Illinois Ag Connection - Uncertainty Results in Consumer Goods Forecast Downgrades

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Uncertainty Results in Consumer Goods Forecast Downgrades
Illinois Ag Connection - 10/21/2016

Global market research firm Euromonitor International's quarterly industry forecast statement for Q3 2016 shows the impact of recent political events to the global economy and fast-moving consumer goods (FMCG) industries.

From Brexit's impact on the UK and EU to the upcoming US presidential election, political uncertainty continues to challenge and influence the global economic outlook.

Within FMCG industries, Q3 forecast growth revisions point to marginal sales downgrades. In the short-term, several emerging markets will see a protracted recovery; however, growth will return over 2016-2020.

"FMCG companies must shift focus to markets with healthier growth opportunities such as India and Indonesia," Kotryna Tamoseviciene, macro analytics manager at Euromonitor, said. "Value-added consumer goods such as premium lager and skin care appear to offer more secure revenues, for now."

Key findings for Q3:

-- Packaged Food: Brazil experiences another decline in its snacks forecast, down by more than 46,000 tonnes compared to Q2.

-- Soft Drinks: Weaker than expected growth in the US has revised down per capita gross domestic product growth of 1.9 percent for 2016 to 1 percent.

-- Hot Drinks: Coffee is disproportionately affected by downgrades for the US, Brazil and Western Europe, which together account for close to half of global coffee sales.

-- Alcoholic Drinks: Premium lager is demonstrating potential for cushioning against macro shocks within this segment.

-- Tissue and Hygiene: Online sales of disposable hygiene products continue to grow, with more options for consumers, such as subscription services for sanitary protection.

-- Beauty and Personal Care: The sharpest downgrades are observed in men's toiletries and fragrances, both losing 0.5 percentage points in compound annual growth rate over 2015-2020.

-- Home Care: The Q3 update shows a further decline in US laundry care sales with a US$80 million downward revision.

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