London, 18 November 2014 – Prices being paid for FMCG goods across Europe have risen by their lowest level in almost four years, curtailing sales revenue growth - according to the latest figures released today by Nielsen.
In the third quarter of 2014, FMCG sales, aggregated across Europe, were up 2.0% year-on-year. This growth in takings was driven by a 0.3% rise in sales volumes and just a 1.7% rise in prices paid. The last time prices rose less than 1.7% year-on-year was Q4 2010 (1.5%).
Nielsen’s European director of retail insights Jean-Jacques Vandenheede says: “Across the region, the annual increase in prices paid for FMCG goods – as a result of both price inflation and shoppers switching between different-value items – has dropped below 2% for the first time since 2010. The fall can be attributed to a decline in the prices being paid in the big five western European markets between Q2 and Q3. What’s more, France, Italy and Spain have actually experienced deflation.”
In Q3, Turkey experienced the highest nominal year-on-year sales growth (+13.4%) among the 21 European countries measured, followed by Hungary (+4.4%) and Norway (+4.3%).
Of the big five western European markets, Spain (+0.7%) had the highest nominal growth. Finland (-3.2%) had the largest decline in nominal growth, followed by Portugal (-2.4%) and the UK (-1.8%).
Nielsen’s UK head of retailer and business insight Mike Watkins comments: “Slowing inflation is much more apparent in the UK than across Europe as a whole. This is primarily due to supermarkets adjusting pricing strategies in response to falling sales volumes and the growth of the discounters, which enjoyed 19% FMCG sales growth in Q3. Furthermore, this is compounded by food inflation in supermarkets reaching an eight-year low and remaining below the Consumer Price Index for the last six months."
E.g. Europe’s 2.0% nominal growth was accounted for by a 1.7% increase in prices paid and a 0.3% increase in volume
The nominal increase in FMCG sales across Europe is being driven by higher prices being paid for goods, rather than volume increases. Only two of the 21 measured European countries experienced price rises above 3.0% (Turkey and the Czech Republic); four experienced year-on-year deflation.
Turkey (3.7%) and Norway (2.6%) saw the largest increase in sales volume. Over half (12) of the countries measured saw a decline in sales volume, Finland (-5.0%) and Austria (-3.5%) having the largest decreases.
Vandenheede concludes: “Retailers have some reason to be cheerful as the year-on-year rise in sales volume hit its highest level since 2011 – excluding last quarter’s Easter ‘anomaly’. In addition, FMCG sales volumes usually increase a couple of quarters after prices fall so things are looking encouraging – in terms of volume at least – for the first quarter of 2015.”
Unit Value Change = the change in the price paid by a shopper for a unit (item), as a result of price inflation, and/or the shopper substituting a unit of one value for a unit of a different value.
Nominal Value Growth (or the change in takings at the tills) = Unit Value Change + Volume Change
The Nielsen Growth Reporter compares overall market dynamics (value and unit growth) in the FMCG sector across Europe. It is based on the sales measurement that Nielsen performs in 21 European markets, and covers sales in grocery, hypermarket, supermarket, discount and convenience channels. It’s based on the widest possible basket of product categories that are continuously measured by Nielsen in each of these countries and channels.
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.