Commentary

FMCG Global Megabrands Battling For Relevance, Share


Between 2014 and 2017, eight of the top 10 global fast moving consumer goods brands either maintained or improved their rankings, according to Euromonitor International’s latest, just-released white paper on the top 100 FMCGs.

But if there was ever a time when reaching global dominance allowed for some coasting, that time is long past.

You can bet that none of these brands, or their parent companies, managed to retain or improve their positions without hustling to adapt in product development, marketing and basically every key aspect of their operations. And whether in the top 10, top 100 or somewhere down the rankings, you can also bet that the brands that performed best during the period were the ones that were intelligently responding to and/or benefiting from several core consumer megatrends that are transforming all world markets, including North America.

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“While several major brands have maintained their ranking for some time, the balance across the list is shifting,” sum up Euromonitor’s analysts. “People’s attitudes to health and premiumization are evolving, and brands that cannot meet new realities have lost out. Changes in how people research and shop online are having a profound impact. Also, the importance of different regions of the world has changed for many of these megabrands, raising the question of where companies should focus their resources most effectively.”

There’s a wealth of information in this report — too much for one column. For now, I’ll give an overview of key points and trends relating to the overall and major category rankings. (Next time, a more in-depth look at how one major CPG maker epitomizes and has leveraged the trends laid out above, with current results to show for it.)

The top 100 FMCGs continue to be dominated by packaged foods — 41 of the brands, or 41% of the total — followed by beauty and personal care brands (25) and soft drinks (18). Just 16 brands are from other categories (including consumer health, home care, hot drinks and pet care), and five of these are in the tissue/hygiene category.

Looking at the top 10 overall (see table), Coca-Cola and Pepsi retained their #1 and #2 global sales rankings over the four-year period (the 2014 data comes from a “Billion Dollar Brands” report published in 2015). Nescafe moved up from #4 to #3, Lay’s rose from #6 to #4, L'Oréal Paris remained at #5, Red Bull rose from #9 to #6, Pampers dipped from #3 to #7, Tide/Ariel remained at #8, Nivea rose from #10 to #9, and Huggies, previously at #17, made #10.

Beauty/Personal Care: E-Commerce, Premiumization Pay

While second in total sales, leaders in the beauty/personal care category showed the most growth in the period — benefiting from increased consumer demand for premiumization, as well as the category’s lending itself to leveraging ecommerce.

Euromonitor notes that “evolving purchase models such as subscription or one-button purchases can mean exceptional consumer loyalty” (and, I would add, repeat purchases born of habit). That dynamic, including fewer impulse buys, can cut both ways — initially helping recognizable brand leaders, but also empowering disruptors “to flourish” without being stopped by traditional retail barriers.

Within the beauty/personal care top tier, L'Oréal Paris and Nivea remained at #1 and #2, Garnier remained at #6, and six others, though moving up or down a bit, remained in the top 10 (Colgate, Gillette, Dove, Avon, Gemey/Maybelline/Jade and Natura). The only brand to enter the top 10 in the four-year period was Shiseido, at #8.

Soft Drinks: Energy Drinks Growth Amid Overall Decline

Looking at top soft drink brands, the top four -- Coca-Cola, Pepsi, Red Bull and Sprite -- remained unchanged, and Fanta stayed at #7. Gatorade rose to #5, Diet Coke declined to #6, Monster and Minute Maid rose to #8 and #9, and Master Kong declined to #10.

“The relative lack of movement masks the negative retail sales performance of most soft-drink brands since 2014,” confirms Euromonitor. "Driven by sugar consumption concerns, the poor performance of carbonates has been a major factor and is forecast to continue. In contrast, sports and energy drinks are a growth area, with energy drinks the driver. This is shown by the performance of Red Bull and Monster in the global top 10.”

Increasing water consumption is also a factor, of course — but “as a fragmented, commoditized and often localized product, bottled water brands are not threatening the soft drinks megabrand rankings,” the report points out.

Packaged Foods: Snack Mania Cuts Both Ways

Turning to the largest category, packaged foods, Lay’s retained the #1 position and, despite shifting positions, eight of the others were also in the top 10 in 2014: Kellogg’s (#2), Mengniu (#3), Yili (#4), Wrigley’s (#5), Arawana (#6), Kraft (#7), Cadbury (#8) and Knorr (down to #10). Kinder (at #9) is the only brand to enter the top 10 in the period, bumping Master Kong (at #12 as of 2017).

That so many of the top-10 brands fall into or include snackable foods is no coincidence. What Euromonitor calls the “sustained blurring of traditional mealtimes” by snacking throughout the day certainly offers potentially big opportunity for snack foods, and a headwind for many other, less “graze-able” packaged foods.

But being snackable alone won’t cut it in today’s global marketplace; effective regional strategy is another make-or-break.

As the report points out, China is now the third-largest FMCG market, behind the U.S. and the U.K. (Which is why three brands sold only in China — Mengniu, Yili and Arawana — are in the top 10 packaged goods ranking.)

PepsiCo’s Lay’s marketing/distribution strategy clearly reflects this reality. While the U.S. is still by far the brand’s biggest market (bigger than its next 20, in fact), it increased its sales in Asia Pacific and Western Europe, as well as North America, between 2014 and 2017, reports Euromonitor. Further, China is now its third-largest market (behind the U.S. and the U.K.).

“This contrasts strongly with number-two brand Kellogg’s — which, while still in the top six packaged food brands in both Western Europe and North America, has seen sales fall in both regions,” the report points out.

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