Warc, 20 August 2014
LONDON: Volume sales of FMCG brands are rising in all major European markets except the UK according to new data which suggests that a reduction in promotions is having an effect.
Figures for the second quarter from the Nielsen Growth Reporter, reported by Marketing Week, showed the average European volume growth in FMCG sales was 1.6% year on year but that for the UK was -1.1%.
Germany and France registered the greatest volume growth, each at 2.0%, while Italy was on 1.8% and Spain on 0.9%.
Relative price inflation figures played a role as this was higher in the UK, at 2.3%, than in any other country. Only Germany, on 1.5%, came close to that; France was on 0.2%, Italy was flat and Spain recorded a decline in price inflation of -0.6%.
Overall, nominal FMCG sales value was growing at its slowest rate for five years in the UK, up just 1.2% year on year in the second quarter, well below the below the 3.8% average for the whole of Europe. Only Spain was lower, on 0.3%.
Jean-Jacques Vandenheede, Nielsen's European director of retail insights, attributed part of the increase to Easter. "While we estimate this calendar anomaly accounted for about 1% of extra volume sales," he said, "a 'normalised' view is that overall sales value is still up around a healthy 2.8% – which is more positive than it has been recently."
Another interpretation is that a move away by the giants of the FMCG sector, such as Unilever and Procter & Gamble, from price-led promotions in the UK is finally having an impact, albeit at the expense of volume sales.
Last year, Irwin Lee, P&G UK managing director said the thing that kept him awake at night was "the amount of value given away via ever deepening promotional offers".
"We believe promotions win quarters," he declared, "but true innovation wins decades."
Data sourced from Marketing Week; additional content by Warc staff