SymphonyIRI - Topline Report - Q3 2011

1 CopyrlghL Symphonyl8l Croup, 2011. ConfldenLlal and roprleLary.
Tim Eales
Director of Strategic Insight
SymphonyIRI Topline Report
The Quarterly European Barometer
Third quarter (Q3 2011)
Is economic uncertainty affecting FMCG sales?
2 Copyright SymphonyIRI Group, 2011. Confidential and Proprietary.
Key Findings
Confidence levels have decreased across
Europe France by the most and in Germany
the least.
Purchasing power is under pressure due to
increasing prices, impacting mainly non food
volume.
Prices are rising faster than earnings so this
means Consumer Recession.
After a pause, promotion activity has started to
increase again in the UK, The Netherlands and
Spain.
Own label is growing although National Brands
remain dominant.
Own label operators are starting to use the
trade promotion lever more.
PRICE RISES
PURCHASE
BASED ON NEED
MANAGE BUDGETS
2.6
1.1
0.8 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 15
th
November 2011
Growth rates of GDP in volume
(based on seasonally adjusted data)
Euro area GDP up by 1.4%
Q2 11
September 2011
EU unemployment rate up from 9.5% in Jan 11 to 9.7%
4.5
8.3 8.3
9.9
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
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 trend
for Greece
FMCG Consumer Reaction to Economic Uncertainty Q3 2011
Food prices are increasing (or at least no longer declining) in
almost all countries but this is not consistently impacting volume
sales, 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 of
tightening their belt.
Consumer expenditure has changed in many countries, moving
spend from out of home to in-home. This will have contributed to
volume growth in some categories.
Promotion has decreased in France, Italy and Germany. Greece
has reported that companies are pulling back on trade promotions
in order to boost profits as sales are squeezed.
The trends that we saw for H1 have generally been repeated in Q3
apart from a small volume growth for food in the UK which could
have been driven by the poor summer.
Q3
2011
2.0
3.0
2.3
3.9
2.1
2.0
2.6
2.9
4.5
2.2
3.4
2.8
3.9
1.8
2.0
2.6
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
0.9
1.6
2.1
-1.0
1.4
1.5
1.4
-0.6
0.0
-0.3
-0.7
0.3
-2
-1
0
1
2
3
4
5
6
Trend of Non-Food Sales in France
(Pet Food, Health, Toiletry, Household)
SOURCE: SymphonyIRI, Hypermarkets & Supermarkets
YoY Value & Volume price change
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
Overview - France
The inflation rate reached +3% in September (as expected).
Despite this background, the trend is still toward volume growth for
FMCG products in hyper and supermarkets (although the rate of growth
is decreasing).
Value sales in hard discounters are totally flat with volume decreasing in
this 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 or
pleasure products).
VAT on Food 5.5% & 19.6%
5.1
2.9
1.4
3.6
-3.0
0.9
2.3
4.1
4.5
6.5
4.3
2.6
6.4
-3.5
2.4
2.0 2.0
0.8
-4
-2
0
2
4
6
8
VALUE VOLUME PRICE
In Italy, Q3 2011 trend vs. 2010 has shown growth for Food in Value and
Volume 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
0.6
1.3
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
5
Trend of Non-Food Sales in Italy
SOURCE: SymphonyIRI, All Outlets
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
VALUE GROWTH
FROM INFLATION
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
M
a
y
-
0
7
A
u
g
-
0
7
N
o
v
-
0
7
F
e
b
-
0
8
M
a
y
-
0
8
A
u
g
-
0
8
N
o
v
-
0
8
F
e
b
-
0
9
M
a
y
-
0
9
A
u
g
-
0
9
N
o
v
-
0
9
F
e
b
-
1
0
M
a
y
-
1
0
A
u
g
-
1
0
N
o
v
-
1
0
F
e
b
-
1
1
M
a
y
-
1
1
A
u
g
-
1
1
Difference (Mix effect) basket Inflation FMCG Inflation
s
e
t
-
1
1
Overview - Italy
The macro economic scenario in Italy shows a low growth for both consumption
and GDP (+0,3% in Sept- Source: Istat). This rate of growth is below the
forecast 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 of
2011 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 signs
of recovery). Home Care and Personal Care are performing worse in
supermarkets and hypermarkets whilst they are registering growth in Specialised
channels.
FMCG inflation is at around 3%. It is reaching the general inflation rate
registered from ISTAT. This means that the sector can not moderate prices
increases 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%
-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
2.6
2.4
1.8
-6
-4
-2
0
2
4
6
VALUE VOLUME PRICE
In Spain, food prices started to rise but have since fallen again and
volume remains buoyant. Non-Food prices are rising now.
Trend Spain Food Sales in Spain
-1.0
-0.1
0.4
1.4
0.6
2.0
0.8
2.2
4.0
3.8
4.4
5.2 5.2
2.6
3.9
2.8
3.2
2.5
-6
-3
0
3
6
Trend of Non-Food Sales in Spain
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
3.8
1.2
3.2
1.9
1.6
2.3
5.1
2.8
0.8
2.9
2.5
1.1 1.1
1.0
1.3
- 1.0
- 1.2
5.2
1.7
1.5
2.2
3.3
2.7
4.7
3.0
3.9
3.3 3.3
2.1
2.4
1.5
1.8
0.7
3.6
1.5
1.0
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
5.8
5.0
5.0
4.8
2.6
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
3.9
4.3
1.4
2.1
0.0
- 3.6
0.2
- 0.7- 0.7
0.5
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
H
1

2
0
1
1
Q
3

2
0
1
1
P
0
1
-
0
8
P
0
2
-
0
8
P
0
3
-
0
8
P
0
4
-
0
8
P
0
5
-
0
8
P
0
6
-
0
8
P
0
7
-
0
8
P
0
8
-
0
8
P
0
9
-
0
8
P
1
0
-
0
8
P
1
1
-
0
8
P
1
2
-
0
8
P
0
1
-
0
9
P
0
2
-
0
9
P
0
3
-
0
9
P
0
4
-
0
9
P
0
5
-
0
9
P
0
6
-
0
9
P
0
7
-
0
9
P
0
8
-
0
9
P
0
9
-
0
9
P
1
0
-
0
9
P
1
1
-
0
9
P
1
2
-
0
9
P
0
1
-
1
0
P
0
2
-
1
0
P
0
3
-
1
0
P
0
4
-
1
0
P
0
5
-
1
0
P
0
6
-
1
0
P
0
7
-
1
0
P
0
8
-
1
0
P
0
9
-
1
0
P
1
0
-
1
0
P
1
1
-
1
0
P
1
2
-
1
0
P
0
1
-
1
1
P
0
2
-
1
1
P
0
3
-
1
1

(
*
)

P
0
4
-
1
1
P
0
5
-
1
1
P
0
6
-
1
1
P
0
7
-
1
1
P
0
8
-
1
1
P
0
9
-
1
1
Consumption Price
Sales Evolution FMCG Market vs. previous year: demand and price evolution
Spain - Prices stopped decreasing in March
Overview - Spain
Unemployment was 21,5% in Q3, higher than Q2. Summer time historically
pushes 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 of
consumption, +2.3%, and also prices, +1.1%. Prices continue going up since
the 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 they
have internalized their shopping strategies, so they spent less time in front of
the shelf to choose their shopping basket. Shoppers also seem to be tired of
tightening their belts, and consumption has been positively affected.
Although shoppers are sensitive to prices, store and shelves are key drivers to
leverage 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%
2.2
3.6
1.7
0.1
-5.0
3.4
1.3
-0.5
1.8
2.8
2.2
-2.3
5.5
2.4 2.0
1.5
0.4
1.0
-6
-4
-2
0
2
4
6
8
VALUE UNITS
In Greece, after a period of continuous price reduction, Food units
growth has been virtually halted in the latest quarter.
Trend of Food Sales in Greece
-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
0.2 0.0
-12
-10
-8
-6
-4
-2
0
2
4
6
Trend of Non-Food sales in Greece
YoY Value change
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
Price per unit
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 meet
their profit margins. Within promotion activities, those with price off are
gaining share.
Retailers are promoting own label products more and more.
Food category sales seem to suffer less, due to consumption a
transfer 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 network
expansion). Especially for Lidl where there was an increase of sales in
2011.
VAT on Food 23%
1.6
0.7
0.2
1.4
0.0
1.1
2.4
2.7
4.7
1.9 1.9
3.1
1.4
3.3
0.1
0.7
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 begin
to increase. Non-Food volume has fallen.
Trend of Food Sales in the Netherlands
-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
0.1 1.5
-6
-4
-2
0
2
4
Trend of Non-Food Sales in the Netherlands
SOURCE: SymphonyIRI, All Outlets
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
Overview The Netherlands
Unemployment is relatively low, in September it was 5,5%.
Food prices are beginning to increase, and it looks like volume growth
is declining.
Non-Food prices have been falling for most of the past year as
Supermarkets face increased competition from Drugstores. In 2011
the prices in supermarkets have increased again.
Trade promoted volume is quite stable.
VAT on Food : 6%
-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
0.2
0.5
0.2
2.2
-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
0.9
2.3
1.7
2.5
0.8
0.4
-0.9
-0.7
-0.2
0.1
0.7
0.3 0.5
0.6
0.2 0.9
1.8
1.4
-3
-2
-1
0
1
2
3
4
5
Trend of Non-Food Sales in Germany
SOURCE: SymphonyIRI, All Outlets inc. Aldi
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
The uncertainties in Europe and the entire world, resulting from the
financial crisis in several countries, are causing consumers to spend
less money and calculate each single additional spending in detail
5.8% of the German population is without a job at the end of
September
The consumer price index climbs further and reaches an increase of
2.6% by the end of September
While sales for food categories in total remain stable compared to Q3
2010, dairy products and drinks are showing an increase in value
sales. Main reason for this positive development is the increase of
prices 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 by
2.4% 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
5.1
3.3
2.5
1.8
1.5
1.9
4.0
2.3
4.4
1.0 1.1
1.7
-0.7
0.5
0.1
0.4
0.0 1.0
-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 Q3
2011 on Non-Food but more resilient on Food in a poor summer.
SOURCE: SymphonyIRI, All Outlets, YoY Value & Volume price change
Excludes Northern Ireland
Trend of Food Sales in the UK
2.4
2.1
1.0
1.5
-0.1
1.0
3.5
1.2
2.2
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
Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 H1 2011 Q3 2011
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 this
total. 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, unit
share 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 current
rate of increase is over 4%.
FMCG sales started to falter and volumes are down in 2011. The growth in Q410 was as
a 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 in
2011.
A spell of good weather, a different timing for Easter and the Royal Wedding all
contributed 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 July
but improved dramatically for 2 weeks at the end of September when there was a short
heatwave.
23 CopyrlghL Symphonyl8l Croup, 2011. ConfldenLlal and roprleLary.
Tim Eales
Director of Strategic Insight
SymphonyIRI Topline Report
The Quarterly European Barometer
Third quarter (Q3 2011)
Trade Promotion Trends
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.
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.
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-Food
in the latest quarter.
Turning Insights Into Actions
Insights Recommendations
As prices rise, shoppers will be actively looking
for trade promotions.
Categories beginning to lose sales as
shoppers carefully manage their budgets.
Shoppers looking for value for money.
Shoppers buying more based on need than
want.
Private label offers are gaining share as offer
quality for value.
Reduce deal depth to maximise value sales
when on offer.
Innovate to stimulate interest and curiosity in
the category.
Maintain, if not, increase weeks on deal.
Stimulate need through media activity.
Understand the private label and brand
portfolio in each category and what erodes
key brand positions. Review shopper needs,
retailer strategies, market mix and develop
mitigation strategies in priority categories.
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 Consultant
or email to: eu.marketing@symphonyiri.com
Contact: SymphonyIRI Group, eu.marketing@SymphonyIRI.com, Tel: +33 1 30 06 23 62

SymphonyIRI - Topline Report - Q3 2011

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