Global packaged food market set for downturn

By Niamh Michail contact

- Last updated on GMT

Euromonitor downgrades global growth rates 2 points to 2.3%. © iStock
Euromonitor downgrades global growth rates 2 points to 2.3%. © iStock

Related tags: Marketing, Revenue, Compound annual growth rate

Emerging market slowdowns are having a knock-on effect on the global packaged food market, according to market analyst Euromonitor, which has downgraded its growth forecast for the next five years. “It’s understandably of a concern to many in the industry."

It has revised downwards its predicted global compound annual growth rate from 2.5% to 2.3% for the 2015-2020 period.

Of all the emerging economies Brazil is set to experience the biggest drop in projected growth.

The UK is performing better than most other European markets with projected GDP to continue to grow at a rate of around 2.3% for the 2016/2017 period. Meanwhile Russia’s GDP is projected to continue its downward trend although this decline in growth will be at a slower rate than before. The Eurozone is forecast to expand but will be nonetheless be affected by the global slowdown and a loss of confidence in financial markets.

The 2016 quarterly statement also takes a look at how big global players are likely to be affected. Global giants Nestlé and Lactalis are particularly exposed to the downgraded markets as over 10% of their sales come from Brazil, but it warns that all the top global food players will feel the impact in some way.

Meanwhile General Mills and PepsiCo, which are heavily dependent on the US market, could see up to 70% of their packaged food sales negatively affected by the downturn - although the analysts warn it would be hard for any large food company to avoid being negatively affected given that the three largest food markets – China, the US and Brazil – have been hit. However confectionery giant Mondelez has revenue sources so geographically diverse that it may be protected.

Meanwhile companies have been reacting to the weak outlook in different ways. Kraft-Heinz has opted opted for aggressive cost-cutting measures and achieving “operational efficiencies”​ through factory closures and job cuts in order to keep profits up. According to the market research company, the 2015 Kraft-Heinz deal is an example of how business leaders are seeking profit growth through efficiencies and scale rather than through sales expansion.

Yet one company that seems to be bucking the trend is Unilever, which has increased sales, albeit at the expense of profits. “It has [also] continued to invest boldly in innovation, optimistically looking for continued growth in what is a slowing market,” ​says the report.

Commenting on Unilever’s recent performance, analyst Lamine Lahouasnia said: “Unilever is one of the few big food forms to report a net sales increase, underlying its focus on high growth categories. This is a contrast to rivals adopting a more cost/profit-centric approach.”

Related news

Related products

show more

Microbiological analysis quality control

Microbiological analysis quality control

Thermo Fisher Scientific EMEA | 17-May-2022 | Infographic

Your brand and customers depend on the strength of your microbiological analysis. So it is important to have complete confidence in your methods and laboratory...

Healthy, delicious and sustainable

Healthy, delicious and sustainable

Döhler – Natural Food & Beverage Ingredients | 21-Mar-2022 | Data Sheet

Discover our comprehensive portfolio of plant-based ingredients which are ideally suited for innovative plant-based applications. Doehler fully understands...

Related suppliers

Follow us

Products

View more

Webinars