SymphonyIRI Group - H1 2011 - EU Topline Report

8/3/2019 SymphonyIRI Group - H1 2011 - EU Topline Report

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Tim Eales

Director of Strategic Insight

Topline Report Half Year (H1 2011)

Is economic uncertainty affecting FMCG sales?


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3 Copyright SymphonyIRI Group, 2011. Confidential and Proprietary.

2.8

1.6

0.70.8

0.7

1.5

Germany Netherlands France UK Italy Spain Greece

GDP Growth Q2 2011 - % change vs. previous year

Source : Eurostat Q2 11 - Published 6th September 2011

Growth rates of GDP in volume(based on seasonally adjusted data)

Euro area GDP up by 0.2%

na


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Q2 2011 - Euro area unemployment rate slightly up by 0.3%

Source : Eurostat Q2 11 - Published as at 15th September 2011

0.40.8

0.51

-6.4

-0.9

1.4

Netherlands Germany UK Italy France Greece Spain

% CHANGE IN UNEMPLOYMENT RATEvs. Q1 2010


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2.2 2.0

3.1 2.7

-1.0

2.21.7

Netherlands Germany UK Italy France Greece Spain

FMCG Growth H1 2011 - % change vs. previous year

0.4

-0.9

1.81.0

2.2

0.4

VALUE TREND

VOLUME TREND

NA

France, Italy and Spain, with the lowest priceincreases are showing growth

With prices up more in Germany and UK, volume is declining.


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FMCG Consumer Reaction to Economic Uncertainty H1 2011

Prices are continuing to rise everywhere, this is more apparentamongst food categories than non-food

The effect on volume sales trends has been most noticeable inGermany and the UK

Greece is the only country where value sales are down as

well as volume sales

Rising prices has predominantly produced increased value

sales

France, the Netherlands, Italy and Spain all showed volume growth inH1 2011. Increased purchasing for in-home will have contributed tothis

Greece has reported that companies are pulling back on trade

promotions in order to boost profits as sales are squeezed As suspected, the slowdown in volume sales that we saw in Q1 was in

part due to the timing of Easter in some countries. However, H1 stillshows volume reduction or a slowdown in growth in all countriesexcept Italy and Spain

H12011


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2.03.0 2.3

3.9

2.1 2.02.6 2.9

2.23.4

2.83.9

1.8 2.02.6

1.2

-1

0

1

2

3

4

5

6

VALUE VOLUME PRICE

In France, Food sales are holding up, with prices slightly upand volume growing. Non-Food volume was stable in H1.

Trend of Food Sales in France(Packaged Food, Confectionery, Drinks, exc. Alcohol)

0.4

3.2 2.9 3.2

1.7

0.6 0.91.6

-1.0

1.4 1.5 1.4 0.0

-0.3-0.7

0.3

-2

-1

0

1

23

4

5

6Trend of Non-Food Sales in France

(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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Overview - France

Consumer confidence levels are still rather low. Most of the economicindicators are rather badly positioned (unemployment rate and GDP).

The inflation rate has been globally quite strong. Inflation for FMCG is

growing month after month (and reached +2.2% in June). All retailershave not yet done their price revisions, so we can expect priceincreases in the coming months, however, the inflation rate should notexceed +3% on H2 (and +2% overall in 2011).

Despite this context, so far we have seen quite a good growth rate on

FMCG products in hyper and supermarkets, while sales in harddiscounters are totally flat. National brands have generally performedbetter than own label, although own label market share has showngrowth in May and June.

Most departments/sectors have a positive trend, especially nonalcoholic beverages (thanks to a very sunny spring). Almost 60% ofcategories have been growing during the first half of 2011.

H2 should be less positive and we foresee that sales will only be flat involume.

VAT on Food 5.5% & 19.6%


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5.1

2.91.4

3.6

-3.0

0.92.3

4.1

6.54.3

2.6

6.4

-3.5

2.42.00.8

-4

-2

0

2

4

6

8

VALUE VOLUME PRICE

In Italy, H1 2011 trend vs. 2010 has shown growth for Food in Value andVolume despite prices rising but the Non-Food sector is declining.

Trend of Food Sales in Italy(Packaged Food, Confectionery, Drinks, inc.. Alcohol)

3.3

4.5

1.8

1.1

-2.0

-3.3 -2.7

-0.8

1.3

3.8

1.4

-1.9-3.0 -2.4

-0.9

0.8

-4

-3

-2

-1

0

1

2

3

4

5Trend of Non-Food Sales in Italy


SOURCE: SymphonyIRI, All OutletsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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Inflation rate in FMCG - Italy

Tot. Italia Ipermercati + Supermercati + Superette

% Price changes - FMCG

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Nov-08

Jan-09

Mar

-09

May

-09

Jul-0

9

Sep-09

Nov-09

Jan-10

Mar

-10

May

-10

Jul-1

0

Sep-10

Nov-10

Jan-11

Mar

-11

May

-11

Jul-1

1

Difference (Mix effect) basket Inflation FMCG Inflation

After 16 months of deflation since December 2010 westarted registering a price increase in FMCG

During the last 4 months inflation has been around + 2%


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Overview - Italy

The macro economic scenario in Italy shows a low growth for both consumptionand GDP (+0,3%- Source: Istat).

Unemployment is up to 8% in July 2011. The rate of youth unemployment (15-24years) is at 27.8% (-0.4%).

Consumer confidence fell again in July (Index is 103.7- Source Istat) due to highunemployment and massive public spending cuts, reducing consumerdiscretionary expenditure.

2011 H1 volume trends registered a better performance than 2010, mostly in the

food categories. Home care and personal care are performing worse insupermarkets and hypermarkets whilst they are registering growth in Specialisedchannels.

Annual CPI inflation for 2010 was +1.6%, now its around 2% (since for 4months).

Large increase in the number of own labels resulting in share improvementparticularly in premium price after 2 years.

Trade promoted volume is relatively high at around 25%. Own label promotionsare increasing more that branded products ones.

VAT on Food 4% & 10%


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-0.5

0.0

-0.9

0.3

-0.6 -0.5

0.0

2.3

3.1

4.8

3.2 3.2 1.7 1.92.41.8

-6

-4

-2

0

2

4

6

VALUE VOLUME PRICE

In Spain, food prices have started to rise after a long period of falling.Volume and Value sales remain in growth in H1 2011.

Trend Spain Food Sales in Spain(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-1.0-0.1

0.4 1.4 0.6

2.0

0.8

2.2

3.8 4.45.2 5.2

2.6 3.9 2.8 3.2

-6

-3

0

3

6Trend of Non-Food Sales in Spain


SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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3.8

1.2

3.2

1.9 1.6

5.1

2.8

0.8

2.92.5

1.1 1.1 1.0

0.1

- 1.0- 1.2

5.2

1.7 1.52.2

3.32.7

4.7

4.3 3.9 3.3 3.3

2.1 2.41.5 1.8

0.7

3.6

1.51.0

1.4 1.4

0.2

2.11.4

- 1.8

1.4

2.2

4.5

- 1.9

6.6

5.9

5.8

5.1

4.8

5.85.0 5.0

4.82.6

2.1

0.2-0.6

-2.5

-3.5-3.6-4.5-4.6

-4.1-4.1-4.4-4.3-4.5-4.0

-3.2-2.6

- 2.2- 2.3-2.1-2.0-2.1-2.3-2.1- 1.8

- 1.3-0.7

1.3

1.0

1.3

3.03.9

3.1

1.2

0.2

-3.6

1.0

-0.70.0

0.5

2007

2008

2009

2010

H1

2011

P01-08

P02-08

P03-08

P04-08

P05-08

P06-08

P07-08

P08-08

P09-08

P10-08

P11-08

P12-08

P01-09

P02-09

P03-09

P04-09

P05-09

P06-09

P07-09

P08-09

P09-09

P10-09

P11-09

P12-09

P01-10

P02-10

P03-10

P04-10

P05-10

P06-10

P07-10

P08-10

P09-10

P10-10

P11-10

P12-10

P01-11

P02-11

P03-11

(*)P04-

P05-11

P06-11

Consumption Price

Sales Evolution FMCG Market vs. previous year: demand and price evolution

Spain - Prices stopped decreasing in March


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Overview - Spain

Unemployment was 20.9% in Q2, a little bit lower than Q1. Summer timehistorically pushes employment with the rise of temporary jobs.

Annual inflation (CPI) for 2010 was +2.0%. By August 2011 it had risen to

+3.0%. GDP stays in the same rate at +0.7%.

Sales in H1 has increased +2.2%. This is due to the increase ofconsumption, +1.6%, and especially prices, +0.5%, which continue to go

up - after decreasing for the last two years due to the recession. Although shoppers are sensitive to prices, store and shelves are key

drivers to leverage sales.

Trade promotion levels are still high, but lower than last year, under 19%.

Less new products have been launched, but they are performing better(the SRI is higher than in previous years).

Own label for H1 is 41%. This is one point above 2010 total.

VAT on Food 8% and 18%


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2.23.6

1.70.1

-5.0

3.4

1.3

-0.5

-6

-4

-2

0

2

4

6

VALUE

Against headline inflation of over 4% the value sales trend of Grocerywould suggest a significant reduction in the amount bought.

Trend of Food Sales in Greece(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-1.6 -1.9

2.6

-1.7

-9.4

0.7

-2.5-1.7

-12

-10

-8

-6

-4

-20

2

4

6 Trend of Non-Food sales in Greece(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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Overview - Greece

Inflation in Greece was +1.7% for the first semester of 2011.

Unemployment rates during the first semester of 2011 reached 16.3%.

GDP for the first six months of 2011 was -7.3%.

Promotion intensity has declined, since companies are trying to meettheir profit margins. Within promotion activities, those with price off aregaining share.

Retailers are promoting own label products more and more.

Food category sales seem to suffer less, due to consumption atransfer from other small stores (e.g. kiosks, haberdasheries,convenience) to supermarket/hypermarket stores.

The top 7 retailer groups are gaining market share at the expense of

smaller chains (due to both organic growth and stores networkexpansion). Especially for Lidl where there was an increase of sales in2011.

VAT on Food 23%


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1.6

0.70.2

1.4

0.0

1.1

2.42.7

1.9 1.93.1

1.4

3.3

0.71.5

-0.2

-2

-1

0

1

2

3

4

VALUE VOLUME PRICE

In the Netherlands, the growth rate of Food has slowed as prices beginto increase. Non-Food volume has fallen.

Trend of Food Sales in the Netherlands(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-2.1

2.2

0.9

-2.1

0.5

-1.8-1.3

0.2

-5.2

4.1

-1.0

0.9

-1.6-1.9

0.11.5

-6

-4

-2

0

2

4

Trend of Non-Food Sales in the Netherlands(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, All OutletsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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Overview The Netherlands

Unemployment is very low, in June it was just 5%.

Food prices are beginning to increase, and it looks like

volume growth is declining. Non-Food prices have been falling for most of the past

year as Supermarkets face increased competition fromDrugstores. In 2011 the prices in supermarkets have

increased again. Trade promoted volume is quite stable.

VAT on Food : 6%


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-0.8

-2.0

-0.7

1.8

-1.2

2.1 2.42.5

-1.2 -0.3

1.1

-1.1

0.30.50.22.2

-3

-2

-1

0

12

3

4

VALUE VOLUME PRICE

In Germany, the effect of rising Food prices seems to have hit inH1 2011 and Non-Food grows slightly in volume as prices fall.

Trend of Food Sales in Germany(Packaged Food, Confectionery, Drinks, exc. Alcohol)

0.9

2.31.7

2.5

1.61.0

-0.5 -0.7

0.7 0.30.5 0.20.2 0.91.81.4

-3

-2

-1

0

1

2

3

4

Trend of Non-Food Sales in Germany(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, All Outlets inc. AldiYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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The current situation for several countries within the EU is leading touncertainty as well as a loss of trust in the economy perspectives are notas positive as they were at the end of Q1 2011.

6.9% of the German population is unemployed in June 2011(it was 7.5% inJune 2010) this number has been going down steadily since January2011.

The consumer price index end at the end of June 2011 is 2.3% higher thanin June 2010.

Total FMCG sales for the first half of 2011 have gone up by 1.7%compared to 2010 - strong categories are beverages, dairy products andfrozen food.

An increasing price trend of 1.4% underlines the fact that value is growingat a faster rate than volume we can see volume sales decreasing at a

much stronger rate than value. When comparing own label evolvement, there are certain categories that

show dynamic growth (frozen food, dairy, food) and others with losses (petfood, household, sweets).

Overview - Germany VAT on Food 7% & 19%


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5.1

3.3

2.5 1.8 1.51.9

4.0

2.3

1.0 1.11.7

-0.7

0.50.1 0.01.0

-1

0

1

2

3

4

5

6

VALUE VOLUME PRICE

In the UK, price rises are hitting home as volume has declined inH1 2011 on both Food and Non-Food.

SOURCE: SymphonyIRI, All Outlets, YoY Value & Volume price changeExcludes Northern Ireland

Trend of Food Sales in the UK(Packaged Food, Confectionery, Drinks, exc. Alcohol)

2.4 2.1

1.0 1.5

-0.1

1.0

3.5

1.2

1.1 1.6 0.9

-0.8 -1.2

1.3

-1.6

0.3

-3

-2

-1

1

23

4

5

6

Trend of Non-Food Sales in the UK(Pet Food, Health, Toiletry, Household)

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011


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Overview United Kingdom

At 4.5% for August 2011, inflation is above the Governments target.

Unemployment remains close to 8%. Temporary employment has increased within thistotal. This level is expected to increase.

GDP grew in the 2nd quarter of 2011 by 0.7% vs Q2 2010.

VAT was reduced in Dec 2008, returned in Jan 2010 and went up again in Jan 2011.

Credit has stabilised but the savings ratio has started to fall.

Own Label (OL) value share is increasing slightly in Food & Drink, unit share is up a littlemore but so far the anticipated rise of OL hasnt really happened since brands arepromoting strongly.

Prices started to rise before VAT went up in Jan 2011 and continue to go up. The currentrate of increase is +3 to 4%.

FMCG sales started to falter and volumes are down in 2011. The growth in Q4 was as aresult of bad weather inducing stocking up, pre VAT sales, extra shopping day in theChristmas week and perhaps a feeling to have a good Christmas before cutting back in

2011. A spell of good weather, a different timing for Easter and the Royal Wedding all

contributed to growth at some stage but the underlying volume trend is still down.Summer seasonal products have performed badly due to poor weather from May to July.

VAT on Food 0% & 20%


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Tim Eales

Director of Strategic Insight

Topline Report Half Year (H1 2011)

Topline Trade Promotion Trends


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24 Copyright SymphonyIRI Group, 2010. Confidential and Proprietary.24 Copyright SymphonyIRI Group, 2011. Confidential and Proprietary.

0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Deal levels vary enormously across Europe - Food

GERMANY

NETHERLANDS

UK

ITALY

SPAINFRANCE

% SALES WITH TRADE PROMOTION (Volume SP, NL, UK Value IT, GE, FR)

Trade Promotion level is still very high in the UK but has started toslow down. In France and in the NL, the drop is continuing


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0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Deal levels vary enormously across Europe Non-Food

GERMANY

NETHERLANDS

UK

ITALY

SPAINFRANCE


Trade Promotion levels have again increased strongly in the UK, when in the

other countries it has dropped.


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0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Deal levels vary enormously across Europe All Products

GERMANY

NETHERLANDS

UK

ITALY

SPAINFRANCE


Strong decrease in Trade Promotion levels in Food in Q2,which is impacting total FMCG


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Turning Insights Into Actions

Insights Recommendations

As prices rise, shoppers will beactively looking for tradepromotions.

Categories beginning to lose salesas shoppers carefully manage theirbudgets.

Shoppers looking for value for

money.

Shoppers buying more based onneed than want.

Reduce deal depth to maximisevalue sales when on offer.

Innovate to stimulate interest andcuriosity in the category.

Maintain, if not, increase weeks on

deal.

Stimulate need through mediaactivity


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Final Notes

Source: SymphonyIRI Group InfoScan, syndicated retail tracking service

Methodology: Seven quarters of review, YoY data for FMCG

Country coverage: France, Germany Greece, Italy, the Netherlands,

Spain, United Kingdom

To gain deeper insights, predictive analysis and

recommendations on specific products, categories,segments, channels or retailers

contact your SymphonyIRI Consultantor email to: [email protected]

Contact: SymphonyIRI Group, [email protected], Tel: +33 1 30 06 23 62

SymphonyIRI Group - H1 2011 - EU Topline Report

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