The amount Europeans paid for everyday groceries (on the widest possible basket of product categories that are continuously tracked by Nielsen) increased by +3.4% in Q2 2019 (up 0.9% from Q1 2019), after three previous quarters of muted growth. The seasonal adjusted GDP growth for the European Union rose by 0.2%1 the second quarter of 2019 compared to the previous quarter, annual GDP growth recorded at 1.4% in Q2 2019 compared to 1.6% in Q1 2018 for EU28. Household consumption in Europe during the second quarter supported the GDP growth with 0.3% rise compared to Q1 2019.
On the consumer side while FMCG volume growth in Q2 2019 has been recorded at +0.5% (up by 1% as compared to -0.5% in Q1 2019), it is on account of the Easter season effect and should be read as temporary indicator. Notably, inflationary spikes have led to consumers paying 2.9% more per item than they did in the same quarter compared to the previous year (2% in Q2 2018).
“The annual inflation rate in the Euro Area is 1%, which is close to a three year low, as energy price inflation slows down,” said Johan Vrancken, Managing Director Nielsen Benelux. “However with the prices of food, alcohol & tobacco and services rising faster, we expect inflationary pressure on FMCG purchasing. Manufacturers and retailers would need to think about how this would affect consumers’ spending in FMCG and choice of brands while making purchasing decisions. The demand push will have to be driven by effective promotional and marketing strategy as consumers will be cautious in their approach towards managing their finances and spending across categories,” adds Vrancken.
How different countries compare
Turkey continues to show the highest year-on-year growth in takings at the tills (+19.4%), contributed due to inflation, however there is a decline in volume growth which is at negative growth levels (-5.4%) in Q2 2019. Other countries that have recorded high growth numbers are Hungary (+7.7%), Poland (+7.1%), Czech Republic (+6.6%), Slovakia (+4.6%) and Portugal (+4.2%). On the other hand Finland (0.3%) had the smallest growth. Belgium ranked 17th of the 28 countries.
Italy ranked on top with the highest FMCG growth rate (+4%) in the second quarter of 2019, among the big five Western European markets, followed by Germany(2.4%) and Spain (2.3%), whilst France and UK recorded 1.3% and 0.7% FMCG growth in Q2 2019 respectively.
the situation in BELGIUM
In comparison to the European average, in Belgium, the prices paid rose 0.8% while volumes also grew 0.2%, meaning total grocery – or what the industry calls fast-moving consumer goods (FMCGs) – spend rose 1.0%.
“Value creation in Belgium has mainly been driven by price increases during the past ten years, which has created a price gap in neighboring countries — and consequently more cross-border sales. This explains much of our flat volume sales the last four years. In 2019, we’re seeing less drastic price increases, in part due to more promotions. When we look at the price increases in the Netherlands (due to the VAT increase) and France (due to the promo law), we can anticipate a significant decrease in the price gap with neighboring countries. This could have a favorable impact on local volumes sales, should manufacturers get their pricing strategy right,” said Vrancken.
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
1 Q2 2019 estimates by Eurostat EU28
About the Nielsen Growth Reporter
The Nielsen Growth Reporter compares overall market dynamics (value and unit growth) in the Fast moving Consumer Goods sector across Europe. It is based on the sales measurement that Nielsen performs in 28 European markets, and covers sales in grocery, hypermarkets, supermarkets, 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.