The story of FMCG in Belgium has remained relatively unchanged during the past few years: Growth has continually declined due to ongoing pressure on price and promotions, price gaps with neighboring countries and a consistent demand from Belgian consumers on getting a good deal. What’s new is that for the first time, we’re seeing red.
In 2019, the decrease in volume sales outpaced the relatively smaller increase in prices paid. As a result, the overall amount taken at the tills for the full year 2019 fell by 0.1%. As a retailer or a manufacturer, this raises alarm bells when looking at the potential for revenue growth this year and beyond.
Yet, despite the decline in sales, there are ways to find incremental growth across the fast-moving consumer goods (FMCG) landscape. Finding them will require understanding how the changing megatrends we’re seeing across Europe will create opportunity within the Belgian market.
The Consumer’s Changing Plate
According to our syndicated Nielsen Shopper Trends 2019 report, health is by far the No. 1 concern for Belgian shoppers—above increasing bills, immigration, terrorism and global warming. And our growing concerns about our health is driving a broader change in the way we eat.
Consumers are increasingly paying attention to what they put in their bodies, as diets we only used to talk about are now gaining adoption. We’re seeing increases in veganism, vegetarianism and flexitarianism. Diets are also on the rise like low-sugar, low-carb, paleo or the most popular diet according to Google in 2019: intermittent fasting. And all of these trends will have an impact on your sales.
Where are the opportunities for the FMCG market? There are quite a few actually. Over the past two years, meat replacements, for example, are showing a significant increase in innovation, marketing and sales in our neighboring market of the Netherlands, with ad spending increasing 85% last year and sales increasing 30%. That’s a huge increase in that market, linked to a significant increase in the mental and physical availability of the category. In just two years, we’ve seen the growth in choice for meat substitutes in the Dutch market increase from 61 to 91 SKUs. And growth isn’t coming just from A-Brands; 44% of the value growth of new introductions is coming from private label and hard discounters.
In Belgium, fresh products are the second highest growing category over the past five years, second only to salted snacks. These results tell us that while shoppers are increasingly thinking about what’s good for them, they’re not depriving themselves of some indulgence items. There is balance and room for both categories.
But, though we do see a greater interest in healthier products, we’re not seeing the same trends in Belgium on meat substitutes as we’re seeing now in the Netherlands. Belgium spends just a fraction of the advertising in the Netherlands for meatless products, and sees just a fraction of the sales as well. Knowing that the Belgian consumer has an appetite for health(ier) products, if brands and retailers boost advertising and innovation for meat substitutes in Belgium, they could potentially see sales grow as they have in the Netherlands.
Our More Complex and Busy Lives
The next driver of change is our lifestyles: 55% of European consumers say their lives are busier and more complex than two years ago. Things like traffic, working hours, constantly connected lifestyles and information overload are weighing on consumer lifestyles. And stress is seen by many health organizations as the health epidemic of the 21st century. But what’s the solution?
From an FMCG perspective, it’s really about taking convenience to the next level. Take a simple example of soup. You’re a single father, working full time but also responsible for making dinner for your family. In the past, you might have gone for a boxed soup. You might have tried to make it healthier with real vegetables, but that’s pretty time consuming.
Cue the rise of fresh and chilled soups, where you buy the vegetables in a pre-packaged “kit,” so you don’t need to search for recipes before you go to the store. In the Netherlands, you can see the introduction and rise in popularity of these types of soups in purple in the chart below. And in red, you’ll see the introduction of the next level of convenience for fresh soups: soup kits with the vegetables already pre-cut for you, and the bouillon cube included. These are examples of smart innovation, playing on our need for convenience, and driving incremental growth.
The Inevitable Rise of E-Commerce
Our latest data forecasts FMCG e-commerce sales to hit 10-12% globally in 2022—up from 6-7% last year. As online sales continue to accelerate, we’re seeing the evolution of e-commerce across the world following similar patterns.
Last month, Nielsen together with FMI revised the e-commerce projections we made in 2017. We now believe that food and beverage e-commerce sales in the U.S. will hit $143 billion dollars by 2025—an increase from our original projection of $100 billion.
What we’re seeing is that, while we previously believed Millennials would dominate omni-channel adoption, older and higher-income households are in fact leading the charge in moving toward integrated online and in-store shopping. Why is this important? It means that in more mature markets like the U.S., we’re seeing a bigger base of adopters than we originally predicted—and there’s no reason why we won’t see this in Europe as well.
Take the Netherlands again, for example. After years of hovering around the 1-2% share for grocery e-commerce, we’re finally seeing that acceleration we’ve been waiting for—with the e-commerce market projected to hit a 4.4% share this year. Now there are many reasons for this growth: a lot of brick and mortar players have ramped up in the Netherlands and the pure player Picnic ramped up in 2017, further helping to accelerate the Dutch market.
And before you say “Belgium’s e-commerce market is still small…”, think about the recent and coming retailer entrants in the market like bol.com, Albert Heijn, Jumbo, and Amazon’s opening later this year in the Netherlands. There is no way these retailers aren’t going to impact the Belgian market.
And it’s important to move fast. Consider this Nielsen research from China: 75% of the brands that were No. 1 online in this market in 2014 are still No. 1 today. This is a demonstration of the huge first-mover advantage, and a big recommendation for your strategies for tomorrow.
So to conclude, here are some ways we feel you can grow—tailoring your strategies to the changing and forthcoming megatrends in our market:
- Neighboring markets are showing that we can grow by tapping into the changing consumer plate, from things like plant-based innovations, to hybrid vegetable products.
- Don’t stick to the middle ground of “sort of healthy.” Winners will be the healthier alternatives and more indulgent products.
- If you combine healthier alternatives with convenience, you can tap into another growing segment—catering to consumers with less time than before.
- E-commerce will only grow, and it will grow at a pace higher than what you estimate it to today. Not only does it tap into Millennials’ digital preferences, but online options will appeal to all age groups if the offer is right.
- The first-mover advantage in e-commerce will give you return in the coming years as the industry matures. So if you haven’t started yet, start now!