT TO SPEND LESS

TIME GROCERY

SHOPPING “IT IS A

CHORE”

44%

PREFER STORES

WHERE IT’S EASY TO

GET IN AND OUT

QUICKLY

31%

WISH THERE WHERE

MORE PRODUCTS TO

MAKE EASY THEIR

LIFESTYLES

WHAT IS DRIVING CONSUMER LIFESTYLE CHANGES?

INCREASED

URBANIZATION

RISING POPULATION

DENSITY

FEMALES IN

WORKPLACE

WIDER TECH

ACCESS CONVENIENCE

WILL BE A NECESSITY

WHAT ARE CONSUMERS SEEKING?

EASE, UTILITY & SIMPLICITY

DISCOVER HOW COMPANIES CAN CATER TO CONVENIENCE

Download THE QUEST FOR CONVENIENCE report. Reach out to your local client service team for local specifics.

-4.5M WORKING

WOMEN (60% FEMALE

LABOUR FORCE)

+9M URBANIZED

PEOPLE (71% OF TOTAL

POPULATION)

76% INTERNET

PENETRATION (VS. 67% IN 2015)

25% YOUNG

+2.9M

40% WORKFORCE

-11.4M 35% OLDER

+12.6M

BY

2025

*

* POPULATION - YOUNG: 0-19 YEARS | WORKFORCE: 20-49 YEARS | OLDER: 50+ YEARS

LONGER

COMMUTING

50%

44%

66%

BUCHAREST +7% VS. 2015

CONGESTION

LEVEL (2016)

MOSCOW

SAINT

PETESBURG +1% VS. 2015

+2% INDIVIDUALS

PER KM2

(VS. 2015)

IN THE INDUSTRY: QUEST FOR CONVENIENCE EAST EUROPE



113


Economy Watch

% GDP per annum growth sourced from Economist Intelligence Unit (EIU)

Inflation, consumer prices % change per annum sourced from Economist

Intelligence Unit (EIU) or from local government statistics offices where

unavailable.

The Conference Board® Global Consumer Confidence Survey is conducted

in collaboration with Nielsen. - Survey is based on respondents with Internet

access. Index levels above and below 100 indicate degrees of

optimism/pessimism. Q1 2017 CCI results are unavailable this quarter due to

a Nielsen global survey service enhancement.

FMCG Market Dynamics - compares overall market dynamics (value and unit

growth) in the Fast Moving Consumer Goods sector based on the sales

tracking Nielsen performs in the mentioned markets. The FMCG definition is

based on the widest possible basket of product categories that are

continuously tracked by Nielsen in each of these countries and channels.

Nominal value growth: Percentage change in value sales (expenditures) as

measured by the total basket of reported product categories

Unit value growth (≈ ‘price’ change):

• 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 behaviour.

Volume growth: Percentage change in purchased volume (quantity) of

products

Super Category Performance – definition of Super Categories are based on

local market definitions

CLICK HERE FOR DETAILS

DEFINITIONS AND SOURCES

https://www.nielsen.com/content/dam/nielsenglobal/eu/docs/quarterbynumber/qbn-super-category-eu-q2-2018.pdf

114


ABOUT NIELSEN

Nielsen Holdings plc (NYSE: NLSN) is a global measurement and

data analytics company that provides the most complete and trusted

view available of consumers and markets worldwide. Our approach

marries proprietary Nielsen data with other data sources to help

clients around the world understand what’s happening now, what’s

happening next, and how to best act on this knowledge. For more

than 90 years Nielsen has provided data and analytics based on

scientific rigor and innovation, continually developing new ways to

answer the most important questions facing the media, advertising,

retail and fast-moving consumer goods industries. An S&P 500

company, Nielsen has operations in over 100 countries, covering

more than 90% of the world’s population. For more information, visit

www.nielsen.com.

Quarter by Numbers Europe Q2 2018 - Nielsen · The Austrian economy is continuing its solid...

Documents

Transcript of Quarter by Numbers Europe Q2 2018 - Nielsen · The Austrian economy is continuing its solid...