SymphonyIRI - Topline Report - Q3 2011

8/3/2019 SymphonyIRI - Topline Report - Q3 2011

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Tim Eales

Director of Strategic Insight

SymphonyIRI Topline ReportThe Quarterly European Barometer

Third quarter (Q3 2011)

Is economic uncertainty affecting FMCG sales?


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2 Copyright SymphonyIRI Group, 2011. Confidential and Proprietary.

Key Findings

Confidence levels have decreased acrossEurope France by the most and in Germanythe least.

Purchasing power is under pressure due toincreasing prices, impacting mainly non foodvolume.

Prices are rising faster than earnings so thismeans Consumer Recession.

After a pause, promotion activity has started toincrease again in the UK, The Netherlands andSpain.

Own label is growing although National Brands

remain dominant. Own label operators are starting to use the

trade promotion lever more.

PRICE RISES

PURCHASEBASED ON NEED

MANAGE BUDGETS


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2.6

1.10.8 0.8

0.5

-5.2

1.6

Germany France Netherlands Italy Spain UK Greece

GDP Growth Q3 2011 - % change vs. previous year

Source : Eurostat Q3 11 - Published 15th November 2011

Growth rates of GDP in volume(based on seasonally adjusted data)

Euro area GDP up by 1.4%

Q2 11


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September 2011EU unemployment rate up from 9.5% in Jan 11 to 9.7%

4.5

8.3 8.39.9

17.6

22.6

5.8

Netherlands Germany UK Italy France Greece Spain

Source : Eurostat Sept 11

(4.3) (6.4) (7.8) (8.2) (9.7) (14.7) (20.4) (Jan 11)

JULY 11

AUG 11


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4.7

3.9 3.7 3.9

1.3

3.5

1.9

Netherlands Germany UK Italy France Greece Spain

FMCG Growth Q3 2011 - % change vs. previous year

0.1 0.0

1.5

0.5 0.3

2.6

-1.8

VALUE TREND

VOLUME TREND

Italy and Spain, with the lowest price increases are showing growth

With prices up more in Germany and UK, volume is declining.

UNITS trendfor Greece


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FMCG Consumer Reaction to Economic Uncertainty Q3 2011

Food prices are increasing (or at least no longer declining) inalmost all countries but this is not consistently impacting volumesales, except in Germany. However, non-food volume is generally

flat or declining. Prices are continuing to rise everywhere except for Food in Spain

and non Food in Germany.

Rising prices have predominantly resulted in increased value sales.

In Spain consumption has increased as Spanish are tired oftightening their belt.

Consumer expenditure has changed in many countries, movingspend from out of home to in-home. This will have contributed tovolume growth in some categories.

Promotion has decreased in France, Italy and Germany. Greecehas reported that companies are pulling back on trade promotionsin order to boost profits as sales are squeezed.

The trends that we saw for H1 have generally been repeated in Q3apart from a small volume growth for food in the UK which couldhave been driven by the poor summer.

Q3

2011


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2.03.0 2.3

3.9

2.1 2.02.6 2.9

4.5

2.23.4

2.83.9

1.8 2.02.6

1.2 0.8

-1

0

1

2

3

4

5

6

VALUE VOLUME PRICE

In France, Food volume sales are still growing, with prices well up. Non-Food volume is declining however.

Trend of Food Sales in France(Packaged Food, Confectionery, Drinks, exc. Alcohol)

0.4

3.2 2.9 3.2

1.7

0.6 0.91.6 2.1

-1.0

1.4 1.5 1.4

-0.6

0.0

-0.3-0.7

0.3

-2

-1

0

1

23

4

5

6Trend of Non-Food Sales in France

(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011


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Overview - France

The inflation rate reached +3% in September (as expected).

Despite this background, the trend is still toward volume growth forFMCG products in hyper and supermarkets (although the rate of growth

is decreasing).

Value sales in hard discounters are totally flat with volume decreasing inthis channel.

Private labels have been gaining market share as inflation returns (but

only in value). Concerning food products, the situation is improved for home made

products and essential categories (compared with ready to eat orpleasure products).

VAT on Food 5.5% & 19.6%


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5.1

2.91.4

3.6

-3.0

0.92.3

4.1 4.5

6.54.3

2.6

6.4

-3.5

2.4 2.02.00.8

-4

-2

0

2

4

6

8

VALUE VOLUME PRICE

In Italy, Q3 2011 trend vs. 2010 has shown growth for Food in Value andVolume despite prices rising but Non-Food volume is declining.

Trend of Food Sales in Italy(Packaged Food, Confectionery, Drinks, inc.. Alcohol)

3.3

4.5

1.8

1.1

-2.0

-3.3 -2.7

-0.8

0.61.3

3.8

1.4

-1.9-3.0 -2.4

-0.5-0.9

0.8

-4

-3

-2

-1

0

1

2

3

4

5Trend of Non-Food Sales in Italy


SOURCE: SymphonyIRI, All OutletsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011

VALUE GROWTHFROM INFLATION


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Inflation rate in FMCG Italy: In Sept the inflation rate of FMCG is almost equal to the

general inflation rate in the country. Consumers in this sector will be impacted.

Tot. Italia Ipermercati + Supermercati + Superette

% Price changes - FMCG

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

May

-07

Aug-07

Nov-07

Feb-08

May

-08

Aug-08

Nov-08

Feb-09

May

-09

Aug-09

Nov-09

Feb-10

May

-10

Aug-10

Nov-10

Feb-11

May

-11

Aug-11

Difference (Mix effect) basket Inflation FMCG Inflation

set-11


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Overview - Italy

The macro economic scenario in Italy shows a low growth for both consumptionand GDP (+0,3% in Sept- Source: Istat). This rate of growth is below theforecast from the beginning of the year. Moreover the trend is not positive,considering that Industry production is -4,8% vs. August.

Unemployment is up to 8,3% in Sept 2011. The rate of youth unemployment(15-24 years) is at 29.3% (+1.3%).

The purchasing power of households is under pressure. In the second quarter of2011 it decreased by -0,2% vs. the previous quarter. (Source Istat).

2011 Q3 volume trends registered a positive performance for Food & Beverage

while Home Care and Personal Care are still suffering (even if we can see signsof recovery). Home Care and Personal Care are performing worse insupermarkets and hypermarkets whilst they are registering growth in Specialisedchannels.

FMCG inflation is at around 3%. It is reaching the general inflation rateregistered from ISTAT. This means that the sector can not moderate pricesincreases any more.

Large increase in the number of own labels, resulting in share improvement,particularly in the premium price sector after 2 years.

Trade promoted volume is relatively high at around 25%. Retailer Own Brand

promotions are increasing more than National Brand promotions.

VAT on Food 4% & 10%


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-0.5

0.0

-0.9

0.3

-0.6 -0.5

0.0

2.3 2.0

3.1

4.8

3.2 3.2 1.7 1.9 2.62.41.8

-6

-4

-2

0

2

4

6

VALUE VOLUME PRICE

In Spain, food prices started to rise but have since fallen again andvolume remains buoyant. Non-Food prices are rising now.

Trend Spain Food Sales in Spain(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-1.0-0.1

0.4 1.4 0.6

2.0

0.8

2.2

4.0

3.8 4.45.2 5.2

2.6 3.9 2.8 3.2 2.5

-6

-3

0

3

6Trend of Non-Food Sales in Spain


SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011


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3.8

1.2

3.21.9 1.6

2.3

5.1

2.8

0.8

2.9 2.5

1.1 1.1 1.01.3

- 1.0 - 1.2

5.2

1.7 1.52.2

3.32.7

4.7

3.0

3.93.3 3.3

2.1 2.4

1.5 1.8

0.7

3.6

1.51.0

1.4 1.4

0.2

1.2

3.1

- 1.8

1.4

0.1

2.3 3.1

2.2

4.5

- 1.9

1.1

6.6

5.9

5.8

5.1

4.8

5.85.0 5.0

4.82.6

2.1

0.2-0.6

-2.5

- 3.5-3.6-4.5-4.6

- 4.1-4.1-4.4-4.3-4.5-4.0

-3.2-2.6

-2.2-2.3-2.1-2.0-2.1-2.3-2.1- 1.8

- 1.3

1.0

1.3

1.0

1.1

1.1

1.2

0.1

3.94.3

1.42.1

0.0

-3.6

0.2

-0.7-0.7

0.5

2007

2008

2009

2010

H12011

Q32011

P01-08

P02-08

P03-08

P04-08

P05-08

P06-08

P07-08

P08-08

P09-08

P10-08

P11-08

P12-08

P01-09

P02-09

P03-09

P04-09

P05-09

P06-09

P07-09

P08-09

P09-09

P10-09

P11-09

P12-09

P01-10

P02-10

P03-10

P04-10

P05-10

P06-10

P07-10

P08-10

P09-10

P10-10

P11-10

P12-10

P01-11

P02-11

P03-11

(*)P04-11

P05-11

P06-11

P07-11

P08-11

P09-11

Consumption Price

Sales Evolution FMCG Market vs. previous year: demand and price evolution

Spain - Prices stopped decreasing in March


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Overview - Spain

Unemployment was 21,5% in Q3, higher than Q2. Summer time historicallypushes employment with the rise of temporary jobs.

Annual inflation (CPI) for 2010 was +1.8%. By October 2011 it had risen to

+3.0%. GDP has increased +0.1% and the new rate is +0.8%.

Sales in Q3 has increased +3.4%. This is due to the increase ofconsumption, +2.3%, and also prices, +1.1%. Prices continue going up sincethe beginning of the year - after decreasing for the last two years due to the

recession.

Although Spain is still in recession, shoppers have learnt to buy, and theyhave internalized their shopping strategies, so they spent less time in front ofthe shelf to choose their shopping basket. Shoppers also seem to be tired oftightening their belts, and consumption has been positively affected.

Although shoppers are sensitive to prices, store and shelves are key drivers toleverage sales.

Trade promotion levels are decreasing, under 18%.

Own label for Q3 is 41%. This is one point above 2010 total.

VAT on Food 8% and 18%


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2.23.6

1.7 0.1

-5.0

3.4

1.3

-0.5

1.82.8 2.2

-2.3

5.52.4 2.01.5 0.4

1.0

-6

-4

-2

0

2

4

6

8

VALUE UNITS

In Greece, after a period of continuous price reduction, Food unitsgrowth has been virtually halted in the latest quarter.

Trend of Food Sales in Greece(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-1.6 -1.9

2.6

-1.7

-9.4

0.7

-2.5-1.7 -1.3

2.2

-8.5

-2.4-1.5

0.3

-0.6-0.3

0.20.0

-12

-10

-8

-6

-4

-20

2

4

6 Trend of Non-Food sales in Greece(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, Hypermarkets & SupermarketsYoY Value change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011

Price per unit


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Overview - Greece

Inflation in Greece was +1.7% for the first semester of 2011.

Unemployment rates during the first semester of 2011 reached 16.3%.

GDP for the first six months of 2011 was -7.3%.

Promotion intensity has declined, since companies are trying to meettheir profit margins. Within promotion activities, those with price off aregaining share.

Retailers are promoting own label products more and more.

Food category sales seem to suffer less, due to consumption atransfer from other small stores (e.g. kiosks, haberdasheries,convenience) to supermarket/hypermarket stores.

The top 7 retailer groups are gaining market share at the expense of

smaller chains (due to both organic growth and stores networkexpansion). Especially for Lidl where there was an increase of sales in2011.

VAT on Food 23%


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1.60.7

0.21.4

0.0

1.1

2.4 2.7

4.7

1.9 1.93.1

1.4

3.3

0.10.7

1.5

-0.2

-3

-2

-1

0

1

2

3

4

5

6

VALUE VOLUME PRICE

In the Netherlands, the growth rate of Food has slowed as prices beginto increase. Non-Food volume has fallen.

Trend of Food Sales in the Netherlands(Packaged Food, Confectionery, Drinks, exc. Alcohol)

-2.1

2.2

0.9

-2.1

0.5

-1.8-1.3

0.2

-0.6-5.2

4.1

-1.6-1.0

0.9

-1.6-1.9

0.11.5

-6

-4

-2

0

2

4

Trend of Non-Food Sales in the Netherlands(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, All OutletsYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011


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Overview The Netherlands

Unemployment is relatively low, in September it was 5,5%.

Food prices are beginning to increase, and it looks like volume growthis declining.

Non-Food prices have been falling for most of the past year asSupermarkets face increased competition from Drugstores. In 2011the prices in supermarkets have increased again.

Trade promoted volume is quite stable.

VAT on Food : 6%


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-0.8

-2.0

-0.7

1.8

-1.2

2.4 2.3 2.5 2.6

-1.2

1.1

-1.1-2.4

-0.3

0.20.5

0.22.2

-3

-2

-1

0

1

2

3

4

5

VALUE VOLUME PRICE

In Germany, the effect of rising Food prices seems to have hit again in

Q3 2011 with Non-Food flat in volume as prices stabilise.

Trend of Food Sales in Germany(Packaged Food, Confectionery, Drinks, exc. Alcohol)

0.9

2.31.7

2.5

0.80.4

-0.9 -0.7-0.2

0.10.70.30.5

0.60.2 0.9

1.81.4

-3

-2

-1

0

1

2

3

4

5

Trend of Non-Food Sales in Germany(Pet Food, Health, Toiletry, Household)

SOURCE: SymphonyIRI, All Outlets inc. AldiYoY Value & Volume price change

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011


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The uncertainties in Europe and the entire world, resulting from thefinancial crisis in several countries, are causing consumers to spendless money and calculate each single additional spending in detail

5.8% of the German population is without a job at the end ofSeptember

The consumer price index climbs further and reaches an increase of2.6% by the end of September

While sales for food categories in total remain stable compared to Q32010, dairy products and drinks are showing an increase in valuesales. Main reason for this positive development is the increase ofprices by 3.9% (drinks) and 6.8% (dairy products)

As the actual average price is continuously rising, value sales also

increase by 2.6%. In Q3 2011 volume sales however have dropped by2.4% compared to 2010

In comparison to 2010, hard discounter ALDI is the only sales channel- apart from beverage specialty - showing a decline in sales

Overview - Germany VAT on Food 7% & 19%


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5.1

3.3

2.5 1.8 1.51.9

4.0

2.3

4.4

1.0 1.11.7

-0.7

0.50.10.4

0.01.0

-1

0

1

2

3

4

5

6

VALUE VOLUME PRICE

In the UK, price rises are still hitting home as volume has declined in Q32011 on Non-Food but more resilient on Food in a poor summer.

SOURCE: SymphonyIRI, All Outlets, YoY Value & Volume price changeExcludes Northern Ireland

Trend of Food Sales in the UK(Packaged Food, Confectionery, Drinks, exc. Alcohol)

2.4 2.11.0

1.5

-0.1

1.0

3.5

1.22.2

1.1 1.6 0.9

-1.2

1.3

-1.6 -1.4-0.8

0.3

-3

-2

-1

1

2

3

4

5

6

Trend of Non-Food Sales in the UK(Pet Food, Health, Toiletry, Household)

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011


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Overview United Kingdom

At 5.0% for October 2011, inflation is well above the Governments target.

Unemployment has risen above 8%. Temporary employment has increased within thistotal. This level is expected to increase further.

GDP grew in the 3rd quarter of 2011 by 0.5% vs Q3 2011. This is below the Govt

forecast. The forecasts for 2012 and beyond has been reviewed downwards.

VAT was reduced in Dec 2008, returned in Jan 2010 and went up again in Jan 2011.

Credit has stabilised but the savings ratio has started to fall.

Own Label (OL) value share is currently increasing very slightly in Food & Drink, unitshare is up a little more but so far the anticipated rise of OL hasnt really happened since

brands are promoting strongly.

Prices started to rise before VAT went up in Jan 2011 and continue to go up. The currentrate of increase is over 4%.

FMCG sales started to falter and volumes are down in 2011. The growth in Q410 was asa result of bad weather inducing stocking up, pre VAT sales, extra shopping day in the

Christmas week and perhaps a feeling to have a good Christmas before cutting back in2011.

A spell of good weather, a different timing for Easter and the Royal Wedding allcontributed to growth at some stage but the underlying volume trend is still down.Summer seasonal products have performed badly due to poor weather from May to Julybut improved dramatically for 2 weeks at the end of September when there was a short

heatwave.

VAT on Food 0% & 20%


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Tim Eales

Director of Strategic Insight

SymphonyIRI Topline Report

The Quarterly European BarometerThird quarter (Q3 2011)

Trade Promotion Trends


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24 Copyright SymphonyIRI Group, 2010. Confidential and Proprietary.24 Copyright SymphonyIRI Group, 2011. Confidential and Proprietary.

0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Deal levels vary enormously across Europe - Food

GERMANY

NETHERLANDS

UK

ITALY

SPAIN

FRANCE

% SALES WITH TRADE PROMOTION (Volume SP, NL, UK Value IT, GE, FR)

Trade Promotion level is still very high in the UK.Continuing to fall in France and beginning to drop in Italy.


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0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Deal levels vary enormously across Europe Non-Food

GERMANY

NETHERLANDS

UK

ITALY

SPAIN

FRANCE


Trade Promotion levels have remained high in the UK, as well showing an

increase in Spain and The Netherlands.


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0

10

20

30

40

50

60

Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Deal levels vary enormously across Europe All Products

GERMANY

NETHERLANDS

UK

ITALY

SPAIN

FRANCE


The Netherlands and Spain have shown an increase in both Food and Non-Foodin the latest quarter.


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Turning Insights Into Actions

Insights Recommendations

As prices rise, shoppers will be actively lookingfor trade promotions.

Categories beginning to lose sales asshoppers carefully manage their budgets.

Shoppers looking for value for money.

Shoppers buying more based on need thanwant.

Private label offers are gaining share as offerquality for value.

Reduce deal depth to maximise value saleswhen on offer.

Innovate to stimulate interest and curiosity inthe category.

Maintain, if not, increase weeks on deal.

Stimulate need through media activity.

Understand the private label and brandportfolio in each category and what erodeskey brand positions. Review shopper needs,retailer strategies, market mix and developmitigation strategies in priority categories.


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Final Notes

Source: SymphonyIRI Group InfoScan, syndicated retail tracking service

Methodology: Seven quarters of review, YoY data for FMCG

Country coverage: France, Germany Greece, Italy, the Netherlands,

Spain, United Kingdom

To gain deeper insights, predictive analysis and

recommendations on specific products, categories,segments, channels or retailers

contact your SymphonyIRI Consultantor email to: [email protected]

Contact: SymphonyIRI Group, [email protected], Tel: +33 1 30 06 23 62

SymphonyIRI - Topline Report - Q3 2011

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