Sluggish growth among the world’s largest FMCG brands2021年9月16日 | 新闻稿
- Covid-19 drastically altered the fortunes of the FMCG sector, shaking up the rankings of the Global 50
- Revenue growth fell to 1.1% in 2020, significantly lower than 2016-19, but this masked sector variations with Food and Drink thriving whilst Alcohol and Cosmetics were down
- M&A volumes fell to less than 10% of 2015 levels as companies exercised caution
- Brands placing greater financial emphasis on sustainability initiatives in response to increased consumer scrutiny
The world’s FMCG giants saw their collective revenues fall to the lowest level since 2016 as Covid-19 wrought significant disruption, the annual OC&C Global 50 reveals.
Overall revenue growth amongst the Global 50 reduced to 1.1% in 2020, down from 3.9% in 2019 and the lowest since 2016, while profit margins fell by 0.3% to 18.4%, a reversal of steady increases since 2016.
Now in its 19th year, the OC&C Global 50 examines the financial performance of the world’s largest consumer goods companies. Produced by OC&C Strategy Consultants, it is the industry authority on the statistics and big themes that drive the FMCG sector.
The overall revenue growth figure hides significant variation in the fortunes of the Global 50 during 2020, with Covid-19 negatively impacting some sectors more than others. Exactly half grew their revenue in 2020, while the other 25 players, including the top-ranked Nestlé, saw a drop off.
The Food and Drink sector is responsible for the majority of those who climbed the rankings this year. These include Wilmar (21.2% turnover growth), Conagra (15.9%) and Grupo Bimbo (13.4%), whose grocery divisions all benefitted from the almost blanket closure of bars and restaurants across the world during the height of the Covid-19 lockdown last Spring.
Conversely, the Alcohol and Cosmetics sectors experienced significant downturns amid these closures and by extension the mass shutdown of global events. LVMH (19.4% reduction in turnover), Heineken Holding (-17.7%) and Diageo (-8.3%) were among those worst hit. Nestlé also saw an 8.9% reduction, however retained first position in the rankings.
Commenting on the report, Will Hayllar, Global Managing Partner at OC&C Strategy Consultants, said: “The latest Global 50 findings have exposed the significant nuances within the FMCG sector. While headlines during the height of Covid-19 focused on booming grocery sales, the overall impact on the large multinationals was less positive given their exposure to worse performing categories and channels. The extent of the drop-off among some of the larger players is striking and has wiped off the gains made from the painstaking long-term process of shifting portfolios away from slower-growth categories.”
M&A activity saw a significant drop off in 2020, both in terms of total transaction value and the size of deals. The average deal size almost halved from $0.94bn in 2019 to $0.49bn in 2020, while the total value is minuscule compared to previous years at $22bn, less than half that of 2019 ($48bn) and less than a tenth of the 2015 figure ($226bn).
Of the multinationals that did engage in M&A activity, these were companies seeking to invest in the long term from a position of strength. These include Nestlé who have sought to bolster their tech capabilities with the acquisition of pharma company Aimmune. Others used M&A to protect bottom lines or to focus on core strategies, with Kraft Heinz and AB InBev among those spinning off assets to reduce their leverage.
Will Hayllar continued: “The scale of M&A was a far cry from previous years with caution very much the prevailing sentiment. However, we are seeing a strong rebound in 2021 with the availability of cheap finance and the desire to align with the new normal driving significant M&A activity.”
Sustainability is also rising on the agenda of the Global 50. An OC&C consumer survey conducted as part of the report found consumers care more about sustainability issues now than before Covid-19, with an particular increase on social and community issues.
The Global 50’s top 10 have taken note and have all committed to a broad set of ESG goals and topics, which have grown from focusing on environmentral initiatives to address broader imbalances. Proctor & Gamble will spend $200m to work with women-owned businesses by 2025, while Nestlé has reaffirmed its commitment to adopting human rights due diligence processes as part of a $3.6bn pledge to cut its carbon footprint over the next five years.
A full leaderboard of the Global 50 can be found below.
ABOUT OC&C GLOBAL 50
The Global 50 is OC&C Strategy Consultants annual snapshot of the world’s largest 50 FMCG businesses. Now in its 19th year, it is the industry authority on the statistics and big themes that drive the sector. Information is taken from the latest annual report of each business. Turnover is stated in US dollars but growth rates quoted are those in the local currency in which each company reports.